Business
Nigeria’s Oil Faces Threat As Electric Vehicle Sales Rise
The rising number of countries gradually shifting from fossil fuels and encouraging the adoption of electric vehicles may pose a major threat to Nigeria’s crude oil exports.
Sales of electric cars topped 2.1 million globally in 2019, surpassing 2018, already a record year, to boost the stock to 7.2 million electric cars, with China leading the charge, according to the International Energy Agency (IEA).
IEA said nine countries had more than 100,000 electric cars on the road while at least 20 countries reached market shares above one per cent.
“In 2019, electric vehicles in operation globally avoided the consumption of almost 0.6 million barrels of oil products per day,” IEA said.
The demand for crude oil is expected to continue to decline following the surging sales in electric vehicles in Asia and Europe.
Carmakers have sold more than 500,000 battery electric cars in Europe during 2020, compared to only 354,000 sold during the whole of last year across the region, a UK newspaper, The Guardian, reported earlier this month.
Europe is the biggest regional export market for Nigeria’s crude oil, followed by Asia.
An economic expert, Prof Obadan Mike, said weak demand had continued to affect the market for crude oil adversely, adding that oil had continued to be characterised by low prices.
“The implications of weak recovery for global demand for crude oil, upon which Nigeria depends for its fiscal and foreign exchange sustenance, are very grave,” he said at the last Monetary Policy Committee meeting, according to a new document released by the Central Bank of Nigeria.
He added that continuing weak oil market ‘compounds the challenges in Nigeria’s fiscal operations and is not helpful to the country’s external sector and macroeconomic stability objectives’.
The United Kingdom had said last month that it would stop selling new diesel and petrol cars and vans from 2030.
The Prime Minister, Boris Johnson, said in February that he was bringing forward a ban on the sale of new petrol and diesel cars from 2040 to 2035.
Other countries including France and Norway have also announced plans to ban new internal combustion engines over varying timeframes.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
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