Development economist Festus Tokunbo has warned that Nigeria risks losing its biggest oil buyers, China and India, within a decade as they accelerate a shift to renewables and gas. This shift could leave a gap in the 70 percent of foreign revenue that crude still provides. Tokunbo made this statement during an interview with BusinessDay TV Business Morning Show. He emphasized that oil now accounts for just nine percent of Nigeria’s GDP but remains its dominant export earner.
China, once a major buyer of Nigerian crude, has moved largely to gas and other sources, while India already generates 26 percent of its energy from renewables. This change in global energy demand poses a significant challenge to Nigeria's economy, which heavily relies on oil exports. To cushion the blow, Tokunbo suggested that Nigeria must diversify its exports into agriculture, services, and industrial manufacturing anchored on renewable energy.
Nigeria has untapped potential in gas, solar, wind, and biomass to attract international investors and turn into an industrial hub. With 65 percent of Nigerians still in energy poverty and 90 percent of rural communities off-grid, the country can leverage its renewable energy resources to drive growth. Tokunbo stated that Nigeria could achieve industrial-nation status within three years if the government and private capital scale up power generation and distribution.
The eastern states of Nigeria are now pushing to generate and distribute their own energy, which could further boost industrialization. Tokunbo urged the Nigerian government to be active in the push towards energy transition and industrialization. He emphasized that most foreign investment into Nigeria has gone into the financial sector because of its high returns, but sustainable development requires growth in both finance and the real economy.
The transition to renewable energy should be a shift from a high-carbon to low-carbon economy that expands access for millions. According to World Bank data, 65 percent of Nigerians live in energy poverty and 90 percent of rural residents lack electricity. This insecurity has been a major brake on industrialization. Globally, only about 9 percent of energy consumption comes from renewables, according to the Intergovernmental Panel on Climate Change.
Industrial economies such as India, China, and South Africa still depend heavily on coal, a path Nigeria missed. Tokunbo suggested that Nigeria, the world’s fourth-largest producer of liquefied natural gas, should make gas a major energy source. He also emphasized the need to exploit wind and biomass and not depend on solar alone, as it is capital-intensive.
Fixing Nigeria's energy insecurity would help shift the country from import-dependent to export-oriented, support the naira, create jobs, and reduce poverty. Any energy transition must protect people, with climate action assessed socially, systematically, and technically. Tokunbo pointed to the 2023 reforms that removed fuel subsidies and unified exchange rates, emphasizing the need for safety nets to deepen poverty and erode purchasing power.
Key points
- Nigeria risks losing its biggest oil buyers, China and India, within a decade due to their shift to renewables and gas.
- The country can leverage its renewable energy resources, such as gas, solar, wind, and biomass, to drive growth and become an industrial hub.
- Nigeria's energy transition must protect people and be assessed socially, systematically, and technically to ensure sustainable development.
