We see several differences when comparing Nigeria and South Africa, the two largest economies in Africa. In terms of population, South Africa has 60 million people and Nigeria has 180 million people, but when we look at their energy grid and energy availability, South Africa produces about 40,000 megawatts compared to Nigeria’s 6,000. Only 60% of Nigeria’s 182 million population have access to electricity, and most of this power is generated by an aging and inefficient grid. The inefficiency results in substantial losses due to poor controls and monitoring technology, and outdated infrastructure. Investment in better energy technology will “help tackle the scourge of unemployment, poverty and inequality, creating an inclusive and prosperous Nigeria” (Siemens Nigeria CEO Onyeche Tifase). These lofty promises may not be true, but the average Nigerian only uses 3 percent of the energy that the average South African consumes, so if they manage to ramp up their energy infrastructure to generate 20,000 megawatts, they will meet the projected demand for commercial and residential use for the near future.
One new development to help Nigeria’s energy efficiency and capacity is Azura, the country’s first privately-financed independent power project (IPP). It uses the country’s reserves of natural gas, a cleaner alternative to coal, to address critical electricity needs. The International Finance Corporation (IFC) is working with the World Bank, the Multilateral Investment Guarantee Agency (MIGA), and dozens of other lenders to support the project, starting with a new 450-megawatt plant near Benin City. The two-phase project will generate about 3,000 megawatts of new power for the country, approximately 20% of Nigeria’s projected installed capacity by 2020.
Azura and other projects like it will become the norm in Nigeria and other highly populated, developing nations with sophisticated economies. We have seen a recent shift away from having just a few large, centralized power production facilities that generate power for the whole country. Instead, countries are turning to smaller sources generating electricity closer to those that need it to ensure a more reliable supply and better access. Access to electricity is key to sustained economic growth in countries like Nigeria, and cleaner, more efficient energy will power Nigeria’s future.
Chris Shelby and Cole Wheeler