Development of the bioeconomy in Nigeria: Overcoming oil dependency
Inclusive and sustainable development is a difficult task in oil dependent countries. Oil dependency is usually accompanied by problems like volatile oil prices, rent seeking and non- or de-industrialization. Recent developments in global geopolitics and the rising interest in green growth and renewable energy, means that oil dependency is set to become even more unsustainable for national economies. The bioeconomy is often seen as an alternative for economic development that could improve income, employment, and environmental sustainability. In many African countries bioeconomic sectors are the largest contributors to economic growth.
Nigeria is Africa’s largest oil producer. Oil accounts for about 90 percent of its export earnings. Despite huge revenues from oil, Nigerians still suffer from low living standards, poor governance, infrastructure deficits, and frequent power-cuts. The Nigerian agricultural sector employed more than 36 percent of the labor force and contributed about 20 percent to the GDP in 2018. However, agriculture has not sufficiently improved the living standard of those engaged in the sector, especially that of smallholder farmers. One of the reasons is poor market access for agricultural products. Value addition and alternative markets within the bioeconomy could improve the livelihood of smallholder farmers. Against this backdrop, the Nigerian government implemented a biofuel policy in 2007. The bio-refining industry is still in its infancy in Nigeria and is supported to some degree by the government, mainly in the form of research stations and pilot projects. Bio-refineries could promote integrated and sustainable development by expanding the market potential for agricultural biomass.
About research methods
This research assesses the impact and potential social and environmental trade-offs of the bioeconomic transition in Nigeria with an emphasis on bio-refineries. In 2018, during preliminary field work, interviews were conducted with representatives of bio-refineries, the Ministry of Energy and Environment, the Energy Commission of Nigeria, and the Renewable Energy Division of the Nigerian National Petroleum Corporation. Some of the refineries were only partially operational while others had only an online presence. Although government’s bio-refining projects have yet to take off, all the interviewees saw huge market potentials and net benefits in the projects. Several challenges were mentioned: structural dependence on and support for the oil sector and its products, huge investment cost for developing the projects, and poor technical capabilities in the country.
The research project employs parametric and non-parametric matching methods to understand the implication of oil dependency on bio-based growth. Further to this, household surveys will be used to determine the local welfare impact of bio-refineries. Lastly, a spatially explicit economic simulation model will be used to estimate the environmental impact of full-scale development of bio-refineries in terms of land use changes and deforestation. The outcome of the study will help shape policy development towards a sustainable bioeconomic strategy for Nigeria.
About the author
Anyokwu Evelyn Ewere is a junior researcher at ZEF.
