24 June 2026 - A new set of policy reports examining fossil fuel dependence in Nigeria, Kenya, Angola, Tanzania, Senegal and across Africa indicate that continued reliance on oil and gas is increasing economic risk and exposure to market volatility. The reports outline opportunities that African nations can explore for economic diversification beyond fossil fuels, including renewable energy, agriculture, manufacturing and digital industries, which can offer a more stable long-term growth strategy.

The research project commissioned by the Fossil Fuel Treaty Initiative titled “‘Visions for Replacing Fossil Fuel Revenues in Africa” shows that many African economies remain heavily exposed to global oil and gas price shocks — such as those currently propelled by the ongoing global energy crisis. In oil-producing countries, government budgets often depend on export revenues. When prices fall, public income drops quickly, forcing governments to borrow, delay spending, or cut services. When prices rise, spending often increases rapidly, creating volatile cycles of boom and crisis.

At the same time, countries that import large amounts of fuel face a different but equally serious challenge. Rising global oil prices increase national import bills, inflation and cost of living, and put pressure on foreign exchange reserves. Governments frequently step in to artificially stabilise prices through subsidies, which can cost billions and divert funds from health, education and infrastructure. This means heavy reliance on fossil fuel consumption, particularly in transport and industry, can leave economies fragile and exposed to price volatility and energy insecurity.

The reports do not call for abrupt shutdowns of existing industries. Instead, they recommend phased and practical planning. This includes gradually reforming fuel subsidies and taxation policies, strengthening fiscal planning, building local manufacturing capacity and investing in sectors that generate more jobs and stable income. Renewable energy, climate-resilient food systems, food processing, green manufacturing and industries, and the digital economy are identified as areas with strong growth potential.

In Nigeria, where oil has dominated exports and public revenues for decades, oil market volatility, oil theft and vandalism, corruption, environmental damage, health harms and declining sector performance have limited the benefits of this dependence. The country continues to face high poverty and unemployment levels, while over 80 million Nigerians still lack access to electricity, despite its large oil reserves - highlighting the reality that fossil fuel production does not guarantee energy access. The report argues that Nigeria faces a narrowing window to invest fossil fuel income into more productive and job-rich sectors before global demand shifts further, exacerbating stranded asset risks.

Kenya presents a different picture, but with similar risks. The country generates nearly 90% of its electricity from renewable sources, yet fossil fuels remain its largest and most expensive import, costing more than $4 billion per year. Between 2021 and 2024, the government spent KSH 169 billion on stabilising fuel prices, around the same amount used in a fiscal year for health. While fossil fuel revenues contribute only a small share of GDP, meaning they are unlikely to solve broader debt and development challenges, the report recommends expanding renewable energy and building on alternative sectors that promise steady growth.

The report also examines the contexts of Angola, Senegal and Tanzania, which range from legacy to emerging fossil fuel producers. Across Africa, the reports highlight a striking contradiction. The continent has significant oil and gas reserves and has accounted for a large share of new discoveries in recent years. Yet around 600 million people still lack access to electricity. The findings suggest that extracting fossil fuels does not automatically deliver universal energy access or broad-based development.

Dr. Jessica Omukuti - Research Fellow, University of Oxford 

“When government revenues depend heavily on fossil fuels for exports, or import and depend on them for energy generation, then your public finances get tied to global commodity prices. When prices rise, you earn more revenues, depending on which side of the fossil fuel dependence you're on. When prices fall, governments face difficult choices about spending, investments and debt. The challenge is not just volatility. It's because these revenues often encourage countries to become dependent on a very narrow set of sectors. In most cases, governments make decisions based on expectations of future revenues from fossil fuel. As the global energy system is changing, if you're making investments with the expectation of returns in 10-30 years, and the investment ecosystem changes, then your returns are at risk.”

Dr. Zainab Aliyu - Co-founder, Reimagine Change

“For Nigeria, the question is no longer whether it should transition; it has become imperative. It is a fiscal survival strategy. The question is whether we will play an active role in determining the terms on which the country transitions, or be forced to react when demand declines and pressure to transition grows. The research shows that there is no single replacement for fossil fuel revenues, but rather a strategic portfolio of diversification options. The good news is that Nigeria has abundant solar resources, vast areas of uncultivated arable land, and booming creative and fintech sectors. The diversification pathways must be centred on equity, and supported by stronger policies to ensure a just transition.”

Tracy Tunge - University College London

“Some argue that Kenya's fossil fuel reserves can help tackle its debt, which currently stands at around KSH 12 trillion. While the country earns an estimated KSH 421 million annually from fossil fuel revenues, it would take us over 30,000 years to repay the debt even if the entire amount went to debt repayment. Even at full production in Turkana [oil fields], which would yield an estimated KSH 220 billion per year, it would still take up to 50–131 years to repay the debt. On the flip side, we have other high-growth sectors, among them renewable energy, agriculture, green manufacturing and the digital economy, that could help settle the debt faster and help us transition to a low-carbon economy.”

Nair De Sousa- African Circular Business Alliance

“The case of Angola’s energy transition is peculiar because of volatility in oil prices that exacerbates the debt-to-GDP ratio, but also because Angola’s energy transition is highly politically centralised depending heavily on political predictability. This exerts a direct impact on the country’s wealth management and decision-making related to funds allocated to energy transition and climate finance. There is a strong donor dependency and excessive foreign consultancy influence, which poses a huge risk to energy transition in the long-term. Such issues cause constant delays to project implementation and success capacity, especially because the solutions have not been built and designed by Angolans. Our main recommendation for alternative revenues in the very short term is agriculture with food processing that can be translated into high-value manufacturing from special economic zones.”

Dr. Adia Coumba Ndaw - University of Gaston Berger

"Since June 2024, Senegal has become a fossil fuel producing nation. Fossil fuels represent around 75% of national electricity generation, while the sectors of transport and industry are heavily dependent on these resources. The government views this as a way to reduce the cost of energy and accelerate universal access to energy, particularly through gas-to-power and gas-to-industry strategies. But those opportunities present risks. The massive investment that has been made in the gas infrastructure and refinery — estimated at billions of dollars, could create a significant stranded asset risk. We also face the volatility of oil and gas prices, and a severe debt crisis. The oil industry could also affect some of our strategic sectors such as fisheries, which contributes roughly 3.2% to Senegal’s GDP and represents 10% of national exports. Faced with these challenges, it is essential to identify sectors to diversify the economy and create sustainable revenues. This is why we recommend renewable energy, agriculture and tourism as key avenues for economic diversification and note the critical role of international cooperation in the transition.”

Nibwene Mwakibinga -  Independent expert

“As an emerging producer, Tanzania is at a crossroads. While direct fiscal dependence on fossil fuels in the country is low, there is some dependency on energy and power generation. If the USD $42 billion LNG project goes through, Tanzania might be locked into fossil fuels for decades, while the fossil fuel investments, including coal projects, risk becoming stranded assets. Renewable energy, mining of critical minerals and agriculture could serve as alternative sectors to explore in order to replace potential gas and coal revenues. Our policy recommendations include development of a national just transition investment fund, as well as sunset policies to phase down all fossil fuels by 2040.”

Shallinerosena Mbwette - Energy Engineer, Researcher & Climate Resilient Infrastructure Development Consultant

“Our findings align with the African position at the Santa Marta Conference - that we need a managed, conditional, time bound use of fossil fuels. It's not a concession to the fossil industry, but a fiscal responsibility, a responsible pathway to a just transition. We have made different recommendations and recognize that national actions are not sufficient. We believe that the proposed Fossil Fuel Treaty platform is uniquely positioned to be able to provide the structural international support that makes a just transition across African countries possible.” 

Dr. Amiera Sawas, Head of Research and Policy, Fossil Fuel Treaty Initiative 

"The reports highlight the predicament facing African countries making costly trade-offs as they seek to expand energy access, drive economic development, and respond to a changing global energy landscape. They underscore that a truly just transition cannot rely solely on the domestic efforts of African countries, but requires international cooperation to unlock finance, technical support and debt relief that enable countries to pursue their development goals while transitioning away from fossil fuels. The proposed Fossil Fuel Treaty is a key piece of the puzzle, as it offers a framework to foster that cooperation and deliver an equitable global transition."

The just transitions outlined in the reports are framed as visions and pathways to economic security, energy sovereignty and industrial transformation. By diversifying their economic base, African countries can reduce exposure to global fuel price volatility and build more predictable and resilient sources of growth. The researchers argue that long-term resilience will depend not only on what countries extract, but on what they produce, manufacture and innovate.

This vision for diversifying economies beyond fossil fuels across the continent comes as global momentum grows for international cooperation to manage the energy transition. The final outcome report from the First International Conference on Transitioning Away from Fossil Fuels, released during London Climate Action Week on Tuesday, demonstrates strong support for a Fossil Fuel Treaty as countries prepare for the second conference in the Pacific next year, to chart a path for the global transition.