article · International Journal of Energy Sector Management
An empirical evaluation of secondary data from 1990 to 2020 examines how the transition to low-carbon energy affects public revenues in Africa's top three petroleum producers: Algeria, Angola, and Nigeria. By applying cointegration econometric estimators, the analysis reveals that shifting towards cleaner energy sources reduces both oil revenues and non-oil receipts across these economies. Because changing global demand and prices lower traditional petroleum earnings, existing revenue structures are becoming unsustainable. Consequently, resource-reliant African states face declining fiscal capacity. To counteract this downturn, the findings highlight an urgent requirement for strategic economic diversification. Governments must direct investments towards non-oil sectors, including manufacturing, the service industry, and human capital development, to transform their national economies and safeguard revenue streams amid continuing global decarbonisation.
As the world moves away from fossil fuels, petroleum-dependent nations face severe budgetary pressures. This research shows that decarbonisation directly reduces state revenue in resource-reliant African economies. Understanding these fiscal risks helps policymakers, international development institutions, and public planners design targeted diversification strategies to safeguard public services and maintain national economic stability during global energy shifts.
The abstract does not indicate a commercial application pathway. Instead, the study offers high-level economic evidence aimed at public finance officials, international development agencies, and economic planners. While it cannot be commercialised as a technology or product, the insights can inform national policy frameworks and investment programmes designed to support early-stage growth in alternative sectors such as manufacturing and services.
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Purpose The purpose of this study is to empirically analyse the fiscal revenue implications for oil-dependent African countries in the face of low-carbon energy transition (LET). Design/methodology/approach The study combined the novel fully modified ordinary least squares, dynamic ordinary least squares and canonical cointegrating regressions estimators to analyse secondary data between 1990 and 2020 for the three major oil-dependent African Countries (Algeria, Angola and Nigeria). Findings The result shows that LET reduces oil revenue and non-revenue for specific countries (Algeria, Angola and Nigeria) and the panel, suggesting that low-carbon energy transiting is lowering the fiscal revenue of oil-dependent African nations. Research limitations/implications The seeming weakness of this study is its inability to broaden the scope to include all oil-producing African economies. However, since the study selected Africa’s top three oil-producing states, the sample can serve as a model for others with lesser crude oil outputs. Practical implications Oil-dependent African countries must urgently engage in sincere economic diversification in sectors like industry and manufacturing, the service sector and human capital development to promote economic transformation that will enhance fiscal revenue. Originality/value With the pace of energy transition towards low-carbon energy, it is not business as usual for oil-rich African countries (Algeria, Angola and Nigeria) due to fluctuating demand and price. As a result, it becomes worthy to examine how the transition is affecting oil-dependent economies in Africa. Also, this study’s method is unique as it has not been used in a similar study for Africa.
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DOI: 10.1108/ijesm-08-2023-0026
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