Oil and Gas Expansion Risks leaving Africa Mired in Debt: Report

Oil and gas development in Africa has left the continent more vulnerable to global shocks and mired in debt, according to a new report released by Oil Change International and Power Shift Africa.

Titled ‘Pipe Dreams: How Oil and Gas Fail to Deliver Economic Development in Africa’, it analysed 13 oil and gas producing nations to argue that fossil fuel extraction has enriched multinational corporations and local elites while failing to provide energy access or meaningful employment for the broader population.

According to the report, there is a structural enclave effect where oil and gas operations remain physically and economically isolated from the host country. In Nigeria, despite being a global oil giant, the industry employs a mere 0.01% of the workforce. Similar figures are reported in Angola (0.3%) and Congo-Brazzaville (0.1%).

Furthermore, the report highlighted a paradox of exporting energy while importing poverty. Many African producers export crude oil only to import expensive refined fuels like diesel and gasoline. In countries such as Mozambique and Equatorial Guinea, natural gas is extracted for external markets while millions of domestic citizens remain without electricity or clean cooking facilities.

Economic vulnerability

The report found how the fossil fuel sector exploits other parts of the economy. There has been inflation of national currencies, making local manufacturing and agriculture uncompetitive. In countries like Nigeria, which was earlier a leading exporter of palm oil and peanuts, it became a net food importer after oil production decimated its agricultural sector.

“Oil and gas have not and will not deliver development for Africa. Instead, this model concentrates wealth in the hands of multinational corporations and political elites, while communities are harmed by pollution, lost livelihoods, and rising costs of living. The current geopolitical conflict has laid bare once again just how volatile and unjust this system is, by driving up energy and food prices, pushing millions closer to hunger, and making it harder for families to afford basic necessities. The only way forward is a shift to renewable energy that puts people first and delivers real, lasting development,” said Thuli Makama, Oil Change International.

The volatility of the market has also proven catastrophic. The report noted that during the 2014 oil price crash, Angola was forced to cut its budget by 25%, leading to a collapse in public health services and outbreaks of preventable diseases like malaria and yellow fever.

With global demand for oil expected to peak by 2030, the report found that new producers, including Uganda, Namibia, and Tanzania, are walking into debt traps. There is a risk of investing billions into infrastructure that will become stranded assets as the world shifts toward renewables.

“Once again, Africa is being sold a fossil fuel fairytale that promises prosperity but delivers dependence. Decades of oil and gas extraction have left producing countries more exposed to global shocks, not less — with wealth flowing out, not down. At a time when the world is moving on from fossil fuels, doubling down on this broken model risks locking African economies into stranded assets and rising debt. The real opportunity is clear: homegrown renewable energy that creates jobs, expands access, and keeps value in African economies,” said Mohamed Adow, Director of Power Shift Africa.

Renewable alternative

In contrast, the report advocated for a people-centered transition to renewable energy. It estimated that a renewable-led pathway could create 14 million jobs across Africa by 2030 — two to three times more jobs per dollar than fossil fuels. As solar and wind can be decentralised, they offer a more direct route to solving energy poverty in rural areas.

If African governments and international financiers could halt the expansion of oil and gas and pivot toward a just transition that prioritises domestic energy sovereignty over foreign export profits, then Africa would progress towards real development.

“Across Africa, we’ve seen the same pattern repeated: countries rich in oil and gas remain energy poor and communities are left behind. This is not a failure of African countries — it is a failure of an extractive model that was never designed to deliver development. Decades of fossil fuel extraction have exposed countries to volatile prices, debt, and pollution, while millions still lack access to reliable energy. Africa’s future lies in its vast potential to be a clean energy superpower,” said Kudakwashe Majonjo, a just transition expert.