Fossil Fuel Wealth Fails to Deliver Development in Africa – Report

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Children dry fish in the sun at a village in the natural gas-rich Afungi peninsula of the northern Mozambique region. In countries including Nigeria, Equatorial Guinea, and Mozambique, gas is extracted and exported to serve external markets, while domestic energy needs go unmet. Photo courtesy of Justica Ambiental

NAIROBI, Jun 11 2026 (IPS) - A new report examining the economic impact of oil and gas production in Africa has found that fossil fuels have failed to deliver sustained or inclusive economic development, observing that the resources have contributed to economic vulnerability and inequality and have constrained growth through prohibitive commodity prices, inflation, and weak local currencies.

It reveals that oil- and gas-rich countries were running on economies that are ‘extractive’ in nature, while their other economic sectors remained weak and tended to have elevated levels of corruption, benefiting a few rich, thus perpetuating inequality. This is while delivering few job opportunities, and the sectors employ about 0.3% of the national workforce overall.

The document titled Pipe Dreams, based on evidence from 13 oil- and gas-producing countries, finds that the structure of the oil- and gas-producing economy concentrates on exporting wealth while leaving populations to bear the costs of producing it, ultimately fuelling poverty.

Observing that Africa is in the midst of a “fossil fuel crisis” where global energy prices have surged in the wake of the American-Israeli-Iranian war, exposing countries to expensive petroleum, the analysis by advocacy groups Power Shift Africa and Oil Change International note that producing countries have not been spared the price shocks.

Shanties serving as shops in a village in the natural gas-rich Afungi peninsula of the northern Mozambique region, where poverty remains high. A new report discloses that the government will not receive significant revenues until the mid or late 2030s because contracts allocate most of the early revenues to foreign companies. Photo courtesy of Justica Ambiental

This is because while many of them exported crude, they later imported costlier refined products refined abroad, including petrol and diesel. This happens as hundreds of millions of people across the continent still lack access to electricity and clean cooking energy.

“In some cases, such as Nigeria, Equatorial Guinea, and Mozambique, gas is extracted and exported to serve external markets, while domestic energy needs go unmet,” the analysis explains.

This happens against a backdrop of millions living in extreme poverty, Nigeria and Angola being two such countries where the report acknowledges that an estimated 40% of the population survive on less than USD 3 per day, decades of extracting oil notwithstanding.

“In fact, according to the African Import-Export Bank, Africa’s oil exporters have mostly had lower economic growth and higher inflation than their non-resource-intensive counterparts in recent years,” it explains.

Basing its conclusions on peer-reviewed literature, official data, and independent reports, it asserts that, among others, the fossils sector in Africa is ‘extractive’ in nature, with extraction occurring in ‘enclaves’.

Fishermen at a village in the natural gas-rich Afungi peninsula of the northern Mozambique region, where poverty remains high. The new Pipe Dreams report reveals that the government will not receive significant revenues until the mid or late 2030s because contracts allocate most of the early revenues to foreign companies. Photo courtesy of Justica Ambiental

By breeding an extractive economy where the commodities are mostly exported, the main economic function for producer countries is restricted to generating revenues and export earnings.

This is made worse by the fact that the natural wealth is dominated by multinationals, who often “take a disproportionate share of the revenues either through one-sided contractual terms or through lopsided accounting schemes”.

Citing the example of Mozambique’s Coral South gas project led by Italy’s Eni , which began producing gas in 2023, it discloses that the government will not receive significant revenues until the mid- or late-2030s. The reason is that the contract terms usually allocate most of the “early revenues” to foreign companies to the exclusion of governments.

The report faults fossil sectors for having few links to other sectors in an economy, noting that related sectors, including services and supplies, are “generally imported, while the products and the profits are mostly exported”.

Released on 11 May to coincide with the Africa Forward 2026 summit sponsored by France and bringing together more than 40 African presidents and heads of government in Nairobi, Kenya, it asserts the fossil wealth was creating minimal employmen…