"Investments in gas pipelines, LNG facilities, and distribution infrastructure can unlock domestic markets and stimulate regional trade in energy services."

Fred Kabanda

DIVISION MANAGER, EXTRACTIVES, AFRICAN DEVELOPMENT BANK (AFDB)

June 06, 2025

Can you update us on the AfDB’s activities around natural resources?  

Africa’s abundant endowment of renewable and non-renewable natural resources presents a transformative opportunity to accelerate inclusive growth, industrialization and climate-resilient development. 

In 2024, the AfDB launched its new Ten-Year Strategy (2024–2033)—TYS 2.0—which acknowledges natural resources as key levers of structural transformation. The strategy outlines a bold vision to drive good governance of natural resources, valuing natural capital, and facilitate low-carbon investment pathways through the strategic deployment of critical minerals, as well as renewable energy sources. 

How can development and energy transition goals be met with natural gas projects in Africa?

Natural gas in Africa can be a bridge to industrialization and the clean energy transition. Africa is home to an estimated 800 trillion cubic feet of natural gas reserves, concentrated in countries such as Nigeria, Mozambique, Algeria, Egypt, Tanzania and Senegal. As the continent works to achieve energy access, industrial growth and climate goals, natural gas presents a strategic transitional fuel that can support both socioeconomic development and decarbonization pathways when deployed responsibly. In its Ten-Year Strategy (2024-2033), the Bank pledges to continue supporting Africa's net zero transition during which transition natural gas is a relevant resource for the continent's industrialization, particularly for harder to abate industrial sectors.

Natural gas can play a transformative catalytic role in Africa's development through power generation. For industrialization, gas is essential for energy-intensive sectors such as cement, steel, fertilizer, and petrochemicals, which are key to Africa's structural transformation and job creation. Investments in gas pipelines, LNG facilities, and distribution infrastructure can unlock domestic markets and stimulate regional trade in energy services.

Supporting a just energy transition, natural gas can complement Africa's transition to a low-carbon future in several ways. As a transition fuel in the near to medium term, natural gas can displace more carbon-intensive fuels and serve as a bridge while renewables are scaled up. For cleaner cooking, Liquefied Petroleum Gas (LPG) and compressed natural gas (CNG) can help reduce biomass use, lowering deforestation and indoor air pollution. As an enabler for renewable integration, gas offers dispatchable power that can balance intermittent renewables like solar and wind, enhancing energy reliability.

The use of natural gas is consistent with Africa's differentiated pathway under the Paris Agreement, acknowledging the continent's low historical emissions and development needs. Natural gas is prioritized in several African national energy strategies and regional programs (e.g., PIDA, AU Climate Strategy). Multilateral development institutions increasingly support "gas for development" frameworks that integrate economic inclusion, emissions reduction, and environmental safeguards.

To ensure alignment with development and climate objectives, gas projects must include strong governance and transparency frameworks to manage revenues and avoid the resource curse. It should be integrated with industrial policy, ensuring gas is used to support domestic production and jobs, and incorporate emissions monitoring, methane reduction, and carbon capture technologies where feasible. It's important to leverage blended finance and risk-sharing instruments to mobilize private investment in infrastructure.

What is the AfDB's strategy to connect natural resource value chains?

Africa has significant natural resources wealth. The continent holds 30% of the world's total mineral reserves, including large reserves of cobalt, diamonds, platinum, uranium, and gold. In 2022, Africa accounted for over 7% of proven global oil and 8% of gas reserves. Extractive natural resource development has not sufficiently led to value addition and industrial upgrading in Africa, as investments are heavily concentrated in resource extraction and raw material exports. As a result, there is low value being added to the local economy through jobs, supply chains, skills and education, technology, and human capital. 

The Bank conducted value chain analyses for petroleum, green minerals such as lithium, cobalt and the Rare Earth Elements to identify market opportunities in global value chains. The Bank is currently undertaking a continental pre-feasibility study of battery, EVs (BEV), and Renewable Energy (RE) value chains of key countries and sub-regional blocs in Africa to identify their inherent opportunities and challenges in developing capacity for the battery, EV, and renewable energy value chains. The study outputs include project proposals in the BEV and related sectors with economic justification (NPV, IRR etc.) for potential funding activities: Battery precursor production; battery cell manufacturing; battery assembly, etc.

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