Ajaokuta Steel Company


With the commencement of Nigeria’s new government, from May 29, 2015, one can only hope that the Ajaokuta Steel Company project will finally become a reality. It has failed largely due to mismanagement of funds and incompetent planning by the previous Nigerian governments. Nigeria’s demand for steel is estimated at about 12 million tonnes per annum – to begin industrialisation. At full throttle, the Ajaokuta Steel Company can only provide about 5.2 million tonnes per annum. This project, in my view, can only be realised with the active involvement of the private sector and total submission to transparency and accountability by the Nigerian government.

Problem: Mismanagement and Incompetence in project implementation

Beneficiary: Federal Government of Nigeria

Proposed by: Tomi Orunmuyi

Idea Status: Pitch



It is actually quite puzzling that since democracy, none of the governments have been able to complete the Ajaokuta Steel Company project successfully. One would think that perhaps the past government officials need to be put through the fundamentals of project management or simply the logic behind the application of business models. The issues preventing the project from being a success seem quite basic as they could easily be anticipated considering a project of its magnitude. For the sake of constructive criticism, the major issues are listed below.

1. Funding: The steel company has found it difficult to source for funds in the financial market. This has led to the government being its primary financier. And with the currently challenged economic state of the country, things appear to only get worse. In the past, the steel project has experienced lack of working capital for the operation of various units of the steel plant leading to deterioration of completed units. Reactivation of these units will require significant capital reinvestment.

2. Raw materials: Apart from Iron ore, which has its purest deposits found around Itakpe in Kogi State; bauxite, manganese and coke (fuel) are needed to create steel. These materials are not available locally and therefore need to be imported. Logistics and procurement procedure implementation have been the shortcomings of the project till date.

3. Infrastructure: Adequate transportation infrastructure such as access roads,  railway and bulk landing facilities at ports have been lacking since inception.

The issues above are simply challenges that could ordinarily be expected by any large scale project. However, the main problem which may not be quantifiable would be the strong and mighty corruption. One would hope that this corruption is curbed by the new government of Nigeria. I would recommend that a project management company with a worthy track record, preferably international, should be contracted with delivering this project. The expertise and experience with working on high profile projects will go a long in delivering the project. Clearly stated timelines, milestones; along with transparency and accountability by the government officials and stakeholder are important in making the project a success.

Full impact potential: Industrialisation of Nigeria.

Funding: Public Private Partnership could be the way forward.

Marketplace: Mining and Steel

Other interesting facts: The per capita consumption of steel in Nigeria is very small: 10kg, there are speculations that it maybe less than that; while the world average is 130kg.

Written by: Tomi Orunmuyi