How Gas Keeps Africa Trapped in a Vicious Debt Cycle
Africa is no stranger to debt but gas projects are exacerbating the problem. While fossil fuel companies and foreign investors promise economic growth and energy security, the reality on the ground tells a different story. Gas infrastructure is expensive, extractive, and entrenching African nations in deeper cycles of financial dependency. Here's how:
1. High-Cost Infrastructure Leads to Heavy Borrowing
Gas projects are capital-intensive. From pipelines and refineries to liquefaction plants and export terminals, building this infrastructure often requires billions of dollars. To fund these mega-projects, governments frequently take out loans from international banks or institutions, or sign long-term contracts with foreign companies. These debts must be repaid — with interest — whether or not the projects yield the expected returns.
2. Dollar-Denominated Debt Worsens Currency Crises
Most gas deals are made in US dollars. When African currencies depreciate against the dollar — a common occurrence — the cost of repaying these loans increases dramatically. This forces governments to allocate more of their budgets to debt servicing, draining resources from public services like education, health, and social welfare.
3. Stranded Assets Risk Future Financial Collapse
As the world shifts away from fossil fuels, there is a growing risk that new gas infrastructure will become obsolete before it can generate a return. These stranded assets leave countries burdened with unpaid loans and unusable infrastructure, while climate regulations make it harder to find buyers or investors. Africa ends up holding the bag for a dying industry.
4. Environmental and Social Damage Increases Public Costs
Oil spills, pipeline leaks, and land degradation from gas projects destroy ecosystems and hurt local livelihoods, especially in agriculture and fishing. These damages translate into higher government spending on disaster relief, public health crises, and environmental restoration — all while reducing the tax revenue base.
5. Transparency Issues Enable Corruption
Many gas deals are struck behind closed doors, often with limited public oversight or community involvement. This lack of transparency opens the door to corruption and mismanagement, allowing billions of dollars to be siphoned off while the public is left to shoulder the debt.
6. Social Displacement and Conflict Fuel Instability
Communities displaced by gas exploration often receive little to no compensation. This leads to social unrest, increased military and policing budgets as seen in Mozambique and Uganda — all of which place additional financial pressure on governments.
Conclusion: Fossil Fuels Are Not a Path to Freedom
Gas is sold as a tool for development, but it is chaining African economies to extractive systems and long-term debt. A just transition means rejecting false solutions and investing instead in community-owned renewable energy, transparency, and economic models that prioritize people and the planet over profit.
Are you tired of the long list of negative impacts that gas has on African communities? Sign the petition below and help us tell the African Union: Don’t Gas Africa!
