Nigeria Could Emerge As a Key Strategic Partner in Europe’s Energy Transition Efforts

Russia’s invasion of Ukraine has caused a massive energy crisis in Europe, results of which have been skyrocketing inflation and fears of recession. While the European Union has been looking for alternative energy sources to Russia, a short term measure has been a pivot to coal. But that solution will not be sustainable in the long term as the bloc aims to phase out fossil fuels. While this longer term goal will develop Europe’s existing domestic industries, such as wind in Denmark and solar in Spain, the bloc still needs to find new partners in order to secure energy supplies.

Europe’s clean energy push also means it needs a variety of resource inputs, most importantly rare earth minerals, which are essential for many industries from advanced ceramics, to oil refining, to computing. They are fundamentally indispensable in a green energy economy. While deposits exist in many other countries, most rare earths are currently being extracted in China.

Nigeria, which is commonly known as an Oil and natural gas-rich country, is also home to many rare earth minerals necessary for sustainable development. Nigeria’s substantial resource wealth and geographic proximity to Europe makes it a very attractive partner for meeting the continent’s energy needs.

Europe’s search for energy independence from Russia has potential to make it a partner in Nigeria’s economic development. With a massive capital investment base and substantial expertise in the energy market through juggernauts such as TotalEnergies and Shell, Europe has the necessary elements to build out the as-yet underdeveloped Nigerian energy sector. This would mean substantial economic benefits for Nigeria, building on its status as a major sub-Saharan trade hub.

Thanks to these opportunities, one of Nigerian government’s primary goals is to develop economic relations with Europe. These ties are strengthening especially quickly with France.

France’s operations in Nigeria are expansive and have constantly grown since the election of President Macron in 2017. He sees the bilateral relationship as a key opportunity for mutual benefit. In addition to the military support provided in the context of antiterrorism operations in the north, France also accounted for nearly €10 billion of direct investments in Nigeria in 2019, as well as €5 billion in annual trade. This makes Nigeria France’s largest Sub-Saharan trading partner.

While Nigeria is a key producer of energy, its agricultural production is insufficient to feed its large population and it is heavily import dependent for food. This is where France is uniquely equipped to help Nigeria, being one of Europe’s largest agricultural producers. France’s agricultural sector produces volumes of expertise, especially regarding strategies for adapting to and addressing issues resulting from climate change, that could be used to industrialize Nigeria’s largely rural and underdeveloped agricultural system.

Between a buildout of the agricultural sector through the use of French and European expertise and cooperation in energy with companies such as Total, Nigeria has the potential to become a hub of stability and economic growth in West Africa.

As a former British colony entirely separate from the traditional French sphere of influence, Nigeria is positioned relatively well to shore up relations with France. On the other hand, Nigeria’s economic and financial sophistication makes it a more likely candidate for sustained stability than France’s other partners in the region. For example, French operations in Niger, one of France’s more stalwart West African relationships, have been hindered by the country’s lack of infrastructure and economic development.

Nigeria’s political instability is one of the challenges to a successful partnership. Another is the wealth imbalance between regions. While the coast is highly developed, the northern half of the country is very underdeveloped, and would require massive amounts of subsidies for infrastructure construction and security, without which the requisite extraction projects could not operate.

Nigeria has a fairly long history of looking to trade in order to ramp up its economic growth. With European corporations taking an active interest in Nigeria’s development, alongside Chinese infrastructure investment and the support of the government, the multiple free trade zones in development near Lagos set to benefit from an unprecedented level of institutional and financial support. This, paired with a renewed interest in building out Nigeria’s energy sector, positions Nigeria well for substantial growth over the course of the next decade.

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