Africa's financing challenge in a soft oil market

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Africa’s oil and gas lobby is hoping to cash in on shifting attitudes towards the energy transition.

Fossil fuels are becoming easier to fund, but low oil prices and declining spending for development may dash those hopes.

Here at African Energy Week in Cape Town, countries are defending Africa’s right to draw on its oil and gas reserves, as the continent with the lowest emissions per capita and the highest number of people without electricity.

But investment competition might get even tougher. Low oil prices and high interest rates have forced the world’s largest energy companies to make steep spending cuts.

Energy forecasts expect Africa to get just 8% of funding for new oil and gas projects in 2025. And McKinsey reports a $7 billion dollar drop in African development financing since 2021, as Europe has prioritized defense and the US has cut spending programs.

Growing interest in Africa’s offshore basins could attract investment, and so could regional lenders like the new Africa Energy Bank. But with a historic legacy of underinvestment, Africa’s energy ambitions continue to hinge on the financing puzzle.