Publications

A recently conducted study by the World Bank shows that the cost of mortality and morbidity due to air pollution from exposure to fine particulate matter (PM₂.₅) stood at $2.1 billion or N631 billion (0.5% of Nigeria’s GDP).² Lagos state has an exceedingly high concentration of PM₂.₅, at annual mean concentration  of levels of 68μg/m³ which exceed the World Health Organization (WHO)’s guideline for the annual mean PM₂.₅ level of 10μg/m³. Consequently, 11,200 people die from air pollution with 60 percent of the deaths under the age of 5. Sources of air pollution in the state include, road transport, heavy energy dependence on inefficient diesel and gasoline generators due to unreliable power, poor waste management, polluting fuel and stoves for household cooking etc. Air pollution is injurious to human health especially those that are already vulnerable – children, elderly, or people with existing health problems. In addition, it increases the rate of cardiovascular and respiratory ailments as well as mortality rates in the economy. Intrinsically, the life expectancy is reduced by air pollution. Therefore, to curtail these effects, low emission vehicles should be adopted and old generators should be discarded. Thus, they should be replaced with a better source of power such as renewable source of energy.

This brief examines the challenges towards green energy transition in Africa and the prospect of regional integration in fast-tracking this process. Regional integration as being proposed among African countries can sidestep some of the constraints that countries, individually, face in the areas of finance, human capital and technology needed for transition. The study also reflects on the proposed Africa-Europe partnership as an important tool to strengthen this effort with support for regional integration and access to finance and innovations needed for green energy adoption.

Recommendations:

• National government: Domestic actors have a role to play in aligning their policy and regulatory frameworks with regional requirements. Specific interventions include: support with domestic resources (land, finance, inputs) to encourage regional infrastructure linkages, and appropriate legal measures to encourage local and foreign entries into the green sector.
• Regional Institutions (African Continental Free Trade Area Secretariat and AU): Gains and burdens from regional approach to energy transition are not expected to be shared equitably. A framework for compensating possible losers will be crucial to ensure broader support for renewable energy transition.
• EU: A shift in development assistance to encourage a regional approach in transiting to green energy in Africa is required when regional solutions prove more efficient and cost-effective.

This policy briefing has been published as part of a series under the project Partnership for a Green Transition and Energy Access: Strategic priorities for Africa and Europe. The project is a partnership between SAIIA and the Konrad Adenauer Stiftung’s Regional Programme on Energy Security and Climate Change in Sub-Saharan Africa.

As part of its response to combat COVID-19, the Nigerian government temporarily closed schools. To reopen schools, effective guidelines must be developed and implemented to protect students, staff, parents, and communities against the spread of the virus. In addition, it is imperative to mitigate the effect of COVID-19 closures on learning, and reopening presents a critical opportunity to recover these losses and build a strong foundation for the future of Nigeria’s education system. This policy brief by IDinsight and CSEA, contains: i) guidelines for reopening schools safely, and ii) recommendations for reopening schools to recover learning losses in Nigeria.

Total capital imported into Nigeria decreased by 77.88 percent from $5.85 billion to $1.29 billion between first quarter and second quarter of 2020.¹ A disaggregation of the data shows that Foreign Direct Investments (FDI) declined by 30.65 percent to $148.59 million, portfolio investment plummeted by 91.06 percent to $385.32m while other investments also decreased by 42.8 percent to $761.03m in the review period. The United Kingdom, South Africa and United Arab Emirate are the top sources of capital investment in Nigeria. By sectors, shares (35.9 percent), finance (23.9 percent) and banking (10.8 percent) accounted for the most capital inflow into the country. The decline was as a result of the uncertainty associated with the COVID-19 pandemic as investors seek safer assets. Considering that the decline in capital is occurring in a context of low oil prices, foreign exchange inflows will be significantly impaired with implications on the exchange rate. While the government has minimal influence over the trends in capital inflow, alternative sources of generating foreign exchange earnings should be developed in order to induce stability into the foreign exchange market.

The GDP growth rate in 2020Q2 was estimated to be -6.10%, the first negative growth since the recession in 2016/2017. The GDP declined by 8.22 percentage points from 1.87% to -6.10% between 2020Q1 and 2020Q2¹. The fall was largely driven by a slowdown in international and domestic activities occasioned by lockdown measures to prevent the spread of the coronavirus. Further disaggregation of the data shows that the non-oil sector GDP decreased by -6.05% (first negative decrease since 2017Q3). Also, the oil sector experienced a higher negative growth, declining by -6.63% within the same period. Contractions in growth were also recorded in the industry (-12.05%) and service sectors (-6.78%) while the growth rate in the agriculture sector remained positive (1.58%). Given that the strict lockdown measures were lifted at the end of the second quarter, and Nigeria’s major trading partners – Europe, the United States, and China – have reopened their economies, the GDP growth rate in 2020Q3 is expected to be more favourable than the preceding quarter. However, the coverage and targeting of the existing interventions for the vulnerable households and affected businesses should be improved in order to enhance their reach.

Nigeria’s unemployment rate increased from 23.1 percent in 2018Q3 to 27.1 percent in 2020Q2¹. Similarly, the underemployment rate increased from 20.1 percent to 28.6 percent in the same period. The rise in unemployment was driven by an increase in the labour force size alongside a poor performance in generating adequate jobs. Disparities exist among segments of the population as rural dwellers (28%) are more unemployed than those in urban areas (25.4%), young people (35%) compared to other age groups, and females (31.6%) more than males (22.9%). Even among the educated, those with a bachelor’s degree have the highest unemployment rate at 41% relative to those with a senior secondary school certificate (28.5%) or a post graduate degree (23%). Without adequate efforts to develop labour absorbing sectors, the unemployment rate is expected to continue to rise considering that Nigeria has a young population structure and as such, new entrants to the labour market are expected. Private and public investments in sectors capable of absorbing large numbers of people such as agro-processing (textiles, leather and leather products, and food processing) and horticulture should be accelerated.

 In the week ended 7^th August, the Nigerian Stock Exchange (NSE) reported a week on week growth as 1.065 billion shares were traded compared to the 0.421 billion shares traded in the previous week¹. Altogether, 20,482 deals were made, a majority of which were within the financial sector as the sector accounted for 63.59 percent of trades. The top 3 equities were FBN holdings, UACN plc and Access Bank. Both the All Share Index and market capitalization appreciated by 1.41 percent to close at 25,041.89 and N13.063 trillion respectively, indicating that market activity may continue to remain bullish as the economy reopens. However, various factors including a weak macroeconomic landscape, downward trends in Foreign Portfolio Investment (FPI), and the volatility of the naira will negatively impact the performance of the capital market in 2020. Nevertheless, given the size of the stimulus package the federal government plans to implement, the market is expected to remain relatively stable during the fiscal year.

According to the Central Bank of Nigeria’s (CBN) Business Expectation Survey carried out in July, the business outlook rose by 16.4 index points month on month. However, the overall Confidence Index for July 2020 remained pessimistic/negative at -7.9 index points considering that the Index in the preceding month was -24.3 points². The sectors surveyed were agriculture, manufacturing, and the construction sectors with a more disaggregated data showing that businesses that are neither import nor export-oriented were the most pessimist in the review period. In a more forward-looking survey, respondents had a more optimistic outlook for the month of August (33.7 index points). Understandably, as society transitions back to normal, business activities are expected to improve. While the business community will no doubt be adversely affected by the pandemic, the several interventions put in place by the government should be leveraged on to support businesses.