Financing Gap as an Obstacle to Environmental Sustainability in Sub-Saharan Africa: Evidence from the Fuelwood Energy Sector in Nigeria

Naseer Babangida Muazu, Kanayo O. Ogujiuba

Abstract


Large gaps exist in the literature on fuelwood energy sector financing and investment for environmental sustainability, especially in the Sub-Saharan African countries. Most of the existing studies evaluated the environmental impact of fuelwood consumption from the perspective of land degradation, while a few studies from the perspective of climate change. Nigeria alone consumes 85% of the total energy produced in West Africa, and the whole of this energy is from the wood. At the same time, it has the world’s highest annual deforestation rate of primary forest, signifying that fuel-wood is the major and inescapable source of energy for households in the country. In this study, we examined the roles and impacts of financial institutions on environmental sustainability, focusing on the fuelwood energy sector. Using a qualitative based approach, we employed a multi-stage random sampling technique to select key informants for focus group discussion (FGD) and semi-structured interviews. Our findings revealed a huge financing gap in the fuel-wood energy sector due to lack of access to finance, lack of available information on financial products and lack of government financial support. As fuel-wood becomes the most used and easily accessible energy in the country, mainly due to socioeconomic and demographic factors, there is the need for a renewed commitment from the policymakers and practitioners to change the negative narrative about fuelwood, and allow for the development of a market-oriented fuel-wood industry that could achieve household energy supply, sustainable resource management, energy security, low carbon growth and poverty reduction through the moderating effect of financial institutions.


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