The Way Forward: How Africa can make a comeback from the oil, gas downturn

JOHANNESBURG – Stunning drops in crude oil prices—the result of Covid-19-related declines in demand and an oil price war between Saudi Arabia and Russia—have been taking their toll around the globe this spring. For Africa’s oil-producing countries, where crude oil exports make up a large portion of their revenue, the situation is especially dire.

In Nigeria, for example, Nigerian Finance Minister Zainab Ahmed recently warned of an imminent recession and requested billions of dollars in international emergency funding. 

As of the second week of April, national oil production in Angola was expected to fall from 1.8 million to 1.36 million barrels per day as the government prepared to freeze 30 percent of its goods and services budget. 

And Ghana, according to the Africa Centre for Energy Policy, stands to see a 53 percent shortfall this year in projected revenue from crude oil sales. There are similar difficulties across the continent.

There has been a ray of hope: a landmark production-cut agreement among Opec, Opec+ and G20 stakeholders on April 12 put an end to the oil price war. Shortly after that historical agreement, the African Petroleum Producers Organization (APPO) committed to significant crude production cuts of its own, effective May 1. While demand remains a concern, the production cuts will help lower oil inventories and should bring some stability to the oil market.