“Nigeria Faces Potential $30 Billion GDP Loss Amid Fossil Fuel Divestment Concerns, Afreximbank Report Warns”


Nigeria, Africa’s largest crude oil producer, could see its Gross Domestic Product (GDP) shrink by up to $30 billion due to global shifts away from fossil fuels, according to the latest Africa Trade Report 2024 by the African Export-Import Bank (Afrexim Bank). This divestment trend poses significant challenges to Nigeria’s already strained revenue streams, heavily reliant on oil exports.

The report highlights that fossil fuels remain pivotal for major oil-exporting countries like Nigeria, Algeria, Angola, and others, contributing substantially to export earnings, fiscal revenues, job creation, and energy supply. For Nigeria specifically, the oil sector accounts for 95% of foreign exchange earnings and 80% of budgetary revenues, underscoring its critical economic role.

Benedict O. Oramah, President of Afrexim Bank, expressed concerns about the economic impact of prematurely divesting from fossil fuels without adequate economic diversification strategies in place. The report estimates potential GDP losses of $30 billion for Nigeria alone, with an aggregate of $190 billion across Africa, if such transitions are not carefully managed.

While reducing fossil fuel dependency could aid in lowering emissions, the report acknowledges Africa’s severe energy deficits, with millions lacking access to electricity and clean cooking fuels. Despite commitments under the Paris Climate Agreement to reduce emissions, African nations face limited international support for transitioning to cleaner energy sources.

Critically, African nations are projected to receive only 2% of global investments in clean energy in 2024, contrasting with $70 billion expected for fossil fuel investments on the continent. This disparity underscores the ongoing debate on balancing energy security with climate commitments in Africa’s development agenda.

Amidst these challenges, stakeholders like NJ Ayuk from the African Energy Chamber advocate for continued investments in fossil fuels, arguing for energy security prioritization over rapid transition policies.

As global pressures mount, Nigeria and other African nations confront pivotal decisions on navigating economic sustainability while addressing environmental imperatives in the evolving global energy landscape.

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