A new study by a global market research firm, Euromonitor International, found that Nigeria, the largest economy in Africa, is one of the five nations on the continent most vulnerable to being impacted by energy shocks. The first global energy vulnerability index shows Nigeria positioned fourth in Africa, after Angola, Cameroon, and Ghana. In addition, the nation was ranked as 42nd place out of a total of 100 countries. The 2023 index showed how vulnerable each country was to energy shocks by using six groups of indicators to measure their vulnerability.
Energy independence, fossil fuel alternatives, prospective energy reserves, accessibility, it’s efficiency, as well as it’s economic resilience are the indicators used. A higher value indicates susceptibility to energy stresses, while a lower value indicates resistance. The purpose of the index is to provide leaders and businesses with a tool to evaluate the energy security of a country and gain a better understanding of the risks, difficulties, and possibilities present in the markets in which they now operate or hope to develop.
Oil reserves and natural gas manufacturing give the country an edge.
According to Lan Ha, head of Practice for Economies Research at Euromonitor International, Nigeria ranks relatively well in two pillars: self-sufficiency in energy (21st) along with reserves of energy (16th), owing to its vast oil reserves and natural gas manufacturing. She stated that, nevertheless, the country’s performance is poor in the area of energy accessibility, which is 98th, illustrating its low percentage of the population that has access to power (59 percent of the entire population). She said that this is the country low ranking.
Economic resilience, which placed the country 96th, shows a lack of economic ability to resist energy shocks, considering its lower income level. This is also reflected in the country overall ranking. The ranking for energy efficiency was 94th. She went on to say that the value of gross domestic products generated per tonne of oil equal to energy supply was $2,852 in 2022. This was a considerable decrease from the average of $3,727 for the Middle East and Africa region.
Other countries are also affected by its sustainability.
In a further dive into the study, it was also discovered that Norway, Canada, Australia, and the United States ranked at the top of the index due to their outstanding levels of economic resilience, abundant energy resources, diversified energy mix, and excellent energy self-sufficiency. On the contrary side of the ranking list, Belarus and Lebanon rank at the bottom because both countries suffer from a shortage of energy resources, low energy effectiveness, and economic instability, according to the report.
Singapore and Hong Kong are both considered to be among the last 10 performers, in spite of their high scores in energy efficiency along with economic stability, according to Euromonitor. This is due to their substantial reliance on energy imports, which places them among the bottom performers. Both Singapore and Hong Kong are limited in their potential to produce renewable energy due to their smaller sizes. This is another one of the city states’ many flaws.
Countries that highly depend on imports are susceptible to risks.
Aleksandra Svidler, a consultant for economies at Euromonitor International, said economies that are highly dependent on imports, have low utilisation of renewables, have poor energy efficiency, and are economically unstable are more susceptible to energy risks. She said that developing Asian economies keep battling with low rates of self-sufficiency, a heavy reliance on fossil fuels, and inadequate availability of capital. Many African countries are also struggling with underdeveloped infrastructure, inadequate accessibility to reliable and cost-effective energy, and low investment.