Leaving fossil fuels will cut Africa’s GDP by $190bn–Afreximbank

The African Export-Import Bank (Afreximbank) has warned that divesting from fossil fuel could reduce Africa’s total Gross Domestic Product (GDP) by as much as $190 billion.

This is contained in the Afrexim Bank Africa Trade Report 2024 where it stated that divesting from fossil fuels could reduce GDP by as much as $30 billion in Nigeria, US$22 billion in Algeria, US$19.3 billion in Angola and an aggregate of US$190 billion for the continent.

The report states, “For major oil exporting countries, including Algeria, Angola, Equatorial Guinea, Gabon, Nigeria, and the Republic of Congo, fossil fuel also represents the main source of export earnings and fiscal revenues, job creation, fossil fuel-based power generation and supply, and power to fossil fuel-intensive industries.”

Furthermore, the report lamented Africa’s energy poverty stating that despite holding around 17 per cent of the world’s population, it only expends 6 per cent of its energy with around 600 million people without access to electricity and around 900 million lacking access to clean cooking fuels.

In recent times, there have been calls for African countries to abandon fossil fuel energy sources and invest in climate-friendly clean energy as a measure to combat climate change.

In 2015, 54 African countries signed the Paris Climate Agreement including Nigeria and they have all gone to ratify the accord.

Nigeria, as part of its Nationally Determined Contribution (NDC) to the climate goals as spelt out in the accord plans to reduce emissions by 20 per cent relative to business-as-usual by 2030, increasing its conditional target from 45 per cent to 47 per cent.

According to the International Energy Association (IEA), African countries will only get 2 per cent of the $2 trillion global clean energy investment in 2024. This figure amounts to just $40 billion while fossil fuel investment in the continent is projected to reach $70 billion in 2024.

Last year, a senior official of the African Finance Corporation (AFC) stated that the firm will not back down from fossil fuel investment despite climate change warnings from major development institutions.