An ambitious electric vehicle legislation is racing through the national assembly, charged with hype and hope that Nigeria could become an electric vehicle manufacturing and usage heartland in Africa. This sweeping legislative framework for electric vehicles development is betting that a structured EV industry can turn an import‐dependent car market into a manufacturing base, diversify an oil‐heavy economy and thrust the country ahead in an emerging African race for green mobility.
One way to grasp the stakes is to look at Nigeria’s largely import‐dominated car market, which runs into hundreds of thousands of units a year while local assembly still accounts for only a small fraction, suggesting potential for robust domestic EV production if policy and infrastructure align.
The bill’s likely passage would sign-post the ambition, but implementation in a resource‐constrained, fossil‐fuel dependent state poses formidable challenges.
Certainly, a structured EV industry has its upside. The bill intends to move Nigeria from being a dumping ground for used internal‐combustion vehicles to a regional hub for electric mobility, anchored in local assembly and component manufacturing. It ties EV promotion directly to industrial policy, with targets for local content, conditions for foreign manufacturers to establish Nigerian plants, and incentives around tax, import duties and infrastructure.
For a country that imports most of its vehicles, a structured EV industry could deliver three significant gains. First, formal auto employment and value added can grow — analysts and policymakers see scope for thousands of jobs in assembly, bodywork, battery pack integration, charging installation and software, provided factories reach meaningful scale.
Second, linking EVs to domestic lithium and other minerals opens a path into battery and component value chains, which could support exports rather than perpetuating raw‐material dependence.
Third, a credible EV ecosystem would help Nigeria position itself as one of the African Continental Free Trade Area’s core automotive hubs, competing with South Africa and Morocco for continental investment.
Figure 1: Nigeria’s car market is increasingly import-dominated, showing theoretical potential for local manufacturing, including EVs.
The import dominance shown above captures why policymakers see EVs as a window: nearly 95 percent of Nigeria’s car market is supplied by imports, creating both a fiscal drag (through limited tax capture and FX outflows) and an opportunity for local production if tariffs, quality standards and infrastructure support domestic assembly.
Fossil-fuel dependence and macro-risk can potentially short-circuit the legislation’s expected outcomes. For instance, Nigeria’s efforts at rapid electrification have not produced a grid to speak of. Oil and gas still dominate export earnings, government revenues and foreign‐exchange inflows, and domestic fuel remains central to transport and political stability. In the near term, the EV push will not eliminate fossil‐fuel dependence; instead, it adds new fiscal and infrastructure demands to an already stretched system.
Tax holidays, duty waivers and subsidies for EVs and charging infrastructure, tools that other countries have needed to jump-start their EV sectors, will erode revenues before the new industry matures. Grid weaknesses mean many chargers are likely to run on diesel generators for years, blunting emissions gains while adding capital and operating costs that could make locally assembled EVs uncompetitive. The bill’s heavy fines and production thresholds, designed to keep out speculative assemblers, also risk discouraging smaller investors and entrenching a few politically connected players if enforcement is not transparent.
Figure 2: Hydrocarbons dominate exports at approximately 90%, while automotive manufacturing including negligible EV components, remains below 1%, illustrating the long transition ahead.
The disparity shown above — with crude and gas dominating exports and formal auto manufacturing barely visible — illustrates why EV policy, however ambitious, cannot quickly replace oil revenues. It is a long‐term diversification play, not an immediate fiscal buffer. Policymakers must therefore manage expectations and ensure that near‐term subsidies and tax foregone are proportional to realistic job creation and foreign‐exchange savings.
The power crisis: Nigeria’s hardest constraint
Yet perhaps the most telling omission in the bill’s framing is the depth of Nigeria’s power generation crisis. The country’s installed capacity of roughly 14,800 megawatts in 2024 has consistently generated only 30–32 percent of that nominal output in actual average daily delivery — a chasm that exposes a fundamental paradox: Nigeria is mandating mass EV adoption while unable to reliably power the grid itself.
Figure 3: Nigeria’s power generation gap — installed capacity versus actual output (2020–2024) compared to African competitors — dramatizes the hurdle ahead.
Nigeria’s massive generation gap — installed capacity versus actual output reveals why EV charging infrastructure is unsustainable without parallel power-sector transformation. The third chart captures this grim reality. Even as demand for industrial power, air conditioning and water supply already strains the grid, adding hundreds of thousands of EV chargers — especially fast chargers in urban corridors — would compound an already critical failure of state capacity. Most EV chargers installed over the next 5–10 years will almost certainly run on diesel generators, undermining the environmental case for electrification and loading additional foreign‐exchange costs onto households and businesses already absorbing fuel imports.
This is not a technical problem that can be solved at the margins. Nigeria’s power sector requires transformational investment in generation (especially renewable capacity), transmission and distribution, alongside tariff reforms that allow utilities to recover costs and reinvest revenues. Without that, EV policy risks becoming an exercise in symbolic greening while real transport remains fossil‐fueled and more costly than before.
Road infrastructure and vehicle durability
A second, less discussed constraint is road quality. Nigeria’s road network remains highly fragmented, with poor surface conditions outside major corridors, limited maintenance funding and inconsistent toll and road‐tax collection that funds upkeep. This has two implications for EV strategy.
First, poor road conditions reduce vehicle lifespan and increase maintenance costs — a burden already borne by internal combustion engine vehicle owners and one that will hit EV users harder once warranty periods expire and specialist service becomes scarce outside major cities.
Second, the bill’s mandated charging infrastructure — at filling stations, commercial hubs and residential zones — presumes transport networks capable of reliable, safe access. In regions where roads are seasonally impassable or unmaintained, EV deployment will remain confined to urban and peri‐urban areas, narrowing the market and delaying the scale economies that would make local assembly viable.
Durability and service life are especially critical for EVs, which require regular specialist diagnostics, battery health monitoring and software updates — services that demand a functioning digital and physical infrastructure ecosystem far beyond what Nigeria currently provides outside Lagos, Abuja and one or two other major centers. Without significant investment in roads, maintenance depots and training institutions, EV adoption will further concentrate wealth and mobility in already favoured urban areas, widening inequality and inviting political backlash.
China, the US and energy diplomacy
Against this backdrop, EV policy is becoming another arena for China – US competition in Africa. Chinese manufacturers already dominate Africa’s early EV forays, from buses in Kenya to assembly plants in North and Southern Africa, and Chinese firms are eyeing deeper roles in local manufacturing, infrastructure and minerals. Reports of Chinese interest in EV factories and partnerships in Nigeria fit this pattern, with Chinese capital and technology offering the fastest route to local plants that can hit the bill’s volume and cost targets.
The US, meanwhile, is sharpening its own green‐industrial strategy and looking to diversify critical‐mineral and battery supply chains away from China, which makes Nigeria’s lithium and broader West African resources strategically relevant. A structured EV industry, anchored in rule‐based local‐content and environmental standards, could give Abuja leverage to balance Chinese investment in plants and infrastructure against US and European interest in minerals, standards and financing — if Nigeria is disciplined about transparency and avoids exclusive, opaque deals.
EV market and intra-African trade competition
The Africa Continental Free Trade Agreement, AfCFTA, with its provisions on automotive trade, turns EVs into a regional, not just national, high stakes play. The agreement identifies automotive and transport as priority value chains, with the promise of a larger, tariff‐reduced market that can sustain local assembly and parts production. For Nigeria, that means a structured EV sector could export vehicles, kits and components into West and Central Africa, using scale to offset high domestic costs in power and logistics.
But the same framework invites intense competition. South Africa, Morocco and potentially Egypt are moving faster on EV assembly, with more mature industrial bases and stronger infrastructure. Chinese firms are already using North African plants to serve third markets. If Nigeria’s EV rules prove too rigid or unpredictable, assembly and battery investments may land elsewhere, with Nigeria relegated to a consumption market supplied through AfCFTA rather than a producer shaping continental standards.
| Country | Generation (GWh, Approx) | Per-capita use (KWh/person, approx.) | EV & battery investments 2023-25 (US$ bn) |
| Nigeria | 38,000 | 170 | 0.6 |
| Egypt | 210,000 | 1,800 | 0.9 |
| Morocco | 43,000 | 1,200 | 1.8 |
| South Africa | 235,000 | 3,900 | 2.5 |
Figure 4: Nigeria lags peer African economies in both total and per capita electricity supply, underlining the constraints for large-scale EV adoption and investment
The numbers reveal Nigeria’s competitive position. Nigeria’s recorded EV and battery investments lag peer countries who have more established automotive ecosystems, signaling that capital will seek stable policy, grid readiness and proven supply chains. Additionally, Nigeria’s power generation per capita (165 kWh/person) is a fraction of South Africa’s (3,900 kWh/person) and Egypt’s (1,800 kWh/person), making the grid constraint even more acute.
Without credible and transformational scale implementation of the bill’s framework, and without massive upgrade of parallel power and infrastructure, Nigeria risks losing the continental investment race to more developed competitors, even before it joins.
An EV bill that fits the bill
In view of the complex challenge ahead, the EV bill needs deliberate reconsideration of its current scope and structure. The current bill is ambitious but imperfect, and a cautious, technocratic review before final passage would pay dividends. Analysts and industry participants welcome its investment signals but flag critical gaps around financing models, realistic timelines, charging‐network planning and power‐sector coordination. Yet in its current form, Nigeria risks creating a highly regulated but thin market that deters rather than encourages genuine investors, while failing to deliver affordable mobility.
A comprehensive review should, at minimum, stress‐test the proposed fines, output minima and local‐content timelines against credible demand and infrastructure scenarios. It should integrate the bill with the existing automotive development plan, power‐sector reforms and climate commitments, clarify institutional roles between NADDC, NERC, FIRS and state governments, and build in periodic reviews that allow policy to adapt as technology, costs and global trade patterns evolve. Most critically, the review must address the power generation shortfall, setting realistic timelines for grid expansion and renewable energy integration, and establishing charging infrastructure only in zones where adequate power supply is credible and costed.
Managing the industry after passage
If legislators refine the framework with care, industry management will matter more than the text itself. Several principles stand out:
- Power-sector alignment as a precondition: Before mandating charging stations or assembly scale, the government must credibly commit to and fund generation and distribution expansion, with transparent milestones and penalties for non‐performance. Without this, the EV bill becomes a subsidy to diesel‐powered charging, not a green transition.
- Phase-in and calibration: Local‐content thresholds, minimum production volumes and charging‐station requirements should ramp up over defined periods, with differentiated treatment for large original equipment manufacturers, mid‐tier assemblers and start‐ups. Flexibility, combined with clear milestones, will encourage investment while discouraging speculators.
- Road infrastructure and maintenance integration: EV deployment should be explicitly linked to road rehabilitation and maintenance budgets, with funding mechanisms (e.g. toll revenues, road tax, carbon levies) dedicated to ensuring safe, durable networks outside major cities. Without this, EV benefits will remain concentrated in already‐favoured urban zones.
- Charging network strategy tied to grid zones: Rather than mandate charging at all filling stations immediately, the government should designate priority zones where grid capacity, renewable potential and road access make EV charging viable, and phase‐in expansion as power and transport infrastructure improve.
- Competition, standards and transparency: Licensing, incentives and public‐procurement decisions (for buses, government fleets, charging concessions) should be open and contestable to avoid entrenching oligopolies. Robust safety, performance and environmental standards will protect consumers and support Nigeria’s credibility as an exporter into AfCFTA markets.
- Finance and inclusion: Given eroded purchasing power, EV adoption will depend on leasing, pay‐as‐you‐drive and credit schemes rather than cash purchases. Policy should therefore focus as much on catalyzing domestic finance, guarantees and blended capital for fleets and MSMEs as on headline tax breaks for manufacturers.
Handled with discipline and realism, Nigeria’s EV legislation could move from a symbolic green legislation into a transformational industrial stimulus and a powerful economic diplomacy instrument. It could help diversify an oil‐dependent economy without pretending that hydrocarbons will vanish from its balance of payments any time soon. The bill’s speedy progress in the Senate signals political will, but the hard work lies ahead: threading the needle between ambitious targets and realistic implementation, balancing Chinese and Western capital flows, and securing the unglamorous but essential grid, power and logistics foundations that make EVs matter beyond headline policy.
The power generation crisis and road degradation are not obstacles to be overcome by wishful thinking; they are the central constraint on EV strategy. Any credible path forward must lead with power and infrastructure reform, using EV policy not as an end, but as leverage to force broader modernisation of Nigeria’s core productive systems. Without that reordering of priorities, Nigeria’s EV bill risks becoming another well‐intentioned framework that exhausts itself against unchanged realities.
For Nigeria, the EV move is not primarily about climate; it is about industrial strategy, energy security and economic survival in a world in which power infrastructure and diversification are no longer optional. The bill is a necessary step, but effective execution — anchored in power and transport fundamentals — will determine whether it becomes transformative or merely another illustration of the distance between policy and capacity in a country that has long suffered from petro-paralysis.
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Dozie Arinze, who holds a doctorate in business administration, and is the president of Pedestal Africa Limited, is an entrepreneur, corporate executive, investor and author, with wide ranging experience in energy, business strategy, public policy, and international law. He has special interest in the interaction of investment, regulation and policy in emerging economies, especially Africa, and can be reached via comment@businessamlive.com
