Lockdown measures to contain the spread of the virus and safeguard healthcare systems reduced global energy demand, resulting in a steep drop in the price of oil. As a result, Africa’s oil industry, which accounts for 40% of the continent’s exports, has seen an abrupt and severe drop in revenue, increasing fiscal pressures on major producers like Nigeria, Angola and Algeria.
At the same time, the pandemic has impacted supply chains for African energy projects and prevented workers from travelling. Moreover, financial resources intended for major energy developments have been redirected towards healthcare or used to ease the pressure on government budgets, particularly in heavily indebted Sub-Saharan countries. This has affected the financial health of state-owned energy companies, many of which were under pressure before the pandemic struck.
All this offers Africa the chance to accelerate its use of renewable energy, which in turn should make the continent more resilient to future economic shocks.