Energy Management and Green Investment in Africa: Navigating Sustainable Solutions | 2026
Authors: Abdul-Wahab A.-H.; Jamoni P.; Issahaku H.
DOI: 10.1007/978-3-032-03646-9_3
Journal: Energy Management and Green Investment in Africa: Navigating Sustainable Solutions
Year: 2026
Publisher: Springer Nature
Document Type: Book chapter
Open Access: All Open Access; Gold Open Access
Cited by: 0
Energy subsidies have long been a cornerstone of economic and social policy in Africa, aimed at ensuring energy affordability and shielding populations from price volatility. However, these subsidies impose significant fiscal burdens, distort markets, and hinder the transition to sustainable energy systems. This study examines the complex dynamics of energy subsidies in Africa, analyzing their historical evolution, economic and social impacts, and the challenges of reform. Subsidies for fossil fuels have taken up an enormous portion of African governments’ budgets, leaving less money for essential services like healthcare and education, and going largely to the upper class. South Africa’s subsidies for fossil fuels increased threefold from 2018 to 2023, while Nigeria allocated $10 billion, or 24% of its government budget, to fuel subsidies in 2022. Renewable energy investment is discouraged, inefficiencies are perpetuated, and environmental degradation is accelerated by these subsidies. A policy conundrum exists because, despite worldwide pledges to decarbonize, many African states still put short-term affordability ahead of long-term sustainability. The withdrawal of fuel subsidies in Nigeria in 2023 caused mass protests owing to skyrocketing prices, demonstrating how politically sensitive energy subsidy reform is. Reforms that have been successful in nations like Indonesia and Ghana have shown the value of gradual rollouts, specific social safety nets, and open dialogue. In order to strike a balance between affordability and sustainability, this study proposes a two-pronged strategy: first, to progressively reduce subsidies for fossil fuels; second, to reinvest these savings into renewable energy and social safety nets. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2026.
Africa energy policy; Energy subsidies; Fiscal burden; Fossil fuel subsidies; Social safety nets; Sustainable energy transition