Decarbonisation of the Transportation Sector in Nigeria for Economic Growth and Development
*Written by Racheal Ogbozor and Victor Omefe
Economic growth and development are not arbitrary outcomes but are, in part, the result of deliberate, carefully planned actions, with transportation playing a crucial role in this process. Transportation infrastructure and networks are integral components of economic development strategies, facilitating the movement of goods, services, and people, which in turn drives economic activity and fosters growth. The unequal distribution of natural and human resources necessitates globalisation and economic integration involving countries, multinational corporations, and local organisations.
Effective transportation systems can improve access to markets, reduce transportation costs, and enhance connectivity, all of which are vital for stimulating economic development and improving overall quality of life.
Transportation in Nigeria has a rich history dating back to the era, when road networks, railways and waterways were utilised for the exportation of cash crops and the importation of goods. Since then, the transport sector has evolved significantly, becoming a key player in the nation’s economy and facilitating trade, supply chain and economic progress. Interestingly, with the advent of technology making information and communication readily available, economic opportunities have been related to the mobility of people and freight. Hence, when transport systems are efficient, they provide economic and social opportunities and benefits that result in positive multiplier effects such as accessibility of markets, employment and additional investment. When transport systems are deficient in terms of capacity and reliability, they can have economic costs such as reduced opportunities and lower quality of life.
This underscores the imperative of implementing decarbonisation in the transport sector, ensuring that it does not undermine the national economy, given that the transport sector accounts for approximately 3% of the country’s Gross Domestic Product (GDP).
Decarbonisation in the Context of Global Climate Change
Decarbonisation, the process of reducing dioxide emissions, is undeniably the most significant and transformative change in contemporary climate change governance. This shift was underscored at the UN Climate Change Conference (COP21) in Paris, where 195 parties, Nigeria inclusive, unanimously committed to limiting the increase in average global temperatures to well below 2°C above pre-industrial levels, with efforts to restrict the rise to 1.5°C. This goal aligns with Sustainable Development Goal (SDG) 13, which aims to “build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.”
Decarbonisation thus not only mitigates climate change but also promotes regional and transborder infrastructure development, contributing to economic growth and human well-being through the creation of quality, sustainable, and resilient infrastructure.
Energy production is the main contributor to greenhouse gas (GHG) emissions that drive climate change, primarily due to the combustion of fossil fuels. Reports show that the transport sector emits roughly 60% of total energy-related CO2 emissions in Nigeria. As illustrated in Fig. 1, CO2 emissions show a positive with an upward trend between 2000 and 2005, followed by a two-year decline before continuing to rise until 2014. Except for a decline in 2020, CO2 emissions in the transport system have been increasing.
Fig. 1. CO2 emission in the transport sector (Nigeria)
Source: International Electrification Agency
Current State of Emissions in the Transportation Sector
GHG emissions in Nigeria’s transportation sector have increased as a result of a persistent mode shift over time from the most energy-efficient subsectors (rail and water transport) shortly after gaining independence to the least energy-efficient ones (road and air transport). The modal transport choice makes cars the highest GHG emitter and the target for decarbonisation. In 2018, the number of road vehicles consisted of commercial (57.70 %), private (40.98 %), and Government and diplomatic (1.32 %) vehicles.
This heavy reliance on fossil fuels positions Nigeria as one of the highest contributors to carbon emissions in sub-Saharan Africa. Consequently, there is an urgent need to decarbonise the road transport sector to reduce the country’s carbon footprint and align with global climate targets and build new industrial capabilities that can improve the overall economy. This transition would support sustainable economic development and improve overall quality of life by fostering innovation and resilience in Nigeria’s infrastructure.
Source : istockphoto
Lagos State serves as a representative case study of environmental pollution within this sector in Nigeria. As the hub for over 50% of Nigeria’s non-oil industries and the location of the Nigerian Stock Exchange (NSE), Lagos State plays a crucial role in the nation’s economy as its most industrialised city. However, the city faces severe environmental challenges, with emissions from the transport sector being a major contributor due to high levels of population and trade. The widespread use of communal transportation methods such as motorbikes, tricycles, cars, and heavy-duty vehicles contributes significantly to CO2 emissions.
Decarbonisation Approach in other Parts of the World
Energy use in transportation is expected to increase in both developed and developing countries as seen in Fig 2 below. Even with current national commitments under the Paris Agreement, most energy scenarios project a continued rise in transport-related energy consumption, with oil remaining the primary fuel source until 2050. To limit global temperature increase to below 20c, a significant shift away from fossil fuels in transportation is necessary.
Fig 2. Translation into national measures across G20 countries
Source: link
Electrification of Public Transportation Vehicles
The electric vehicle (EV) revolution is sweeping the world, and Nigeria is no exception. Electrification of transport is a major strategy to reduce dependence on fossil fuels, using hybrid buses for mass transit helps cut emissions associated with transportation. Many countries have put electro-mobility in the focus of sustainable transport and have created funding to support this strategy. China is anticipated to generate the highest revenue in the global Electric Vehicles market in 2024, projected at an impressive US$319.0 billion. This underscores China’s dominant position in the international EV industry. The rapid growth of China’s electric vehicle market can be attributed to substantial government subsidies and a well-developed infrastructure, which have significantly accelerated adoption rates. The United Kingdom has about 2776 electric-diesel hybrid buses, reducing emissions and fuel consumption significantly. Santiago operates almost 800 e-buses, while Bogotá aims to have 480 by the end of 2021.
Africa’s EV sector is still emerging. Recent years have seen an increase in battery electric vehicle sales on the continent, although they remain among the lowest globally. South Africa leads the African market with approximately 1,000 EVs in 2022, a small fraction of its total automobile fleet of 12 million. Meanwhile, Kenya has an estimated 350 EVs, with around 2.2 million registered vehicles in use across the country.
Rwanda is implementing incentives such as import duty and tax exemptions for EVs and their components. Ampersand secured a $9 million loan from DFC in late 2021 to expand the number of electric motorcycles across Rwanda and Kenya to several thousand. Opibus raised $7.5 million in November 2021 for its expansion efforts in Kenya while Tugende, a Ugandan tech-enabled asset finance company secured a $3.6 million funding 2021. The Shell Foundation has supported the sector by providing early catalytic grants and venture-building assistance to companies like Ampersand and Tugende.
Challenges and Opportunities in EV Development in Nigeria
Nigeria grapples with a profound infrastructure deficit that poses a formidable barrier to the widespread adoption of EVs. The country’s charging infrastructure remains nascent, with a sparse network of charging stations, particularly in regions beyond major urban centres. This infrastructure gap not only impedes the practicality of EVs for potential consumers but also undermines their market attractiveness, constraining their mainstream assimilation.
Financial considerations loom large as a significant impediment to EV uptake in Nigeria. The substantial upfront cost of EVs, coupled with limited financing mechanisms and the absence of fiscal incentives, renders EVs financially out of reach for a sizable segment of the Nigerian populace. This affordability quandary dampens consumer demand and stymies market expansion.
Technological complexities present further challenges to the EV sector in Nigeria. The intricate nature of EV technology necessitates specialised skills for maintenance and repair, skills that are often deficient in Nigeria. Additionally, compatibility issues between EVs and existing automotive frameworks and infrastructure pose integration challenges that must be overcome for the sector to flourish.
Notwithstanding these challenges, the EV sector in Nigeria harbours significant opportunities for advancement. Foremost among these is the promise of environmental sustainability. EVs offer a cleaner alternative to traditional fossil fuel vehicles, aligning with Nigeria’s environmental commitments and its aspirations for sustainable development.
Moreover, the development of the EV sector presents compelling economic diversification prospects for Nigeria. It engenders opportunities for job creation, skills enhancement, and the growth of local industries involved in EV manufacturing, battery production, and ancillary services. This economic diversification potential holds implications for Nigeria’s broader economic resilience and growth trajectory.
Additionally, the adoption of EVs can bolster Nigeria’s energy security by diminishing its reliance on imported fossil fuels. Leveraging domestic renewable energy sources for EV charging stands to enhance energy access and reduce the country’s vulnerability to global oil price fluctuations.
The EV sector also presents avenues for innovation and technology transfer. Collaborations with international partners and investments in research and development (R&D) can facilitate knowledge exchange and the acquisition of advanced EV technologies, positioning Nigeria as a regional hub for EV innovation.
In conclusion, while the challenges confronting the EV sector in Nigeria are formidable, the opportunities for advancement are equally compelling. Addressing these challenges necessitates a comprehensive and coordinated effort from policymakers, industry stakeholders, and the international community to unlock the transformative potential of EVs in Nigeria’s transportation sector.
Rachael Ogbozor is Research Associate
at Clean Technology Hub.
Victor Omefe is Research Associate at Clean Technology Hub.
