Africa is facing one of the world’s great energy windfalls. The continent holds roughly 125 billion barrels of confirmed oil reserves and more than 620 trillion cubic feet of natural gas, implying vast additional deposits still waiting to be discovered. At the same time, some 600 million Africans have no electricity at home, and this figure has not fallen since the Covid-19 pandemic. On current trends, it will still exceed half a billion in 2030.
The problem is not geological, but political. Every barrel of oil shipped from an African port to a European or Chinese terminal is a barrel not converted into kilowatts for an African household.
Every long-term liquefied natural gas (LNG) contract signed with a foreign utility commits gas that could be powering an African hospital, school, or factory. The choice between exporting hydrocarbons and using them to electrify the continent is highly consequential yet almost never debated openly. That needs to change.
The case for energy exports is clear enough. The continent depends heavily on imported food, medicines, capital equipment, and manufactured goods that it does not yet produce at scale. For many producer countries, oil and gas exports are the only reliable source of foreign exchange. But the case for domestic use is equally compelling.
Nigeria holds enough natural gas to achieve 100 percent electrification within its borders, and gas-to-power projects across the continent have long demonstrated technical viability.
The International Energy Agency estimates that achieving universal electricity access in Africa would require annual investments of $15b for 10 years, and though only $2.5b is currently being committed each year, domestically deployed hydrocarbons could help bridge the gap.
In theory, these two options are economically equivalent. A government could export oil, invest the proceeds well, and use the returns to finance power infrastructure. In reality, neither condition has been met.
One major distortion is corruption. Rather than being invested in electrification, hydrocarbon revenues in most African producer states are regularly captured. Nigeria has generated more than $600 billion in oil revenues since the 1960s while also recording one of the world’s highest rates of extreme poverty.
Domestic energy subsidies are a second distortion. In many African producer states, consumers pay far less for fuel and electricity than the actual cost. Angola has the world’s fourth-cheapest retail gasoline. Nigeria’s domestic gas prices have historically been held so low that building a gas-fired power plant is commercially pointless. Recent geopolitical shocks are a third factor.
Russia’s full-scale invasion of Ukraine severed some 80 billion cubic meters of annual gas supplies to Europe, and this year’s Middle East war tightened LNG markets further. Suddenly, European governments were in Algiers, Dakar, and Maputo pleading for more supply. Algeria became the European Union’s second-largest pipeline gas supplier in 2023.
A reckoning is coming, though. Africa’s total population will reach 2.5b by 2050, and domestic energy demand is rising fast enough that Africa is projected to shift from a net energy exporter to a net importer by the early 2030s. Something will have to give.
The question is whether it happens through deliberate reform-institutions that constrain rent-capture, energy prices that reflect domestic opportunity costs, and revenues channelled toward electrification-or through the kind of instability that has historically plagued the continent’s natural-resource sector.