STABLE financial systems, clear agreements, and efforts to stop corruption help reduce risks and make investors feel confident enough to invest long-term money.
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Investor confidence in Algeria's energy sector is growing.
The country, which is already one of Africa's top oil and gas producers, has seen even more progress in 2025.
In October, Algeria's national oil company, Sonatrach, announced a $5.4 billion deal with Saudi Arabia's Midad Energy to explore and develop new fields in the Illizi Basin.
The government has also been in advanced talks with ExxonMobil and Chevron about a new framework that would let US companies access Algeria's large natural gas reserves — something never done before in the country. Earlier this year, Sonatrach and China's Sinopec signed a Memorandum of Understanding (MoU) to look into and possibly develop resources in the Gourara and Berkine-Est basins.
These agreements aren't happening by chance.
They show the deliberate changes Algeria has made in recent years, like making it easier to start businesses, setting up special economic zones, improving how contracts are handled, and showing a stronger will to work with international partners. Because of this, the country is attracting a wide range of big companies, from Eni and Equinor to TotalEnergies.
Algeria's progress gives an important lesson to other African countries with oil and gas resources.
Africa's oil and gas industry will need billions in new investment over the next decade, yet getting that capital has become harder. As mentioned in the African Energy Chamber's "State of African Energy: 2026 Outlook Report," Western financial institutions are moving away from funding fossil fuels, and many investors are still cautious about risks in developing markets.
Governments that tackle these challenges by creating friendly investment environments and improving governance will gain the main benefits of oil and gas, such as energy security, job creation, and overall economic growth.
Algeria shows what is possible when reforms match clear investment goals.
Other countries that have taken similar steps, like Angola and Nigeria, are also seeing more activity. But this can't just be limited to a few markets. The resources are there. The opportunities are there. Now is the time to act.
The Opportunity Is Enormous.
The Capital Isn't.
Africa certainly doesn't lack opportunity — it has plenty of it.
The continent holds an estimated 125 billion barrels of proven oil reserves and about 625 trillion cubic feet of natural gas as of 2025. These are not just numbers; they mean jobs, infrastructure, and prosperity waiting to be unlocked.
According to our outlook report, Africa's overall hydrocarbon production is expected to stay around 11.4 million barrels of oil equivalent per day (MMboe/d).
But keeping — let alone increasing — this output needs ongoing investment. Oil wells decline. Infrastructure gets older. New finds must be developed. Without steady capital, Africa risks leaving its wealth underground.
And while our outlook shows some good signs of more investment — especially in countries like Namibia, Angola, and Mozambique — the continent is still far from reaching its full investment potential.
The AEC estimates that Africa faces an annual energy finance gap between $31.5 billion and $45 billion. External investment is expected to average about $35 billion per year between 2020 and 2030 — a level that won't help Africa meet rising domestic demand or boost its export capacity.
Investment Won't Come Without Reform
Whether Africa can increase production depends on several factors, but few are more important than governments' ability to offer investment terms that suit the industry.
Oil and gas projects need massive upfront capital — often in the hundreds of millions or even billions of dollars — and investors are very aware of the risks in new markets. These risks include political instability, sudden changes in rules, unclear contracts, poor infrastructure, and security issues. On top of that, private financiers face pressure globally to direct money toward renewable energy instead of fossil fuels.
If African countries want to compete for limited investment dollars, they must show that their markets are stable, predictable, and appealing for business.
One of the biggest things that put investors off is slow or uncertain approval processes.
Long waiting times, unclear rules, or frequent changes in policy can stop projects and lower returns. Governments must make approvals faster and set up clear, transparent rules with set deadlines. Direct communication lines between regulators and companies also greatly reduce delays.
A proven way is creating single regulatory agencies that handle multiple approvals in one place.
Equatorial Guinea has a system that lets investors set up a business in a week, and Angola recently started a one-stop center for local content compliance in the oil and gas sector. These changes greatly reduce friction and make markets much more competitive.
Just as important is making sure there is strong governance and transparency.
Stable financial systems, clear contracts, and anti-corruption efforts help reduce project risks and give investors confidence to commit long-term money. Countries like Nigeria and Ghana have focused on clear rules, transparent licensing, and better sector management as key parts of their investment plans — and these efforts are widely seen as building investor trust.
The Green Energy Gap Africa Cannot Afford
Interestingly, even as global institutions push investors to focus on renewable energy, Africa is facing a big gap in green-energy investment.
Our outlook report points this out: "Africa's renewable energy sector has the potential to change the power landscape and improve 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 much lower than other global initiatives."
Between 2020 and 2025, Africa spent USD34 billion on clean energy technologies, with 52% going to solar power and 25% to onshore wind. However, even with this investment, Africa's share of global clean energy investments is expected to be just 1.5% in 2025. This gap is linked to how investors perceive risk. Africa continues to trail other regions because its energy markets are seen as risky due to political instability, unclear rules, poor infrastructure, changing policies, corruption, and complex bureaucracy. It is also harder to get money and interest rates are high, which makes things even worse.
African governments need to take steps that address these issues.
The same rules that attract investment in oil and gas—like clear laws, predictable contracts, fast approvals, and stable financial systems—can also build confidence in clean energy like solar, wind, and hydrogen. Strengthening the financing of renewable energy is urgent, especially because one of the energy sources with the biggest potential to support Africa's energy needs and growth is also the most expensive to develop: nuclear power.
To understand the challenge, consider that Africa plans to spend about USD105 billion to build 15,000 MW of new nuclear power by 2035.
Egypt's 4,800 MW project alone is expected to cost nearly USD29 billion.
Nuclear power has a unique advantage: it offers steady, reliable electricity, which is important for replacing fossil fuel energy and helping keep power grids stable as more solar and wind energy is used.
Without that reliability, Africa could face power shortages as solar and wind become a bigger part of the energy mix.
Although traditional nuclear projects need a lot of money upfront, new small modular reactors offer more flexible and cheaper options.
For example, a small reactor with 10-20 MW of power might cost between USD50 million and USD300 million, while a 300 MW modular reactor could cost around USD900 million to USD1 billion—much less than traditional plants.
For African countries seeking long-term, low-carbon energy security, encouraging nuclear investment is worth the effort.
But Africa can't fully unlock its potential in renewable and nuclear energy without creating a policy environment that makes investors feel confident about long-term, big projects.
A Call for the World Bank to Step Up
Even with more private investment, Africa will need a lot more financial support to develop oil and gas, grow renewables, and build a strong nuclear sector.
Private money alone can't meet Africa's energy needs.
That's why the AEC continues to ask the World Bank to end its 2017 ban on financing upstream oil and gas projects.
This policy was introduced due to concerns about climate change. But Africa can't solve its energy poverty without managing its natural gas resources responsibly. Gas-to-power projects offer a fast and affordable way to expand electricity access, providing the reliable power needed for homes, industries, and growing cities. At a time when renewable investments are still too low, income from oil and gas can help fund the transition to cleaner energy.
The AEC welcomes the World Bank's decision to allow nuclear energy financing and its ongoing review of restrictions on natural gas exploration and production.
But reviews aren't enough anymore. The changes need to be quick enough to match the urgency of Africa's energy crisis.
Population growth is happening faster than electricity access.
So every small gain in access is being eaten up by the growing population. Africa needs the money to rapidly expand electricity access—not in 10 or 20 years, but now. By keeping its ban on upstream oil and gas, the World Bank is indirectly contributing to prolonged energy poverty, limiting Africa's industrial growth and slowing progress toward a sustainable energy future.
Removing the ban would not hurt climate goals.
On the contrary, it would help Africa use natural gas responsibly as a transition fuel while allowing investments in renewables, storage, and nuclear power—technologies that could power Africa for generations. What Africa needs from the World Bank is not hesitation, but partnership.
I should mention that the AEC is not the only one calling for change.
The United States government has also asked the World Bank to reconsider its restrictions. The Trump administration recently said that multilateral banks can't fulfill their mission if the World Bank continues to restrict natural gas financing. A spokesperson from the US Treasury told the Financial Times, "An all-of-the-above energy strategy that allows financing for upstream gas would be a positive step towards reconnecting the World Bank and other banks to their main goals of economic growth and poverty reduction."
A Decisive Moment
Africa's energy future won't be secured through words or half-hearted efforts.
It will come from creating the right conditions for investment—conditions that make global partners feel confident to support our oil and gas projects, grow our renewable energy, and build the nuclear infrastructure needed for long-term energy security.
If African governments choose reform over stagnation and if institutions like the World Bank choose partnership over restriction, Africa can end energy poverty, drive industrialization, and give millions the reliable power they need to thrive.
Africa's future depends on what we do today.“The State of African Energy: 2026 Outlook Report” is available for download.