The African Development Bank (AfDB) has said that energy subsidy is one of the reasons African countries, including Nigeria experience energy insecurity. The Executive Secretary of the Nigerian Extractives Industries Transparency Initiative (NEITI), Ogbonnaya Orj, in 2022, said between 2005 and 2020, Nigeria spent N13.7 trillion on fuel subsidy payments. In its 2023 Africa’s Macroeconomic and Performance Outlook report, the AfDB also stated that energy subsidies were controversial due to their distortionary nature. According to the report, 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. It said: “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.”
