While Africa has over 65 per cent of the world’s uncultivated land, it is a net food importer, and as such, has been severely impacted by the rise of global food prices, resulting in increased food insecurity.Īccording to the IMF, staple food prices in Africa “surged by an average 23.9 per cent in 2020-22-the most since the 2008 global financial crisis.” Instead, this risks further perpetuating commodities-based economies, stunting the continent’s own industrialization ambitions. While this may spell more investments in the energy sector on the continent, the benefit may not necessarily result in energy access for Africans themselves. Natural gas is also getting more traction as a “green investment”, a pivot from the pledges made at the COP26 global climate talks in Glasgow in November 2021 to curtail development financing for natural gas projects.įor African countries, this has meant a renewed interest in and fast-tracking of natural gas and liquified natural gas (LNG) projects, but mainly for export to Europe and others outside the continent. The global energy crisis also created policy reversals, with many countries now pursuing natural gas and other fossil fuel projects to meet their energy needs. Moreover, seven African countries are in debt distress as of January 2023, and 14 more are at high risk of debt distress, which makes them unable to implement meaningful countermeasures.Īs a result, African households, who, according to the IMF, already spend over 50 per cent of their overall consumption on food and energy, felt the significant impact of the high conflict-induced global energy prices, along with their indirect effects on the cost of transportation and consumer goods. In addition to pressures from fluctuations in exchange rates, and high commodities prices, inflation reached double digits in 40 per cent of African countries. These high costs for natural gas have come down significantly by February 2023, to less than $100 per megawatt-hour, owing to relatively warm winter temperatures in the northern hemisphere.Įuropean governments largely shielded their citizens from these price shocks by spending over $640 billion on energy subsidies, regulating retail prices, and supporting businesses. African governments, on the other hand, did not have the fiscal space to protect consumers with such wide-scale, much-needed measures to counter rising energy prices.
This strain comes as African economies are still trying to emerge from the impacts of the COVID-19 pandemic, for which they did not have enough resources to cushion themselves.īy mid- 2022, global energy prices soared to a three-decade high, and natural gas price costs edged over 300 Euros per megawatt-hour. The 2022 World Economic Outlook paints a stark picture of the state of global energy, stating that it is “ delivering a shock of unprecedented breadth and complexity.”
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