Climate change is one of the Human greatest challenges and solving it will require a collective effort from individuals and countries. As energy-related emission is the major contributor to climate change switching to renewables looks like the most logical thing to do but is not that simple as many factors need to be put into consideration. 

Climate change is one of the Human greatest challenges and solving it will require a collective effort from individuals and countries. As energy-related emission is the major contributor to climate change switching to renewables looks like the most logical thing to do but is not that simple as many factors need to be put into consideration. Many energy professionals agree with the proposition of transitioning to renewables but different opinions exist on the pace and the pathway for each country. Countries differ in energy access, natural resources and economic power. While some countries are 100% electrified, others still loom in the darkness. 

It now becomes imperative for countries to create a path that will not only focus on reducing their carbon footprint but will also have a strong root in ending energy poverty and bringing its people out of economic poverty.

Nigeria with the highest un-electrified population in the world launched its energy transition plan which aims to solve the dual crises of energy poverty and climate change.

This article aims to study the transition plan across the 5 key sectors; Power, Cooking, Oil and Gas, Transport and Industry in which the Energy transition plan aims to reduce emissions.

The Key objectives of the Transition plan are as follows

Lifting 100 million Nigerians out of poverty and driving economic growth

Bringing modern energy services to the full population

Managing the expected long-term job loss in the oil sector due to the reduced global fossil-fuel demand

Playing a leadership role for Africa by promoting a fair, inclusive and equitable energy transition in Africa that will include Gas as a “transitionary fuel”

Streamlining existing and new government-related energy transition initiatives


Nigeria’s power sector has been on the decline for years now. 

In 2022 alone the grid has collapsed up to 7 times

. No doubt it emits the highest as businesses and citizen becomes Prosumers of energy relying on diesel generators for power. 

This sector contributes 27% of in-scope emissions and emitted 48Mt of CO2 making it the highest emitter among the 5 sectors considered.

The decarbonisation of this sector is in eliminating diesel generators and the expansion of generation capacity using gas as a baseload fuel. In addition, decentralized systems will also play a path as we see a growth in the deployment of renewables in the form of mini-grid

This sector comes second on emissions, emitting 43Mt CO2 representing 24% of in-scope emissions as 100% of cars on Nigeria’s roads in 2020 were diesel/gasoline combustion cars. 

The plan proposes emission reduction through the use of low-emissions transportation technology and mode switching (passenger car to electric public transport)

. Deployment of biofuels in the short term and 100% EV in the long term.

This sector emits 20MT of CO2 representing 11% of in-scope emissions, emission from this sector is attributed to fugitives, upstream energy consumption (/fuel use), venting and flaring. 

The decarbonisation strategy for this sector includes improving flaring efficiency, exporting/repurposing gas and applying Carbon capture Utilizing and storage in the long term.

This sector contributes 19MT of CO2, representing 22% of in-scope emissions. The decarbonisation strategy here is a combination of Liquefied Petroleum Gas (LPG) in the short term and Electric Stoves in the long term.

This sector contributes 29MT of CO2, representing 16% of in-scope emissions. 

Cement Production, ammonia and Industrial heating contribute 93% of the energy-related emission from industry in Nigeria.

 The decarbonisation strategy is the substitution of clinker with calcined clay in the short term and the application of Bioenergy with Carbon Capture and Storage(BECCS) in the long term in cement production. 

Decarbonising Ammonia production will require replacing grey hydrogen with blue hydrogen in the short term and green hydrogen in the long term

. Industry heating will require shifting to zero-emission technologies, electric boilers and solar boilers for the short term and together with heat pumps in the long term.

The energy transition requires funding, according to the plan Nigeria will need $1.9 trillion to reach Net Zero by 2060, which includes $410 billion more than usual spending. This additional cost amounts to about $10 billion per year.

An Energy Transition Implementation Working Group(ETWG) Chaired by H.E Vice President Yemi Osibanjo SAN and comprise many several Key ministers has been sent up to ensure the Implementation of the transition plan. Sustainable Energy for All(SEforALL) and the Global Energy Alliance for People and Planet(GEAPP) are supporting the working group through a dedicated secretariat, The Nigeria Energy Transition Office(ETO) and have the following objectives

 commitment to Kick start the implementation of Nigeria’s Energy Transition plan by COP27

Secure 3-5 agreements with Original Equipment Manufacturers(OEMs) 

to begin the local manufacturing/assembly of key technologies such as electric vehicles and decentralized solar systems by 2025

Secure 1-2 agreements for skills and knowledge transfer with private sector leaders

, research institutions and other partners, with an immediate focus on upskilling labour for the power and cooking sector.

Play a leadership role for Africa by promoting a fair, inclusive and equitable transition

 in Africa that will include Gas as a “transition fuel”, ending energy poverty and supporting industrialization

treamline existing and new government-related energy transition initiatives

 to align with the energy transition plan and Net zero by 2060 commitment.


Solar Mini-grid showed resilient as it predicated to play a huge part in the transition plan of the country to net zero by 2060

EV takes the top spot in helping decarbonize the Country’s transport sector as it accounts for 60% of all vehicles by 2050

Gas will play a crucial role in the transition plan, especially in the cooking and power sectors.

Nigeria's Energy Transition plan is a bold statement demonstrating her commitment to climate action and UN climate goals. 

While this is laudable by the Federal Government of Nigeria, achieving this plan hinges on its ability to externally raise the needed funds. This single factor puts a big question mark on achieving this plan. Developed nations have failed in their previous promise of a $100bn Climate Finance, coupled with the energy crises and inflation most are facing relying on them for funds looks like a failed strategy to me. If Nigeria is to achieve the plan, then it must look internally to raise the annual $10bn needed for this to happen or this might just be another brilliant plan that never comes to fruition.

Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem. 

Study of Nigeria's energy transition plan

The Nigerian adult population (18years and above) is 106 million and about two-thirds of this population live in rural areas (70 million people). According to the 2020 EFInA, access to financial services in Nigeria survey, about 35.9% of the adult population are financially excluded. 

The Nigerian adult population (18years and above) is 106 million and about two-thirds of this population live in rural areas (70 million people). According to the 2020 EFInA access to financial services in Nigeria survey, about 35.9% of the adult population are financially excluded. (EFInA, 2021) 

Table 1 Bank Growth is driven by the Use of Digital Financial Services, Savings, Remittances and Agents:

Nigeria ranks top among countries with low access to electricity and the majority of the un- electrified population is found in the rural areas, with the rural areas having a population of 99,033,580 as of 2020. This shows that efforts need to be increased in the rural areas if Nigeria is to come out of energy poverty in the near future.

“In Nigeria, the electricity access rate was nearly 60% in 2015 (according to the World Bank), with 86% of urban areas and 41% of rural areas with access, while access to non-solid fuels reached only 4%”. 

The huge gap in energy access in Nigeria provides a huge opportunity for Discos (Distribution Companies), including PV Mini-grid Operators but then electrifying these Rural communities have been faced with so many challenges with the pronounced one being Customers’ ability to pay which can be associated with the following:

Low penetration of internet, ATMs, POS, and other enabling infrastructure

Technology inexperience and literacy constraints

Lack of awareness about electronic and mobile payments


Solving these constraints will increase the rate of electrification in rural communities, Could the answer be Payment service bank?

A payments bank is similar to a regular bank, except it operates on a smaller scale and does not take on any credit risk

. In simple words, it can perform most banking functions but cannot advance loans or issue credit cards. It can accept demand deposits, remit funds, accept mobile payments/transfers/purchases, and provide additional banking services such as ATM/debit cards,  net banking, and third-party fund transfers. The Central Bank of Nigeria (CBN) has issued laws and guidelines for the licensing and operation of payment service banks (PSB) in Nigeria. This is in line with the central bank&#39;s initiatives to use technology to promote financial inclusion and improve access to financial services for the unbanked and underserved. The CBN's goal is for 80% of Nigerian adults to have access to financial services by 2020. According to the CBN, 

one of the main goals of the PSBs is to use mobile and digital platforms to improve financial inclusion in rural areas, particularly in underserved communities. Small/micro-companies and low-income households are likely to benefit from increased access to deposit products, payments, and remittance services (KPMG Nigeria, 2018).

Key Features of Payment service banks (PSB)

At least 25 percent of financial service points in rural areas (as defined by CBN)
Deploy ATMs

Operate through banking agents in line with the CBN guidelines

Establish coordinating centers to superintend the activities of outlets and agent

Potential Value Proposition by Payment Service Banks

Increase access to basic banking services

Simple and intuitive payment platform with local multilingual interfaces

A simple and dedicated domestic remittance platform

Customer education and handholding to drive adoption and facilitate usage

Onboarding of small retail merchants on the mobile payment ecosystem to effect non- cash transactions

Digital banking and payment approaches which are smooth, intuitive, functionally rich,
and support anytime, and any device banking

Payment to/from the government on the mobile payment ecosystem (conditional cash
transfers, small savings schemes, etc.

Strong set of customer incentive pull (loyalty programs, discounts, cash backs) to drive
enrolments and usage

Route the direct benefit transfer through the mobile ecosystem to improve familiarity and
adoption

Key Stakeholders That will make or mar the Opportunity presented by Payment Service Banks in Electrifying Rural communities

Discos (including solar Mini-grid Operators)

Design Success Criteria of Payment Service Banks in Increasing the Electrification Rate in Rural Areas

1. Penetration of PSB to the most remote area in Nigeria
2. Reduce risk on Revenue collection for Discos (Including Mini-grids Operators)
3. Increase the revenue of Payment Service banks operators
4. Capture the Majority of Rural Communities dwellers through having access points for Customers

Rural electrification rate will increase if Discos and Mini-grids Operators are certain of collecting their revenue which will be fastened by the emergence of Payment Service Banks(PSB). This will be a win-win for all stakeholders.

Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.

EFInA. (2021). EFInA Access to Financial Services in Nigeria.
Jack, T. S. (2016). The long-run poverty and gender impacts of Mobile Money. New York: sciencemag.org.doi:10.1126/science.aah5309
KPMG Nigeria. (2018). Payment Service Banks: The ‘Challenger’ Banks in Nigeria.
Sustainable energy for all. (2021). Country Data Nigeria.

The Potential of Payment Service Banks (PSB) in Bridging the Energy Access Gap in Nigeria

 a fellow of the Student Energy leaders fellowship and one of the challenge winners of "how to change the world". 

He is also a recent graduate of petroleum engineering from the Federal University of Technology Owerri, who took interest in renewable energy after seeing the impacts it's making in the lives of unserved and underserved communities.

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Promise Nwogu

Promise Nwogu

The Potential of Payment Service Banks (PSB) in Bridging the Energy Access Gap in Nigeria

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