A circular economy is more than an environmental effort; it is a critical, climate-resilient strategy for securing Nigeria's future. Unlike the traditional linear economy—which follows a "take, make, dispose" approach leading to waste and resource depletion—a circular economy is designed to keep resources in use for as long as possible, minimizing waste by reusing, recycling, and regenerating materials.

This shift is crucial, especially in Nigeria, where environmental challenges are becoming more pressing. Issues like water pollution from oil and gas operations, air pollution from industrial activities, and land degradation due to waste buildup aren’t just distant worries—they’re real problems affecting people’s health, jobs, and our shared natural resources. Transitioning from a linear economy, which often adds to these issues, toward a circular model can help us save resources, cut costs, and ease our environmental footprint.

This article addresses the need to transition to a circular economy, the challenges, and opportunities it presents, and actionable steps for Nigerian businesses to embrace this model.

Linear vs Circular Models

What is a Linear Economy?

Traditionally, Nigeria has followed a linear economy—a “take, make, dispose” approach. It’s a straightforward system where we extract resources, make products, and then discard them when they’re no longer useful. This model has supported our economy, but as Nigeria’s population grows and the demand for resources increases, it’s clear that this way of doing things just isn’t sustainable.

Key Features of the Linear Economy

Resource Extraction: Nigeria’s rich natural resources—oil, minerals, timber—are continuously extracted, but this practice is not without consequences. Over-extraction leads to resource depletion, with the Nigerian Bureau of Statistics (NBS) reporting a 15% decrease in mineral resource outputs between 2010 and 2020.

Production: Our factories and industries work hard to meet consumer demand, but in the process, a lot of by-products and potential resources are wasted. Many of these by-products could be repurposed to create new products, but instead, they’re treated as waste. For instance, in Nigeria’s palm oil processing industry, leftover palm kernel shells and husks are often discarded, even though they could be repurposed as biofuel or raw material for other industries, like cosmetics and animal feed.

In steel manufacturing, slag—a by-product of metal extraction—often goes to waste, but it could be used in road construction or cement production. Similarly, in the food and beverage sector, organic waste from processing fruits, grains, and vegetables could be composted and turned into organic fertilizers, helping reduce the country’s dependence on chemical fertilizers.

Consumption and Disposal: In Nigeria, many products are consumed without thought to what happens after they’re used. Without systems for recycling or repurposing, waste builds up rapidly. Lagos alone generates over 13,000 metric tons of waste every day, most of which ends up in landfills or is incinerated. This cycle of high consumption and poor waste management contributes significantly to air and land pollution and poses serious health risks, with issues like respiratory illnesses on the rise.

Environmental and Economic Impacts

Resource Depletion: Nigeria’s current approach to resources is running on borrowed time. Experts warn that our oil reserves might last only another 50 years at the current rate of extraction. This reality forces us to ask: What will future generations depend on if we drain our resources without a sustainable plan?
Our reliance on gas flaring, which wastes valuable natural gas and pollutes our air, is just one example of how we’re squandering what we have. If we don’t change course and adopt more sustainable practices, we risk leaving behind a future with scarce resources and limited options for those who come after us.

Waste and Pollution: With over 70% of Nigeria’s waste being mismanaged, the resulting pollution contributes to soil degradation, water contamination, and air pollution, with cities like Port Harcourt experiencing the infamous ‘black soot’ phenomenon. These issues aren’t just environmental—they have long-term health and economic costs, too.

Energy Consumption: Nigeria’s reliance on fossil fuels for energy is a significant contributor to global warming, with the energy sector responsible for over 50% of the country’s greenhouse gas emissions.

Economic Inefficiency: The linear economy is economically unsustainable. The World Bank estimates that Nigeria loses $8 billion annually due to poor waste management practices, funds that could otherwise be invested in economic growth and development.

Circular Economy

In contrast, the circular economy presents a sustainable alternative. It emphasizes a "closed-loop" system where resources are continuously reused, repaired, refurbished, and recycled, thereby minimizing waste and environmental impact.

Key Features of the Circular Economy

Designed for Longevity: Products in a circular economy are built to last, embracing durability from the start. Manufacturers consider not only the lifespan of a product but also its environmental footprint—opting for biodegradable options when possible, like paper-based packaging in place of nylon. For items like electronic gadgets, longevity means more than just durability. It includes the ability to repair, upgrade, and reuse devices, reducing the need for frequent replacements.

Reuse and Refurbish: Reusing and refurbishing products can have a significant impact in regions like Nigeria, where the electronics market is growing, and refurbished devices are in high demand. By encouraging reuse and refurbishment, we’re not only extending the life of these products but also making technology more affordable and accessible. This approach aligns with the mindset that items can have a “second life” and that there’s value in what might otherwise be discarded.

Recycling and Upcycling: Recycling initiatives, such as those led by the Nigerian Bottling Company, showcase the potential for converting waste into new, higher-value products, thereby reducing environmental impact.

Sustainable Sourcing: Sourcing materials sustainably can dramatically reduce Nigeria’s environmental impact. More businesses are recognizing the importance of using materials that are renewable, recyclable, or biodegradable, aligning with international standards and reducing reliance on harmful materials. For example, Lagos has implemented a ban on nylon and Styrofoam to combat pollution and foster an eco-friendlier environment.

Benefits of the Circular Economy

Resource Efficiency: The circular economy reduces the need for virgin materials by reusing and recycling existing resources. This efficiency is crucial for Nigeria, where the demand for resources often outstrips supply.

Environmental Impact: By minimizing waste and lowering emissions, the circular economy can help Nigeria achieve its climate goals, including its commitment to reduce greenhouse gas emissions by 20% by 2030.

Economic Opportunities: Transitioning to a circular economy opens new avenues for innovation and business growth. The repair, recycling, and refurbishment industries alone could create millions of jobs in Nigeria, contributing to economic diversification.
Consumer Benefits: For Nigerian consumers, a circular economy means access to higher-quality, longer-lasting products, and reduced costs through services like product take-back programs.

Challenges of Adoption

System Transition: Shifting from a linear to a circular economy in Nigeria will require significant changes in infrastructure, business models, and consumer behavior. For instance, the waste management infrastructure needs a complete overhaul to support large-scale recycling efforts.

Economic Viability: Making circular practices economically viable in Nigeria presents a significant challenge. This transition will require substantial investments in technology, innovation, and infrastructure. The initial costs can be high, and businesses may be hesitant to adopt new models without clear financial incentives or support.

Consumer Adoption: Educating and engaging Nigerian consumers about the benefits of a circular economy is crucial for its success. However, this is not without its challenges. Nigeria’s diverse population, with varying levels of education and access to information, makes it difficult to implement a nationwide campaign effectively. Additionally, there is a strong cultural preference for ownership over leasing or sharing, which can be a significant barrier to adopting service-based models

Key Steps to Transition

Develop Closed-Loop Supply Chains: Encourage Nigerian industries to use recycled or renewable materials in production, thus closing the loop on resource use.

Promote Recycling and Resource Recovery: Invest in technologies that can effectively recycle materials or transform waste into valuable resources. The recent introduction of waste-to-energy projects in Lagos is a step in the right direction.

Foster Collaboration: Collaboration between suppliers, customers, and stakeholders is essential. The Nigerian government’s Extended Producer Responsibility (EPR) policy is an example of how such collaboration can drive circular practices.

Educate and Engage Stakeholders: Train employees on the advantages of the circular economy and educate Nigerian consumers about its benefits through public awareness campaigns.

Implement and Monitor: Start with pilot projects to test circular economy models on a smaller scale, then develop standards to track progress and impact.

Scale Up: Once successful models are tested, integrate them into broader business practices and supply chains. Engage in policy discussions to support regulations and incentives that promote circular economy practices.

By focusing on these principles and strategies, businesses, governments, and individuals can contribute to a more sustainable and resilient economy that benefits both people and the planet.

Benefits of Transitioning

Economic Efficiency: Potential cost savings through improved resource use and reduced waste management costs.

Innovation and Growth: The transition will drive innovation, creating new business models, products, and services that can contribute to Nigeria’s economic growth.

Environmental Impact: Reduced waste, lower resource consumption, and decreased pollution.

Customer Loyalty: As Nigerian consumers become more environmentally conscious, businesses that adopt circular practices are likely to see increased brand loyalty and customer retention.

Conclusion

The transition from a linear to a circular economy is not just a necessity for a sustainable future; it also demands a fundamental shift in how we approach business and accounting principles. By embracing circular principles, professionals can drive sustainable decision-making, reduce waste, and create long-term value.

At Stransact, we understand the complexities and challenges that come with this transition. Our ESG consulting services are designed to help your business deeply understand and address these issues. We offer tailored solutions that not only solve immediate problems but also position your business to be future-thinking and agile. By partnering with us, you gain access to a team dedicated to staying ahead of future trends and actively shaping them. We are committed to helping you navigate the evolving landscape, ensuring that your business remains resilient, sustainable, and competitive in an ever-changing environment.

Let us help you turn sustainability into a strategic advantage. Together, we can build a future where your business thrives while making a positive impact on the planet.