policy-insights-112-siyobi-5e0438ab43ead787.pdf

This research paper examines the risk of stranded assets in Africa's extractives sectors as the global economy transitions toward low-carbon energy and a circular economy. It analyzes the economic threats to fossil-fuel-dependent nations, the potential for 'premature deindustrialisation', and the opportunities presented by the rising demand for critical minerals. The author argues for a 'just transition' that prioritizes social and developmental goals through economic diversification and improved governance to avoid the 'resource curse'.

• The transition to a low-carbon economy creates a high risk of stranded assets for African countries dependent on fossil fuel revenues. To meet Paris Agreement targets, it is estimated that Africa must leave 90% of its coal, 34% of its oil, and 26% of its gas reserves untouched.
• Many African nations face 'premature deindustrialisation', where they shift from manufacturing to low-value service economies before achieving labour-absorbing industrialisation. The author suggests adopting green industrialisation strategies, such as battery or solar panel production, to mitigate this and ensure a just transition.
• Despite the potential for renewable energy—with the African Development Bank estimating solar potential at 1000 GW and hydroelectric at 350 GW—public financing remains skewed. Between 2014 and 2016, nearly 60% of public energy finance in Africa went to fossil fuels, while only 18% was allocated to renewables.
• The global shift toward a circular economy increases the demand for 'clean' mineral energy materials. Africa is well-positioned to supply minerals essential for low-carbon technologies, including cobalt, copper, lithium, nickel, and rare earth elements.
• The 'resource curse'—characterized by rent-seeking, corruption, and weak governance—continues to affect resource-rich African countries. In Nigeria, for example, despite producing 2.5 million barrels of oil per day between 2015 and 2019, 86.9 million people lived below the poverty line of $381 per year.
• Economic diversification is critical for mitigating the impact of stranded assets. Ghana is cited as an example through its 'One District, One Factory (1D1F)' initiative, which aims to build one factory in each of its 260 districts to reduce dependence on natural resources and foreign aid.
• While divestment movements have seen over 1,300 institutions controlling $14.5 trillion move away from fossil fuels, the actual impact is questioned. G20 governments have provided at least $151 billion in funding to support fossil fuels for post-COVID-19 recovery, compared to $89 billion for clean energy.

APA

South African Institute of International Affairs (n.d.). policy-insights-112-siyobi-5e0438ab43ead787.pdf. https://saiia.org.za/wp-content/uploads/2021/07/Policy-Insights-112-siyobi.pdf

Chicago

South African Institute of International Affairs. policy-insights-112-siyobi-5e0438ab43ead787.pdf. n.d. https://saiia.org.za/wp-content/uploads/2021/07/Policy-Insights-112-siyobi.pdf.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=policy-insights-112-siyobi-5e0438ab43ead787.pdf |url=https://saiia.org.za/wp-content/uploads/2021/07/Policy-Insights-112-siyobi.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairsndpolicyinsights112siyobi5e0438ab43ead787pdf, author = {{South African Institute of International Affairs}}, title = {{policy-insights-112-siyobi-5e0438ab43ead787.pdf}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2021/07/Policy-Insights-112-siyobi.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }