By NJ Ayuk*
Stable fiscal regimes, predictable contract terms, and anti-corruption measures help de-risk projects and give investors the confidence to commit long-term capital.
Investor confidence in Algeria’s energy sector is climbing. The country — already one of Africa’s most active oil and gas producers — has seen even more momentum in 2025.
In October, Algeria’s national oil company, Sonatrach, announced a USD5.4 billion partnership with Saudi Arabia’s Midad Energy to explore and develop new fields in the Illizi Basin. The government has also entered advanced talks with ExxonMobil and Chevron on a groundbreaking framework that would give US companies access to Algeria’s vast natural gas reserves — a first in the nation’s history. Earlier this year, Sonatrach and China’s Sinopec signed a Memorandum of Understanding (MoU) to jointly assess and potentially develop resources in the Gourara and Berkine-Est basins.
These agreements are not emerging in a vacuum. They reflect the deliberate reforms Algeria has enacted in recent years: simplifying business registration, establishing special economic zones, improving contract transparency, and signaling a stronger commitment to international partnership. As a result, the country is drawing a diverse roster of major players, from Eni and Equinor to TotalEnergies.
Algeria’s progress offers a timely lesson for African nations with petroleum resources. Africa’s oil and gas sector will require billions in new investment over the next decade, yet securing capital has become more difficult. As noted in the African Energy Chamber’s (AEC) “State of African Energy: 2026 Outlook Report,” Western financial institutions continue to retreat from fossil-fuel financing, and many investors remain cautious about perceived risks in emerging markets.
The governments that confront these challenges by adopting investor-friendly policies and strengthening governance will be the ones to realize the key benefits of oil and gas, including energy security, job creation, and broader economic growth.
Algeria shows what is possible when reforms align with clear investment objectives. Other countries that have taken similar steps, such as Angola and Nigeria, are also seeing renewed activity. But this cannot remain limited to a handful of markets. The resources are here. The opportunities are here. Now is the time to act.
The Opportunity Is Enormous. The Capital Isn’t.
Africa certainly doesn’t lack opportunity — it has an abundance of it. The continent holds an estimated 125 billion barrels of proven oil reserves and roughly 625 trillion cubic feet of natural gas as of 2025. These are not abstract numbers; they represent jobs, infrastructure, and prosperity waiting to be unlocked.
According to our outlook report, Africa’s overall hydrocarbon production is projected to hold steady at around 11.4 million barrels of oil equivalent per day (MMboe/d). But maintaining — let alone expanding — that output requires continuous investment. Wells decline. Infrastructure ages. New discoveries must be developed. Without consistent capital inflows, Africa risks leaving its wealth in the ground.
And while our outlook points to encouraging signs of renewed spending — particularly in countries like Namibia, Angola, and Mozambique — the continent remains far from reaching its full investment potential. The AEC estimates that the continent faces an annual energy finance gap between USD31.5 billion and USD45 billion. External investment is expected to average roughly USD35 billion per year between 2020 and 2030 — a level that will not deliver the production growth Africa needs to meet rising domestic demand or strengthen export capacity.
Investment Won’t Come Without Reform
Whether Africa can increase production hinges on several factors, but few are more important than governments’ ability to offer investment terms that meet industry needs. Oil and gas projects demand massive upfront capital — often in the hundreds of millions or even billions of dollars — and investors are keenly aware of the risks associated with frontier markets. These risks include political instability, abrupt regulatory changes, contract uncertainty, weak infrastructure, and security concerns. On top of that, private-sector financiers continue to face global pressure to channel capital toward renewable energy rather than fossil fuels.
If African countries want to compete for scarce investment dollars, they must demonstrate that their markets are stable, predictable, and commercially attractive.
One of the greatest deterrents to investors is slow or unpredictable regulatory approval processes. Lengthy permitting timelines, unclear requirements, or frequent policy changes can stall projects and undermine returns. Governments must streamline approvals and establish transparent regulatory frameworks with firm timelines. Fast, direct communication channels between regulators and companies also make an enormous difference in reducing delays.
A proven approach is the creation of one-stop regulatory agencies that consolidate multiple approvals under one roof. Equatorial Guinea has implemented a system that allows investors to establish a business within a week, and Angola recently launched a one-stop center for local content compliance in the oil and gas sector. These reforms dramatically reduce friction and make markets far more competitive.
Equally important is ensuring strong governance and transparency. Stable fiscal regimes, predictable contract terms, and anti-corruption measures help de-risk projects and give investors the confidence to commit long-term capital. Countries such as Nigeria and Ghana have emphasized clear rules, transparent licensing processes, and improved sector governance as central pillars of their investment strategies — and these efforts are widely recognized as strengthening investor trust.
The Green Energy Gap Africa Cannot Afford
Ironically, even as global institutions push investors to prioritize renewable energy, Africa is experiencing a significant green-energy investment shortfall.
Our outlook report addresses this problem: “Africa’s renewable energy sector holds the potential to reshape the power landscape and enhance energy security for millions. However, given Africa is the second most populous continent in the world, the scale of investment in the renewable energy sector remains significantly behind that of other global initiatives.
“Between 2020 and 2025, Africa invested USD34 billion in clean power technologies, with 52% directed towards solar power and 25% towards onshore wind. Despite this investment, Africa’s share of global investments is projected to be just 1.5% in 2025.”
Just like the fossil-fuel financing gap, this shortfall is tied directly to investor risk perceptions. As the report explains, Africa continues to lag other regions because its energy markets are seen as high risk, marked by political instability, regulatory uncertainty, inadequate infrastructure, policy reversals, corruption concerns, and burdensome bureaucracy. Limited access to capital and high interest rates compound these challenges.
African governments must adopt policies that counter these concerns. The same reforms that draw investment into oil and gas — transparent rules, predictable contract terms, streamlined approvals, and stable fiscal regimes — will also increase investor confidence in solar, wind, hydrogen, and other green energy sources.
Strengthening renewable-energy financing is urgent, particularly because one of the power sources with the greatest potential to support Africa’s long-term energy security and economic growth is also among the costliest to develop: nuclear energy.
To grasp the scale of the challenge, consider that Africa plans to spend around USD105 billion to build 15,000 MW of new nuclear power capacity by 2035. Egypt’s 4,800 MW project on the continent is expected to cost nearly USD29 billion alone.
Yet the potential benefits of nuclear power cannot be overstated. As our report says, “Nuclear offers a unique advantage: it delivers stable baseload power, crucial for replacing fossil fuel generation and for stabilising grids that increasingly depend on intermittent renewable sources.” Without that stability, Africa risks unreliable supply as less-predictable solar and wind take on larger shares of the energy generation mix.
And while traditional nuclear infrastructure requires massive upfront capital, new small modular reactor technologies offer “smaller, more flexible project scales and lower capital requirements,” our report notes. For example, a microreactor with 10–20 MW output can cost between USD50 million and USD300 million, while a 300 MW SMR might cost around USD900 million to USD1 billion, much less than conventional nuclear plants.
For African countries seeking long-term, low-carbon energy security, encouraging nuclear investment will be worth the effort. But Africa cannot fully unlock its renewable-energy potential — or its nuclear potential — without creating a policy environment in which investors feel confident financing long-term, capital-intensive projects.
A Call for the World Bank to Step Up
Even with growing private-sector participation, Africa will need far greater financial support to develop its oil and gas resources, scale renewables, and build the foundation for a viable nuclear sector. Private capital alone cannot meet the scale of Africa’s energy needs.
This is why the AEC continues to call on the World Bank to end its 2017 ban on financing upstream oil and gas projects, a policy adopted in response to global concerns about greenhouse gases and climate change. Africa cannot eliminate its widespread energy poverty without responsibly developing its natural gas resources. Gas-to-power projects offer one of the fastest and most affordable pathways to expanding electricity access, providing the reliable baseload supply needed to power households, industries, and growing cities. And at a time when renewable-energy investment remains far below required levels, revenues from oil and gas can help finance the long-term transition to cleaner energy sources.
The AEC welcomes the World Bank’s decision to lift its ban on financing nuclear energy, as well as its ongoing review of restrictions surrounding natural gas exploration and production. But review is no longer enough. The pace of change must match the urgency of Africa’s energy crisis.
Population growth is accelerating faster than our electrification efforts, meaning every incremental gain is being swallowed by demographic realities. Africa needs the capital to expand access to electricity rapidly and at scale — not in 10 or 20 years, but now. By maintaining its prohibition on upstream oil and gas financing, the World Bank is unintentionally contributing to prolonged energy poverty, limiting Africa’s ability to industrialize and undermining progress toward a balanced and sustainable energy future.
Lifting this ban would not undermine global climate goals. On the contrary, it would support Africa’s responsible use of natural gas as a transition fuel, while enabling the continent to invest in renewables, storage, and nuclear power — the technologies that will power Africa for generations to come. What Africa needs from the World Bank is not hesitation, but partnership.
I would add that the AEC is not the only voice calling for change. The United States government has also urged the World Bank to reconsider its restrictions. As US President Donald Trump’s administration recently noted, multilateral development banks cannot fulfil their core mandates if the World Bank continues to restrict natural-gas financing. “An all-of-the-above energy strategy that provides for the financing of upstream gas would be a positive step towards reconnecting the World Bank, and all other multilateral development banks, to their core missions of economic growth and poverty reduction,” a spokesperson for the US Treasury Department told the Financial Times.
A Decisive Moment
Africa’s energy future will not be secured through rhetoric or cautious half-measures. It will be secured by creating the conditions that allow investment to flow — conditions that give global partners the confidence to support our oil and gas resources, expand our renewable-energy capacity, and build the nuclear infrastructure that can anchor our long-term energy security.
If African governments embrace reform rather than stagnation and if institutions like the World Bank commit to partnership instead of prohibition, Africa can end energy poverty, drive industrialization, and give millions the reliable power they need to thrive. Africa’s future depends on what we choose to do today.
“The State of African Energy: 2026 Outlook Report” is available for download.
