Write Conclusion Paper

Team Country Assessment Paper - Nigeria

Team C-Group 3

Members:

Baseemah Person

Tina Martinez

Debo Ogunseinde

James Langdon

MGT 590-01W, Dr. Guclu Atinc

Summer II 2018

Introduction/Background

Nigeria is one of Africa’s most populated nations with a population of about 190 million people. An interesting fact about the country is that it is mostly comprised of youthful people with more than 60 percent of the population under the age of 25 (Edomah, Foulds & Jones, 2016). The Nigerian economy is also one of the strongest in Africa following South Africa and having a larger economy than Egypt and Kenya. However, the country is still largely underdeveloped in terms of energy and electricity penetration. With more than 40 percent of the country still not connected to the local grid, the country requires more investment in energy sources, with a special emphasis on renewable energy.

The introduction of solar panels in the country would help suffice the energy deficit in the country. Lagos is one of the cities in the world that is widely known for frequent blackouts that paralyze most economic activities. Most of the energy within the country is dependent on fossil fuels with one of the biggest oil fields in the continent located in the country. Therefore, most of the electricity is not obtained from renewable resources yet the country holds much potential for investment in the production of energy. With increased awareness on the effect of fossil fuels and carbon emissions to the atmosphere, policymakers in the country are encouraging the use of non-fossil based sources of energy. For that reason, this plan of selling solar panels to the country would be very successful in the country.

Regardless, a key disadvantage about the energy market in the country and throughout most African countries is the involvement of the government in regulating and the supply of energy. Whilst in most western nations the energy industry is democratized, the regulation of energy markets by the government makes it impossible for independent suppliers to compete in the market, which is the key reason that the energy industry is still largely undeveloped. Nonetheless, the sale of solar energy in the country is mostly by private parties, and in consequence, entry of a large supplier would be a good thing for the country. In consequence, much remains to be completed with the creation of a free energy market in the country, but this plan to sell solar panels is highly viable.

Economic – James

Nigerian economy in the recent years has had substantial growth considering the past economic findings of the country as a whole. A critical indicator of economic development for any country is the growth rate of specific countries Gross Domestic Product (GDP). The Nigerian economy as of recently has been recording positive, encouraging, and consistent growth. The Nigerian economy grew from 0.4% in 1999 to approximately 5.4% in 2000. This number then rose to 8.4% in 2001, and later to 21.3% in 2002, as it hit its peak. These numbers then declined to 10.5% in 2004, about 7.9% in 2010 and 6.9% in 2013. This continued growth performance hasn’t been witnessed in too many countries apart from some few Asian economies. Furthermore, this substantial growth has appeared to not to reflect the level of overall poverty in the country of Nigeria (Dauda, 2017). Nigeria is a country that has a varying amount of clean and renewable energy sources that includes solar energy, wind energy, hydropower, and biomass. There has been a substantial increase in the inquiries regarding clean energy; this is due to the projected depletion of petroleum reserves and production. With the need for more sustainable clean energy sources Nigeria is still slow to develop clean energy technologies (Maji, 2015).

Nigeria has the potential to become Africa's largest economy and a major player in the global economy over the next few decades if certain alignments happen. In the previous economic environment of Nigeria there were poor economic policies, corruption, and overall high costs of doing business. These issues combined over time have kept Nigeria from tapping into the potential of the country. These things considered, the annual per capita GDP is 20 percent lower than it was in 1975, this is even considering Nigeria earning more than $300 billion from the oil & gas industry beginning in 1970. Nigeria returned to democracy in 1999, therefore the government started proceeding with policies geared towards economic growth and sustainable development. Nigeria's lack-luster Gross Domestic Product (GDP) in the past has more than doubled from $45 billion in 2001 to $105 billion in 2005. Economically speaking, if the Nigerian government sustains institutional economic reforms with on-going policy considerations this could help improve productivity and efficiency and Nigeria would be among the fastest growing and largest emerging economies in the world over the next few decades. The country of Nigeria needs to overcome the historical decades of poor governance, infrastructure mishaps, and poor overall economic conditions (Oshikoya, 2008).

As stated above, Nigeria has been increasingly consistent with profitability occurring from natural resources within the country. The overall economic standing of Nigeria points to a poverty stricken environment even with the increase in GDP. This country itself lacks the resources to manufacture solar energy technology in country. Ultimately, the promotion and selling of solar energy technologies will contribute to poverty reduction through local employment opportunities, skills development, investment opportunities and technology transfer. Therefore, a reduction in the poverty level can increase possible investment in solar application technologies and the need for widespread solar panel capable communities within Nigeria (Tombofa & Obudah, 2014).

Legal – Tina

Nigeria is in dire need of improving its current power situation, however, there are a few pre-existing legal and institutional barriers that make this difficult to implement. The Nigerian government has been asked to approve the use of renewable energy sources (RES), which include many options for powering homes, such as wind energy, solar panels, biogas, biofuels, and hydroelectric power. Implementing RES with environmentally sound technologies (ESTs) will require a good amount of legal and institutional framework. One of the three main legal and institutional barriers is the pre-existing barriers to technology transfer which is due to the narrow scope of Nigerian law on technology transfer known as the National Office for Technology Acquisition and Promotion Act of 1979 (NOTAPA) and was charged with ensuring the acquisition of foreign technologies (Olawuyi, 2013). The issue is that the Act’s technology classifications do not include modern ESTs, nor renewable energy technologies, which makes it difficult for investors to place technologies into any existing category of permitted technologies (Olawuyi, 2013). The second barrier is the monopoly that exists by the National Electric Power Authority (NEPA), which requires all transmissions and distributions of electricity through Nigeria to be handled by NEPA. The Nigerian Electricity Regulatory Commission (NERC) is responsible for approving electricity-generating companies and providing economic and technical regulations for the electricity supply industry (Olawuyi, 2013). This means investors must obtain licenses and other permits in order to do business, which takes additional time. The third barrier is the lack of intergovernmental linkages, which means getting the proper federal and state approvals and coordination from the government is not a simple process and takes additional time.

Nigeria has some existing laws that can possibly be amended to assist with the growth of the renewable energy industry. One law is the Land Use Act Cap 202, which states all land in urban areas shall be under the control and management of the Governor of each State (Ajayi, 2013). The other law is the Environmental Impact Assessment (EIA), which makes it mandatory for public, private, incorporated and/or incorporated companies who carry out an EIA to know the impact it will have on the environment (Ajayi, 2013). The government should provide incentives; offer tax relief, and capital allowance to promote the development of renewable energy. The low availability of reliable electricity in the urban communities of Nigeria has not aided business development (Ajayi, 2013). In order for Nigeria to make improvements on the power situation, they must first address any pre-existing legal and institutional deficiencies that make it difficult to supply power generation through renewable energy sources (Olawuyi, 2013).

Social Infrastructure - Debo

Basically, social infrastructure refers to essential social amenities that are critical to the societal growth and human existence in general. They include better housing, roads, railways, electricity, clean water, job creation and many others. As usual, social infrastructure is best provided by the government through revenue collected from the people. In this regard, people from every country demand from their political leader’s basic social amenities to guarantee their wellbeing and satisfaction as well as enhance the country’s security and socio-economic progress. Countries in the developing world are the worst hit when it comes to the provision of adequate social infrastructure to their citizens. For instance, despite having Africa’s largest natural gas and oil reserves, and significant deposits of unexploited minerals among other natural resources, Nigeria continues to contend with poor social infrastructure and other infrastructure over half a century after independence (Globe Business Media Group, 2016). Socially structured into rural and urban ecosystems, there exists a fundamental challenge in regard to the available basic social infrastructure such as water, healthcare, housing, waste management, ICT, and hospitality. In addition, other infrastructural sectors such as roads, airports, railway, and harbor also face comparable problems. Road, Nigeria’s most used means of transport, for example, is less than 20 percent paved (GBMG, 2016).

Regarding power, Nigeria does not produce sufficient electricity for its huge population and industries. This is despite the abundant availability of energy resources like oil, gas, coal, hydro and other renewable sources of energy (GBMG, 2016). Generating a mere 4,000 megawatts of electricity to an estimated population of 170 million, the inability to satisfy the national power needs has affected Nigeria negatively (The Tide, 2014). For example, inadequate power supply has led to low capacity utilization in manufacturing industries thus forcing many industries to shrink or close down and relocate to other countries with dependable electricity supply. Moreover, small and medium sized manufacturing industries, which are the backbone of the economy, are also driven out of business or discouraged to operate altogether. Indeed, this exacerbates unemployment while slowing down economic growth (The Tide, 2014). As a matter of fact, electricity in Nigeria will remain unsustainable due to under exploitation of renewable sources occasioned by low investments, limited technical and institutional capabilities as well as the emerging regulatory frameworks (GBMG, 2016). With the worsening of electricity supply, most Nigerians are resorting to alternative ways of powering their households and businesses. Generators and solar panels are the most common substitutes for electricity in many households. However, since generators constitute noise and environmental pollution due to diesel or fuel fumes, solar remains the only cheaper alternative energy source until the electricity challenge is sustainably resolved.

Demographic Analysis of Nigeria Baseemah

Nigeria holds much promise for the future regarding solar energy development and the establishment as a regional solar hub. Nigeria is the seven most highly populated countries in the world after China, India, Brazil, USA, Indonesia, and Pakistan, not in that specific order (Ozoegwu, 2018). As previously cited, a majority of the Nigerian population is youthful, an issue that has resulted in increased unemployment. For that reason, investing in energy in the country can have some positive aspects by revitalizing the industry and would likewise result in increased job creation that offsets this bad trend. As such, an urgent need for solar power investment is necessary, both for the energy deficit in the country and for improved performance of various industries in the country.

Literacy levels within Nigeria are as high as 61.3% with much promise of increased literacy in the near future. With more than 83.3% of the population having enrolled for primary school education, the creation of a more literate and capable workforce is underway indicating a high likelihood of increasing the literacy levels to more impressive numbers in the near future. However, despite the high enrollment rates in primary school, only 44.0% of the population enrolls for high school, showing a great disconnect between higher education and primary education in the country (Edomah, Foulds & Jones, 2016 b). The infant mortality rates are as low as 8%, which is rather impressive bearing in mind that diseases such as Malaria and HIV is prevalent in the country. The HIV infection rates throughout the country are significantly lower accounting for 3.7% of the population, which is rather impressive bearing in mind that only Ethiopia reports a much lower statistic.

Concerning the economy, the country’s GDP is relatively higher than that of most African countries with South Africa being the only African country that has experienced increased Growth in Real GDP per Employee more than Nigeria from 2001 to 2011. Similarly, between this timeframe (2001 to 2011), the number of exports in the country have increased tremendously with 4.30% growth in the exports. Most of the goods exported in the country are not processed with an increase in the number of semi-processed good increasing since 2010. Nonetheless, the country still lags behind in the processing of most of its product, a characteristic that can be attributed to the type of the major economic activities and the country’s inability to process good due to the high-energy needs that it still falls short of the required capacity.

However, the rate of foreign investment in the country is still marginally low, falling shorter of South African and Kenyan foreign investment figures. Nonetheless, this indicates a limited outflow of domestic product in the country. Only14.64percentage of the GDP goes to foreign nations, which is a good thing for the country, but worse for foreign investment, indicating a kind of reluctance from the government from welcoming foreign investments, which would help offset the unemployment crisis in the country (Aliyu, Ramli, & Saleh, 2013). Similarly, levels of corruption in the country have reduced significantly in recent years, which is a good thing since the country was popular for being one of the most corrupt nations. Regardless, the nation still lags behind greatly when compared to countries such as Rwanda, which manage to beat corruption completely.

Technology – James and Tina

The Nigerian National Policy on Science and Technology was created with specific objectives to address integrating and developing scientific and technological programs to make improvements. Under the Nigerian National Policy on S&T, the development of energy system stated that the nation’s resources shall be developed and protected in the overall interest of the nation at all times (Sanni, Ilori, Opaleye, & Oyewale, 2001). The policy objectives include; to guarantee the availability and adequacy of the energy supply for national development at all times; to ensure stability and self-reliance in the exploitation and application of energy resources; to ensure a balanced exploitation of all energy resources and with due regard to environmental protection; and to ensure an efficient and cost-effective energy utilization program (Sanni, Ilori, Opayleye, & Oyewale, 2001). According to Akinbami (2001), no other renewable energy technologies besides solar, thermal, and biogas technologies have been developed in Nigeria. This means that technologies have to be primarily imported which raises the investment costs of technologies. Due to the primary importation of technologies it can be assumed that Nigeria has a lack of technological development. Technology advancement creates market opportunity for all involved; this is to include Nigerians themselves and investors abroad. The advancement of Nigerian technology has been slow even after the country gained political independence from Britain in the 1960’s. Everything considered, Nigeria could be characterized as being technological backwards in terms of finding new ways or means of accomplishing a task (Drucker, 2007). Uwaifo & Uddin (2009) states that a country is said to be technologically backward when it is unable to use and exploit their natural resources without the help of countries outside of Nigeria providing them with the technology and expertise to undertake the exploitation of Nigerian natural resources. Nigerian technologies have been hindered due to past industrial policies after the above-mentioned independence. Furthermore, Nigerian technology struggles are due to the somewhat limited technology equipment in the educational systems; the educational systems teach the next generation of Nigerians the skills needed to support the technological advancement of the country. Without proper learning equipment the Nigerian people are set up to support the failing advancement of technology in Nigeria, this is somewhat revolving circle of limited advancing technology.

Infrastructure – Debo and Baseemah

The energy infrastructure in a country determines social cohesion, economic development, and environmental sustainability. The country boasts of possessing abundant energy resources including crude oil, coal, lignite, and natural gas. In terms of its oil production, the country is one of the highest producers in Africa with more than 2.53 million barrels produced in 2011 (Adaramola, Paul, & Oyewola, 2014). The exports of oil and oil products contributed to around 95% of all exports in the country and account for more than 75% of all federal government sources of revenue. The country still holds more than 37 billion barrels of untapped oil, and thus heavily invests in the mining of this oil, losing its focus on other sources of renewable energy, which would be much better for the nation.

Before 2005, one company, NESCO supplied all of Nigeria electricity and distributed it throughout the country. However, the reform act of 2005 saw NESCO split into 18 companies to favor competition and improved service delivery. The companies included one transmission company, eleven distribution companies and six energy generation companies. Despite this improvement in the structure, the government still regulates the industry too much, which inhibits innovation and the development of better solutions. Of the various sources of energy generation alternatives, Nigeria has three hydro-powered plants and nine thermal or gas-based electricity generation plants. Nonetheless, Lagos still experiences massive blackouts because the industry still underperforms with more than 60 percent of the nation still not connected to the federal grid (Aliyu, Dada, & Adam, 2014).

The transition from fossil fuels to more renewable energy sources is still an area whereby the country lags behind for a majority of the part. With the overdependence on oil and petroleum, the country still has much ground to cover with renewable sources. Solar panels, with their effect on the environment being almost inexistent, would be the perfect source of energy for the country. Nigeria is located just next to the equator making it the most favorable environment for the growth and development of its solar capacity. Secondly, with 65% of the population living in poverty, solar panels, which are relatively cheap and privatized, hold much promise for the country. Solar power would also assist in reducing the carbon footprint left the by nation, which would do the environment much good.

Currently, energy production accounts for 40% of all production costs in the country (Aliyu, Dada, & Adam, 2014). The inability of the country to produce ample energy has seen more industries subside, crippling growth in various industries, and likewise the reduction in the productivity of the nation. With the country’s grid leaving a deficit of 2000 MW, using fossil fuels to produce ample energy for the company would see more organizations subsiding significantly. Another major problem with the current electricity grid system is that it is expensive to maintain. Nigerian government argues that it spends more than 1.4 billion Naira every week on maintenance of the power generators. This is a tremendously high cost and therefore investing further in thermal plants is not a feasible plan. The use of solar energy is a more feasible approach that would see the nation grow and improve its energy production while simultaneously reducing the costs of generation and maintenance of power generators. One of the best approaches that would work best for this country would be the leasing of solar panels to individuals who are not connected to the grid and who live in poverty. Similarly, individual corporations can be a viable market to supplement their energy needs.

Conclusion

References

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