The Federal Government of Nigeria has disclosed plans to ban the importation of solar panels. This proposed solar panel import ban is part of strategies to develop local production and accelerate the nation’s transition into green energy.
This announcement comes despite efforts by the government to boost local manufacturing, a game changer for affordable alternative power, but without recorded success.
In 2023, former Vice President Yemi Osinbajo laid the foundation for the $325.9 million factory for the National Agency for Science and Engineering Infrastructure (NASENI) in Gora, Nasarawa State, aiming to position Nigeria as a leader in climate-friendly energy.
The Minister of Science and Technology, Uche Nnaji, revealed this in March while presenting the NEV T6 electric buses in Abuja. According to him, the initiative aims to promote made-in-Nigeria solar panels as it will leave citizens with no alternative but to patronise local manufacturers.
Nnaji further stated that the government’s hope of transitioning into off-grid power will receive a significant boost should everything work out as planned. “Soon, most houses will go off-grid,” the minister predicted.
While it sounds intriguing, this sudden plan will impact the country’s economy directly or indirectly.
This article analyses Nigeria’s current economic situation and how the ban could reshape local manufacturing, energy consumption, and overall welfare.
The Present State of Nigeria’s Economy
It is no longer news that Nigeria is in a chronic economic crisis, which some government policies have exacerbated. The cost of food items and commodities has tripled since President Bola Ahmed Tinubu announced the removal of fuel subsidies upon his resumption into office in 2023.
The price of 50kg of rice reportedly jumped from ₦20,000 to ₦70,000; a litre of petrol (gasoline) climbed from ₦198 to ₦860; and the year-on-year food inflation rate rose to 40.66% in 2024, after the fuel subsidy removal.
Despite the citizens’ overwhelming cry for help, the Federal Government didn’t rescind its decision. Instead, the president reportedly approved palliatives to cushion the subsidy-inspired pain.
Aside from the fuel subsidy, the Naira’s steady depreciation against the dollar and other foreign currencies is another factor limiting the country’s hope of rising from its current economic slump. At the time of this report, the official naira-dollar exchange rate is ₦1532.80.
Things could have been better if Nigerians had access to steady electricity to power their businesses, but that is not the case. As of the time of this report, the power sector only generates approximately 5,300 megawatts (MW) of grid electricity daily despite its over 13,000MW installed capacity, which is insufficient to meet the country’s demands.
Due to the epileptic power supply, Nigerians turned to renewable energy as an alternative source of electricity for their businesses and domestic use. The demand became so high that Nigeria’s solar energy imports surged to $237.3 billion in the last quarter of 2024.
What should Nigerians expect from the economy now that solar panel importation will become a thing of the past? Let’s find out.
Negative Implications of The Solar Panel Ban
- Increased energy cost
With the proposed ban, energy costs might increase if local manufacturers create artificial scarcity, eventually leading to higher costs of purchasing the few available panels.
- Reduced access to energy and power supply
Renewable energy is fast becoming the go-to option for Nigerians due to its cost-effectiveness and reliability. For instance, a fully charged 10kWh solar battery guarantees at least 24 hours of power supply without running an AC or electric heater.
Unfortunately, this could change if the price of local panels increases after the ban because struggling Nigerians won’t be able to afford them. If that happens, Nigerians will have limited access to power because the grid energy is unreliable, and fuel prices aren’t pocket-friendly.
- Poor economic diversification
Having relied on agriculture and crude oil for years, the Federal Government is focusing on the renewable energy sector as another revenue source.
Unfortunately, the ban might halt the development recorded in the renewable industry and affect the government’s plans to create multiple revenue streams.
- Reduced foreign investments
Foreign investors might leave the country’s green energy industry if the ban is imposed on their products. They will divert their attention to neighbouring countries that provide a conducive and thriving environment for their products and services.
What Do The Negative Implications Mean to Nigeria’s Economy?
The answer is simple—these will be significant setbacks in the government’s desire to revive the economy. Low access to electricity means manufacturing companies will not be 100% productive, affecting the GDP in the long run.
While some businesses will not produce to their full capacity, others will be forced to leave the country or shut down completely. In either case, the government’s purse will suffer a significant loss.
Positive Implications of The Ban
Having highlighted the negative impact of the proposed ban, let’s look at the bright side. Below are the positive effects the ban could have on the economy:
- Improved technology and innovation
Knowing that the fate and future of Nigeria’s solar energy industry rests on their shoulders, local manufacturers will be motivated to up their creativity and innovative skills.
Institutions such as the NASENI and private companies will strive to manufacture economic-friendly panels suitable for the country’s ecosystem. More collective and personal training will help them create standard, world-class products that will last.
Interestingly, since the announcement of the proposed ban on solar systems, some local manufacturers have begun to gear up to adjust to the new phase. One is LPV Technologies, which recently launched its new solar panel manufacturing plant in Lagos and called for a zero-import policy for solar panels.
- Employment opportunities
The ban promises to create more jobs and employment opportunities in the renewable energy sector. If the price of locally made solar panels remains affordable, the demand will automatically increase. In that case, local manufacturers will hire more workers and ensure they meet the increased demands.
What Do These Positive Effects Mean To The Economy?
Should everything turn out as the minister mentioned, these positive implications will ease the economic tension. Assuming 5,000 youths are gainfully employed in the renewable energy sector, Nigeria’s GDP will increase, and the economy will improve.
Similarly, improved technologies and innovations will facilitate more developments in the power sector, and Nigerians will enjoy a better electricity supply.
Conclusion
The proposed ban on solar panel importation can have two possible outcomes—bad or good. If the federal government empowers agencies and institutions like NASENI and private producers, the economy will benefit from the move.
Local manufacturers will benefit more if the government initiates incentives or programmes to boost their businesses. Incentives such as tax waivers and financing mechanisms will go a long way in promoting local manufacturing.
The government can also facilitate capacity-building and training programmes for individuals interested in solar manufacturing to enhance their technical expertise.
The question is, will the government do the right thing? Only time will tell!
Let us know your thoughts in the comment section.