Fossil Fuel Revenues in Decline: Who Pays for Africa’s Transition?

During one of my earliest visits to the Niger Delta, I met a fisherman who showed me the mangroves where his father had worked. The waters were slick with oil, and the air smelled faintly of gas flares. “The government tells us the oil is for development,” he said, “but look around, what development is here?”

His words echo in my mind as I watch the global debate over fossil fuel phase-out. For decades, oil, gas, and coal have propped up African budgets, but this model is collapsing. Global markets, investor trends, and climate imperatives are already closing the fossil era. The uncomfortable truth is this: unless Africa builds fiscal alternatives, the transition will be unjust and destabilising.

Oil prices and public budgets

Fossil fuels have long been treated as fiscal lifelines. For decades, they funded public wages, school systems, roads, and subsidies. But this dependence has become a structural weakness. When prices fall, governments scramble. The 2014 oil crash forced Nigeria into recession. Angola sought IMF bailouts. Even now, with prices fluctuating around $80 a barrel, revenue uncertainty keeps finance ministers awake at night.

Global phase-out commitments mean that over the next two decades, the window for oil and gas revenue will narrow. Advanced economies are capping imports, investors are pulling back, and renewables are steadily undercutting fossil competitiveness. For Africa, this signals more than shrinking budgets; it exposes the fragility of overreliance. The transition is a chance to finally replace this vulnerability with more resilient revenue systems.

The question that haunts me is simple but profound: who pays for Africa’s transition when fossil cash dries up?

The false promise of “self-funding” transitions

Some argue that Africa can fund its own transition with existing fossil fuel revenues. Use today’s oil and gas rents to invest in tomorrow’s renewables, the logic goes. But this is easier said than done.

First, revenues are already overstretched. Debt service consumed $163 billion across Africa in 2024, nearly triple the amount in 2010, according to Brookings. That leaves little fiscal room for bold new investments. Second, corruption and rent capture erode what remains. Nigeria’s Excess Crude Account, designed to save windfall oil earnings, has been repeatedly depleted. Angola’s sovereign wealth fund has faced similar governance concerns.

In practice, “self-funding” transitions rarely work. They rely on political discipline that is often absent, and on price stability in markets that are anything but stable. Overdependence on hydrocarbons is not resilience; it is fragility.

Debt relief as climate policy

This is why debt relief must be part of the solution. If Africa spends more on debt service than on climate resilience, there is no pathway to a just transition. Every dollar used to repay creditors in London or Beijing is a dollar not used to connect homes to renewable power or build sea walls against rising tides.

A debt-for-climate swap could be one answer. Creditors could cancel a portion of debt in exchange for verifiable green investments. Small Island States have pioneered such mechanisms. Why not scale them for Africa’s oil-dependent economies? Linking debt relief to transition goals is not charity; it is common sense. Without fiscal breathing space, no country can move away from fossil dependence.

Concessional finance: beyond loans

The second pillar is concessional finance that is not loan-heavy. At the Africa Climate Summit in Addis, civil society voices were clear: adaptation and transition finance should be grant-first, not debt-creating. Yet Africa continues to receive loans disguised as support.

The IMF reported that over 57% of adaptation finance in 2024 arrived as loans. This adds to debt burdens and weakens fiscal sustainability. Instead, concessional capital should come with risk-sharing tools, guarantees, local-currency lending, and foreign exchange hedging, so that renewable projects become viable.

Otherwise, Africa faces a cruel irony: fossil revenues decline, loan-based climate finance rises, and women and communities end up carrying the debt trap on their backs.

Critical minerals as leverage

The third pillar is using Africa’s critical minerals as leverage. The continent supplies 70% of global cobalt, 45% of manganese, and vast lithium and graphite reserves. Yet most of these leave unprocessed, enriching others while African states collect meagre royalties.

As fossil revenues decline, critical minerals could become Africa’s fiscal backbone, but only if value addition happens locally. That means refining, processing, and even battery manufacturing within Africa, not just mining and exporting.

Countries like Zimbabwe have already banned raw lithium exports. The African Union’s African Mining Vision calls for industrialisation along the value chain. But making this real requires regional cooperation, stable policies, and the courage to renegotiate contracts that trap Africa in “dig and ship” cycles.

Critical minerals are not just rocks in the ground; they are bargaining chips. Used wisely, they can underpin new fiscal models for the transition. Used poorly, they will repeat history’s extractivist curse.

Communities at the centre

Behind these macroeconomics are people. Communities in the Niger Delta, the Zambezi Valley, and the gas fields of Mozambique are already living the contradictions. Fossil projects displaced them but did not deliver development. Now, as revenues decline, they risk being abandoned again.

If the transition is truly “just,” communities must not only be consulted but compensated. Fossil revenue replacement should include community wealth funds, social protection schemes, and direct investment in health, education, and local infrastructure. Otherwise, the transition will be another elite project, disconnected from those who pay its hidden costs.

My reflection from Addis

At the Africa Climate Summit, I joined a session where a participant asked: “If not oil, then what?” The room fell silent. Because while we speak confidently about renewables and critical minerals, the fiscal arithmetic is still fragile.

What struck me most was how often African negotiators are expected to promise ambitious fossil phase-outs without concrete commitments of finance in return. We are asked to leap without a safety net. For countries whose budgets are tied to hydrocarbons, that is not a transition; it is a collapse.

The fossil phase-out is inevitable. Africa’s demand must be clear: fiscal alternatives must be secured so that phase-out is just and sustainable, not chaotic.

Towards COP30: a continental demand

As Africa heads to COP30 in Brazil, I believe our message must be clear and united. The fossil era is ending—whether Africa is ready or not. Our responsibility is to make the end just, and to ensure it delivers new systems of resilience.

This means:

• Debt relief tied to climate action
• Grant-first concessional finance
• Local value addition in critical minerals
• Community wealth systems that ensure justice

This is not about delay or obstruction. It is about survival. Without fiscal stability, no country can deliver renewable transitions at scale, and no community can build resilience.

The moral case

When I think of the fisherman in the Niger Delta, I see both the injustice of the fossil era and the peril of the transition era. His community bore the cost of extraction but never shared the wealth. Now, as revenues shrink, he and millions like him risk bearing the cost of transition as well.

That cannot be Africa’s story again. If the world insists on an accelerated phase-out, it must also insist on fiscal justice. Otherwise, promises of a “just transition” will ring hollow, and Africa will once again power global change while remaining in the shadows of poverty.

The fossil era is ending. Africa’s challenge is not to resist it, but to ensure the phase-out is just, fiscally stable, and centred on communities.