The Federal Government has proposed a ₦6.04 billion personnel budget for Ajaokuta Steel Company Limited in the 2026 fiscal year, once again spotlighting the long-running paradox of Nigeria’s most ambitious industrial project consuming public funds without producing steel. Details from the 2026 Appropriation Bill show that the steel complex, conceived more than four decades ago as the backbone of Nigeria’s industrialisation drive, remains non-operational while drawing the bulk of its funding for salaries and staff-related expenses.
According to the budget proposal, Ajaokuta Steel was allocated a total of ₦6.69 billion for 2026. Of this amount, ₦6.04 billion, or about 90.4%, is dedicated to personnel costs alone. The structure of the allocation once again reinforces the company’s long-established role as a non-producing public enterprise sustained primarily through wage payments rather than industrial activity or output.
What the 2026 budget breakdown shows
A closer look at the proposed spending reveals that ₦4.79 billion of the personnel allocation is earmarked for salaries and wages, while ₦1.25 billion is set aside for allowances and statutory social contributions. These include ₦479.42 million for employer pension contributions, ₦239.71 million for National Health Insurance Scheme (NHIS) payments, and ₦59.82 million for employees’ compensation insurance. Regular allowances alone account for ₦468.9 million.
Beyond personnel costs, the imbalance between recurrent and capital expenditure remains stark. Total recurrent spending for Ajaokuta in 2026 is projected at ₦6.28 billion, compared with just ₦410.8 million in capital expenditure. This means that less than 7% of the company’s total allocation is directed toward assets, rehabilitation, or infrastructure that could potentially support a return to steel production.
Even within the capital budget, spending is thinly spread across relatively minor items. Fixed asset purchases—such as computers, printers, and security equipment—are allocated ₦56.4 million. Construction and provision of facilities take ₦129.2 million, while ₦225.2 million is assigned to rehabilitation and repairs, largely focused on electricity-related works and office buildings. For a complex originally designed to anchor Nigeria’s steel and manufacturing value chain, these figures underscore how little funding is being channelled toward genuine industrial revival.
A pattern of persistence, not reform
Year-on-year budget trends suggest continuity rather than meaningful restructuring. In 2024, personnel costs at Ajaokuta stood at ₦4.29 billion. This rose sharply to ₦6.21 billion in 2025—a 44.8% increase—despite the absence of production. The proposed ₦6.04 billion for 2026 represents only a modest 2.7% reduction from the previous year.
While the slight decline may appear to signal restraint, it does little to change the underlying structure of spending. Salaries continue to dominate the budget, while capital investment remains compressed, confirming that staff remuneration—not steel output—remains the core priority.
Zero revenue, full dependence on federal funding
The 2026 budget documents indicate that Ajaokuta Steel is projected to generate zero independent revenue and will receive no grants, leaving it fully dependent on federal subventions. Despite this, the company continues to appear in constituency-style capital projects, including solar street lighting in parts of Niger East and Kwara North, water facilities, road repairs, security lighting, and grants to market women and youths.
While such projects may have local social value, they are not linked to steel production or industrial capacity and do little to alter the company’s non-operational status.
Separately, the proposed 2026 budget includes revival-related provisions under the Federal Ministry of Steel Development. The ministry allocated ₦150.99 million for the revitalisation of Ajaokuta Steel Company Limited and the National Iron Ore Mining Company (NIOMCO) as an ongoing capital project. An additional ₦1.06 billion was set aside for project preparation aimed at investment mobilisation, covering feasibility studies, environmental and social impact assessments, and financial modelling.
However, these figures are significantly lower than in 2025, when ₦2.41 billion was budgeted for project preparation and ₦250.98 million for revitalisation. The decline represents a 56% drop in project preparation spending year-on-year, even as the steel complex remains idle.
Why it matters
Conceived in 1979 as Nigeria’s flagship industrial project, the Ajaokuta Integrated Steel Complex was expected to reduce steel imports, drive industrialisation, and support economic diversification. More than 40 years later, budget allocations suggest it functions largely as a payroll institution, with successive administrations—including the current government under President Bola Tinubu—continuing to fund salaries while production remains at zero.
The company says it employs about 3,000 workers and claims that full commissioning could directly engage up to 10,000 staff, with upstream and downstream industries potentially supporting as many as 500,000 jobs nationwide. For now, however, the proposed 2026 budget paints a familiar picture: a steel plant sustained by recurrent spending, with revival still confined to studies and plans rather than actual output.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
