Africa has an enormous incentive to industrialize: the world’s fastest-growing population and an urbanization rate that is nearly double the global average. To create jobs for the nearly 450 million young people expected to enter the job market over the next two decades, Africa must accelerate economic growth, or face a growing risk of severe social unrest.
But, historically, industrialization has required burning huge amounts of fossil fuels. Moreover, for most African countries, natural resources like hydrocarbons are vital sources of foreign exchange and budget revenue.
These countries cannot abandon “brown” industries – those that depend on oil, gas, and minerals – and create a green economy overnight. But they can use them as a tool to achieve a clean, sustainable economy. That means putting brown industries at the center of African governments’ green industrialization plans.
International oil demand may remain relatively strong today, but it is set to drop significantly over the next decade. McKinsey estimates that if electric vehicles (EVs) are adopted at scale, oil demand for road transport will plummet, while total oil demand will peak before 2025. This could leave African oil producers with a supply glut.
But these oil producers have options. By investing in the local petrochemicals industry, which can absorb excess crude supplies, they can lay the groundwork for the manufacture of goods that are critical to the green economy of the future, such as solar panels, wind turbine blades, and EV parts. Oil-rich African countries like Nigeria, Angola, and Algeria have a narrow window to initiate this shift, following in the footsteps of Saudi Arabia, which is basing its economic-diversification efforts on a robust petrochemicals industry.