Energy Target and Unemployment: Could the Bioenergy Industry Using Second-Generation Feedstocks Offer a Solution for Nigeria?

This study explores Nigeria’s bioenergy industry’s potential in reducing unemployment. It focuses on two objectives: first, to determine how the development of the bioenergy sector can reduce Nigeria’s unemployment rate, and second, to identify effective policy instruments to harness the potential of the bioenergy industry in Nigeria. Using a Forest and Agricultural Sector Optimization Model for Nigeria, this study modeled three scenarios with varying labor wage rates. The second scenario used an hourly wage of US$0.38/h for US$3.00 purchasing power parity (PPP), reflecting the International Labor Organization’s global minimum PPP. The first and third scenarios applied prices slightly below and well above the PPP at the rate of US$0.32/h for US$2.56 PPP and US$1.04/h for US$8.30 PPP, respectively. This was modeled against the baseline labor rate (Nigeria’s minimum wage of 45 USD/month, approximately US$0.28/h, equivalent to 70,000 NGN). Nigeria’s current energy and food security targets and policies are also implicitly implemented. The product-demand driver is the Nigerian population data projection, which aligns with the Shared Socioeconomic Pathways (SSPs) for Scenario 2. Results reveal that while increases in the labor wage rate improve labor welfare above the global poverty threshold, they also impact the bioenergy sector and the aggregated total economic welfare. Results highlight an optimal wage balance where employment growth in the bioenergy sector can be sustained without compromising production capacity or aggregated total welfare. Based on these insights, actionable policy implications from this study include implementing moderate wage growth, subsidies, and productivity investments to maximize bioenergy’s potential as a sustainable employment generator in Nigeria.