The development of a nation can be attributed to its rate of industrialisation. This is why economic development is identified based on a nation’s level of industrialisation. Nigeria, a West African nation, has its economy heavily dependent on oil. Various statistics show that the industry contributed 6.33% of Nigeria’s total GDP in 2022, 44.1% of the nation’s total export value in 2021, and 60% of the government revenues in 2019. These show Nigeria’s dependency level on its oil and gas resources. Despite its vast energy resources, the country still faces a huge debacle in its industrialisation efforts, and many people are left in abject poverty alongside high levels of unemployment. The unemployment rate stands at 33% for a population of just over 200 million people.
The manufacturing sector in Nigeria, which makes up 15% of the country’s GDP, has been confronted with several challenges that have limited the country’s growth rate. Limitations such as inadequate access to finance, weak policy frameworks and poor infrastructure are some of the leading obstacles to the country’s growth. Recognising that energy access remains another huge challenge in economic growth, the country, whose energy access stands at 57% (World Bank, 2021), has started making several moves to develop its energy provision, management and delivery while also progressing on its climate plans. The Nigerian Energy Transition Plan (ETP), launched in 2022, is the latest effort to make a meaningful transformation in these areas. The ETP contains plans to diversify the Nigerian economy to create jobs to 340,000 by 2030 and a further 500,000 by 2060, given the rapidly expanding Nigerian population. Job creation will be, without any doubt, one of the critical paths to expanding economic activities in the country. However, for this to happen, the industrial base of activities in the country must take a leap to new levels. This would require new levels of strategic resource management and policy directives.
Energy Transition in Nigeria
According to the IEA, 775 million people live without energy access on the planet. A 2023 report by the World Economic Forum noted that Nigeria is home to 140 million people without energy access globally. Despite the country’s vast amount of oil and gas deposits, this is the Nigerian Electricity Supply Industry (NESI) state, with about 12 GW installed capacity and a wheeling capacity between 3 to 5 GW. This falls extremely short of the energy demand in the country, and more must be done for an industrialised Nigeria to become a reality. Currently, energy access is at 57%, according to the World Bank, and socio-economic development is an issue of major concern in Nigeria.
Innovative solutions are being deployed in solar off-grid nationwide, with specific attention given to rural communities without electricity. Accelerating investments in this sector would be a good action towards expanding the clean energy base in the country. Also, the “decade of gas”, as announced by the Federal Government of Nigeria in 2020, promises to ramp up local consumption of natural gas, helping those in rural communities and urban dwellers to adopt the use of natural gas for cooking purposes, away from traditional biomass. The use of gas is also allotted a prominent role in the country’s Energy Transition Plan of 2022. With an average low emission level compared to fuel oil and coal, natural gas emits 12.3%eq CO2 to produce one kWh of energy. The Energy transition, therefore, to Nigeria is not just an opportunity to change the energy production sources from fossil to clean sources that are less environmentally damaging but also a chance to realise potential economic gains that increased energy access, using modular renewable energy technologies, can bring. Currently, 60% of Nigeria’s electricity is produced through thermal generation, majorly gas. However, the majority of Nigerian people use biomass for their cooking. Energy transition, for Nigerians, is still a mix of moving from woodfuel to cleaner energy sources like solar PV, biofuels and other clean energy sources. With the tested capacity of clean energy technologies, especially solar PV, there is an advantage of increasing energy access, especially to the last-mile communities in Nigeria. Since Nigeria’s economy is heavily dependent on oil and gas, both for local economic activities and economic spending, as a result of the revenue generated from them, the country is regarded to have an oil-dependent economy. However, Nigeria must now look at diversifying its energy business to avoid stranded assets in a world where countries are deliberately cutting off their consumption of fossil fuels for clean energy. The country hopes to attain Net Zero by 2060. Regarding natural gas consumption, Nigeria ranked 38th in the world as of 2017. This is about 0.5% of the world’s total consumption of 132,290,211 MMcf. In achieving energy transition in Nigeria, the government of Nigeria has identified natural gas as a major enabler helping the country edge closer to its decarbonisation goals. It is believed that gas will emerge as a significant player in establishing baseload energy capacity, stabilising the national grid, and integrating variable renewable energies. It will also help reduce the clean cooking gap by using the country’s Liquefied Petroleum Gas (LPG).
In conclusion, Nigeria’s heavy dependence on oil and gas resources has hindered its industrialisation efforts, leading to high levels of unemployment and widespread poverty. The country’s manufacturing sector faces challenges such as inadequate access to finance, weak policy frameworks, and poor infrastructure. Energy access is also a major concern, with a significant portion of the population lacking access to electricity.
Nigeria has launched the Energy Transition Plan (ETP) to address these issues and foster economic growth. The ETP aims to diversify the economy, create jobs, and improve energy provision, management, and delivery. Job creation is crucial for expanding economic activities and reducing unemployment rates. However, achieving these goals requires strategic resource management and effective policy directives.
Nigeria must transition towards cleaner energy sources and improve energy access to drive industrialisation. Investments in solar off-grid solutions and the promotion of natural gas usage are key steps towards expanding the clean energy base in the country. The “decade of gas” initiative and the promotion of natural gas consumption can help address energy access challenges and reduce reliance on biomass for cooking purposes.
Moreover, the energy transition not only presents an opportunity to shift to environmentally friendly energy production but also offers economic benefits through increased energy access and the adoption of modular renewable energy technologies. Nigeria’s heavy reliance on oil and gas necessitates a diversification of its energy business to avoid stranded assets and align with global efforts to reduce fossil fuel consumption.
By embracing the energy transition, Nigeria can improve its industrialisation prospects, create employment opportunities, and work towards achieving its climate and decarbonisation goals. It is crucial for the government, private sector, and other stakeholders to collaborate, invest in clean energy technologies, and implement supportive policies to drive sustainable economic growth and improve the livelihoods of its citizens.