World Bank stops funding oil projects: Implications for Nigeria

As pressure mounts to take serious action towards curbing carbon emission, the World Bank has said it will no longer fund oil and gas projects from 2019 signalling a global shift in funding towards cleaner energy.

Speaking at the One Planet Summit in Paris, Jim Yong Kim, President of World Bank said that the bank will cease financing exploration and extraction projects after 2019, except “in exceptional circumstances” for the poorest countries where there is a clear benefit in terms of energy access and the project fits within the countries’ Paris Agreement commitments.

According to the institution, the objective of the move is to help countries meet the greenhouse gas-curbing pledges they had made in support of the 2015 Paris Agreement

This announcement is important for the reason that the World Bank has a mandate to provide finance and other assistance to aid the economic advancement of developing countries. In its 2016 annual report, the World Bank Group said it had invested just over $3 billion in “extractive industries”, which also include mining, in 2016 – three times as much as the year before

Hence its decision to stop funding oil and gas projects indicates not only an intention to shift to cleaner energies but to back it with funding.

It is also significant that the bank also announced that it was “on track to meet its target of 28 per cent of its lending going to climate action by 2020”. It co-sponsored the one-day summit called by French President Emmanuel Macron to find ways to unlock the money needed for the global economy’s costly shift away from fossil fuels to less-polluting energy sources, and to shore up countries’ defences against climate change-induced weather disasters.

To meet the Paris Agreement’s goal of limiting average global warming to two degrees Celsius (3.6 degrees Fahrenheit) over pre-Industrial Revolution levels will require huge funds. Dearth of investment has constrained global effort to limit global warming, worsened by US President Donald Trump’s decision to withdraw America from the Paris Agreement and slash funding for climate projects.

What does this mean for Nigeria?

A review of the World Bank’s funding initiatives in Nigeria has been concentrated in the agriculture and civil society segments (See Table ‘Funding for Nigerian projects).

“The World Bank Group is helping to fight poverty and improve living standards for the people of Nigeria through 33 Core Knowledge Products Reports and 29 ongoing National and Regional projects. This is in addition to about 60 Trust Funds. Since 1958, the World Bank Group has supported Nigeria with International Bank for Reconstruction and Development (IBRD) loans and International Development Association (IDA) credits worth about 14.2 billion dollars,” says the organisation on its website.

The World Bank’s latest project in Nigeria is the programme to support one million lives. The objective of the Saving One Million Lives Initiative Program-for-Results (PforR) Project for Nigeria according to the World Bank is to increase the utilization and quality of high impact reproductive, child health, and nutrition interventions. The first indicator will be tracked by income quintile to determine whether the poorest 40 percent of the population have experienced significant progress. The results to be achieved will be measured annually and targets will be based on the historical progress on these indicators in Nigeria and globally.

Usually where international money goes provides a significant indicator of what is trending, what is globally important. Nigeria’s obsession with oil has to give. All over the world, even major oil companies are ramping investments in renewable energy while insisting that the world will not give up on oil. This should also spur efforts at reforming the sector and diversifying Nigeria’s income away from oil.

ISAAC ANYAOGU