• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Sectors Energy

Energy subsidies are contributing to energy insecurity in Africa – AfDB

In its Macroeconomic Performance and Outlook for 2023, the AfDB has said that energy subsidies contribute to energy insecurity in Africa due to their distortionary nature

Omono Okonkwo by Omono Okonkwo
January 20, 2023
in Energy, Sectors
AFDB, Africa’s economic growth

Dr Akinwumi Adesina, the president of the African Development Bank (AfDB) Group

Share on FacebookShare on TwitterShare on Linkedin

The African Development Bank (AfDB) said that energy subsidies are one of the reasons why Africa experiences energy insecurity.

The AfDB stated this in its 2023 Africa’s Macroeconomic and Performance Outlook report which was released on Thursday, January 19.

In the report, the AfDB explained that energy subsidies are controversial due to their distortionary nature. This is despite the fact that energy subsidies are the most available and essential fiscal and political tools that governments on the continent use to protect households against potential welfare losses arising from food and energy prices and other exogenous shocks.

RelatedStories

water

USAID commits $3 million to African Water Facility

June 19, 2023
President Bola Tinubu, Military

What Tinubu must do to reduce Nigeria’s fiscal imbalance

March 5, 2023
  • “Energy consumption in Africa is lower than in other comparable regions due in part to its low level of energy security, reflecting inadequate production to meet the rising demand. In 2019, the per capita consumption of electricity in Africa was 550 kilowatts per hour (kWh) compared with 2,300 kWh in Asia. The high disparity in energy security and consumption across low-income countries— mainly non-oil exporting on one hand, and high-income countries on the other—could also be attributed to the level of energy subsidies,” the bank said.

The Nigerian context: In 2022, the Executive Secretary of the Nigerian Extractives Industries Transparency Initiative (NEITI), Ogbonnaya Orji said that between 2005 and 2020, Nigeria reportedly spent N13.7 trillion on fuel subsidy payments. The Nigerian government and other stakeholders have called for the removal of the subsidy to ensure the maximization of the petroleum sector and the direction of funds to other critical sectors of the economy. The Buhari administration has said it will remove fuel subsidies by the second quarter of 2023.

What needs to happen: The World Bank has repeatedly called for the removal of fuel subsidies in Nigeria, saying that wealthy Nigerians benefit more from the initiative than the low-income earners. In November 2022, the National Bureau of Statistics (NBS) said that 133 million Nigerians are living in multidimensional poverty. In a 2022 review report, the World Bank stated:

  • “The potential rise in transport and electricity costs therefore further exposes poor and vulnerable Nigerians to any increase in petrol prices. Overall, assuming a 20% pass-through from petrol prices to inflation, removing the petrol subsidy, could cause the headline inflation rate to rise by an additional 3.0 percentage points over the following two years. This poses a significant threat to purchasing power. With no compensating measures for the poor and vulnerable, removing petrol subsidies thus risks pushing many Nigerians into poverty.”

The World Bank proposes a redistribution mechanism that uses a portion of the financial savings to protect lower-income households could minimize the negative impact on consumer welfare while still yielding a large net gain in government revenues.

  • But how can this happen? The Bank says compensatory cash transfers could work.
  • A Nigerian energy industry stakeholder spoke anonymously with Nairametrics and pointed out that it was easy to deregulate diesel because the direct users are rich Nigerians who own fleets of haulage trucks, lorries and large generator sets.
  • “Of course, the cost was transferred to the economy as trucks and delivery vans transporting food items and other stuff, added to food costs in the market. However, PMS (fuel) is much more sensitive as direct users are the poor who are more widespread. It will be interesting to see how the social consequences of the subsidy removal are managed,” he stated

 


Follow us for Breaking News and Market Intelligence.
Tags: African Development Bank (AfDB)
Omono Okonkwo

Omono Okonkwo

Omono Okonkwo is an accomplished Mass Communicator, with a remarkable track record spanning over a decade across various dimensions of the field. Her proficiency encompasses Print, Digital, and Broadcast Journalism, Copywriting, Research and Writing, Podcasting, Public Speaking, as well as a comprehensive grasp of Energy Markets. Her engagement in energy market coverage commenced officially in 2016, as she assumed the role of a country correspondent (Nigeria) with Natural Gas World, a subsidiary of Minoils Media based in Vancouver, Canada. Since then, Omono Okonkwo has consistently demonstrated excellence and left an indelible mark on the ever-evolving energy sector.

Related Posts

water
Budget

USAID commits $3 million to African Water Facility

June 19, 2023
President Bola Tinubu, Military
Budget

What Tinubu must do to reduce Nigeria’s fiscal imbalance

March 5, 2023
Ugodre Obi-Chukwu, Founder and Chief Analyst at Nairametrics
Economy

Thirteen industries to watch out for in Nigeria in 2023 – Ugodre Obi-Chukwu

February 6, 2023
AfDB approved $544 million in loan financing for Nigeria in 2021
Agriculture

$538 million Agriculture Processing Zones set to be launched in Cross River, Imo, Kaduna, others

October 26, 2022
African Development Bank and FCMB Sign $50 million Line of Credit Agreement to bolster access to finance for SMEs and Women-empowered Businesses
Corporate Updates

African Development Bank and FCMB Sign $50 million Line of Credit Agreement to bolster access to finance for SMEs and Women-empowered Businesses

October 20, 2022
AfDB's Fashionomics Africa opens for applications
Career tips

AfDB’s Fashionomics Africa opens for applications, with $20,000 for each winner

October 18, 2022
Next Post
Chinese, Indian and Nigerian students drove UK’s student population in 2021/22 academic year

How Chinese, Indian and Nigerian students drove UK’s student population in 2021/22 academic year

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Emple
nlng
first bank
Zenth Bank








DUNS

Recent News

  • WAES: West Africa exported goods valued at over $166 billion in 2024 – Tuggar 
  • Heineken withdraws staff, suspends operations in Eastern DRC cities amid worsening rebel conflict 
  • Tariff relief triggers $2 billion investment in Nigeria’s digital infrastructure – Tayo Aduloju

Follow us on social media:

Recent News

Yusuf Tuggar, Nigerian military

WAES: West Africa exported goods valued at over $166 billion in 2024 – Tuggar 

June 21, 2025
Heineken launches mandatory takeover bid of Champions Breweries, offers to buyout remaining 15.3% equity stake

Heineken withdraws staff, suspends operations in Eastern DRC cities amid worsening rebel conflict 

June 21, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics