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African Clean Energy Sovereignty Cannot Wait
Fadil Kaboub: Associate Professor of Economics at Denison University and President of the Global Institute for Sustainable Prosperity, is a member of the United Nations High-Level Advisory Council on Economic and Social Affairs, and author of “Global South Perspectives Substack.”
The war waged by the United States and Israel against Iran forces African economies to confront harsh realities. Once again, much of the continent finds itself at the mercy of volatile global oil and gas markets, a consequence of dependency associated with energy systems and structural deficiencies rooted in decades of neocolonialism. With oil prices surging above $100 per barrel, African economies need to strategically pivot toward clean energy sovereignty.
Anyone following the news knows that the Strait of Hormuz represents a critical global chokepoint, through which nearly a fifth of the world’s oil supply passes. Any disruptions there would have inflationary ripple effects on the global economy at large, including the economies of African countries that are not even direct buyers of Gulf oil.
For example, fertilizer prices are expected to spike sharply as the Gulf region accounts for a third of the world’s nitrogen fertilizer supply. The timing couldn’t be worse. Global food producers in the Northern Hemisphere are now in the midst of planting season, during which most fertilizers are used between February and May. Prices for animal feed, eggs, meat, corn, wheat, rice, and other staple foods are expected to rise over the next three to six months. In African economies that already heavily rely on imported food, high prices will create a second wave of inflation.
The burden will be greatest in African oil-importing nations, including Kenya, South Africa, and most Eastern African countries, which source a significant portion of their oil from the Middle East. For instance, Kenya signed an oil deal with the Government of Saudi Arabia two years ago, but every drop of fuel it imports through Mombasa Port comes via the Strait of Hormuz. Unless conditions stabilize quickly, fuel prices in Kenya will rise sharply, further pressuring its foreign exchange reserves, exchange rates, external debt, public finances, and the cost of living.
As if this familiar cycle weren’t challenging enough, these disruptions are occurring at a time of intense political volatility. We are about a year away from the next general elections in Kenya, and just two years ago, a cost-of-living crisis sparked protests that brought the country’s political system to the brink of collapse.
However, Kenya’s potential for greater reliance on renewable and clean energy sources is substantial, providing a more hopeful path for the future compared to continued dependence on fossil fuels. Once the infrastructure for solar, wind, and geothermal energy is established, it becomes possible to produce energy at near-zero marginal costs. Because these energy sources cannot be sanctioned, banned, or priced in foreign currencies, they significantly reduce exposure to currency fluctuations, import shocks, and geopolitical risks—factors that routinely destabilize African economies.
Every kilowatt-hour of locally produced green energy saves African dollars that would otherwise be borrowed to import fuel. Renewable energy is the only way that African economies can break free from the constraints of perpetual reliance on imported fuels, foreign currencies, and external creditors. It is not just a measure to combat climate change; it is the foundation for long-term economic sovereignty.
Africa possesses vast reserves of critical minerals necessary to drive the global green industrial revolution, positioning it to become an economic powerhouse in the energy sector. Financial and industrial analysts are no longer discussing fossil fuel assets that will become stranded in 2040 or some distant date; timelines have accelerated. Today, many assets are at risk of becoming stranded due to geopolitical risks, insurance costs (or outright unavailability), and currency-related restrictions. The reality is that the Persian Gulf crisis illustrates how risk calculations can change overnight.
In fact, we are witnessing a growing recognition that the future of energy investment lies in systems capable of withstanding both climate risks and geopolitical shocks. Major African banks—including Standard Bank, Nedbank, and FirstRand—have already set strict limits by 2026 on exposure to coal and oil. Any investor embarking on a new project dependent on fossil fuels risks entering a “liquidity trap,” as no one knows whether buyers will exist for such assets within the next five years.
Looking ahead, African pension funds must become the first line of defense for clean energy sovereignty in Africa. With around $1 trillion in managed assets, these funds can finance the construction of local renewable energy projects, thereby reducing import dependence and enhancing macroeconomic stability.
The ongoing conflict in the Middle East is the ultimate stress test. Institutional investors must go beyond merely checking environmental, social, and governance (ESG) criteria to acknowledge the reality that renewable energy is the only asset class capable of hedging against energy price volatility in the 21st century. For their part, African governments need to make bold and strategic policy moves to support this shift in mindset.
Africa does not need a massive increase in financial space to initiate this transition. It requires strategic political coordination through regional industrial policies and those that encompass the entire continent, along with the African Mining Vision and the African Union’s Agenda 2063. It is time to act on joint public procurement programs, local manufacturing of renewable energy components, enhancing the role of public development banks, and regulatory coordination to accelerate cross-border investments, manufacturing, deployment, and energy transfers.
Clean energy sovereignty should not be viewed as a luxury. It is a prerequisite for stability, political independence, and long-term economic development across the continent.
