Unlocking a $10 billion opportunity for energy, agriculture, and economic growth
In collaboration with private sector partners and development institutions, Manufacturing Africa assessed the potential for Africa to produce biofuels across multiple use cases, including road transport fuels, clean cooking fuels, and sustainable aviation fuel (SAF). The analysis examined both conventional and advanced biofuels and evaluated the availability and economics of both first-generation (1G) and second-generation (2G) feedstocks.
A large opportunity in an underdeveloped market
Biofuels are already widely used globally. More than 70 countries mandate ethanol blending in road transport fuels, and advanced biofuels such as SAF and renewable diesel are rapidly scaling in Europe and the United States. In contrast, Africa’s current biofuels market remains limited (~$200 million), despite significant resource availability.
Africa’s biofuels sector remains small—currently worth only around $200 million. Yet the continent holds significant potential to scale production if cost-competitive applications, proven technologies, and viable feedstock supply chains are developed.
A realistic assessment of market potential focusing on use cases that require no subsidies, minimal cost differences (<5%) to consumers, proven technologies, and feasible feedstock availability, shows that Africa could scale production to $10 billion. By 2035, this opportunity could generate up to 325,000 jobs, support 2.2 million farmers, and help up to 15% of households transition to cleaner cooking. Two countries—Nigeria and South Africa—account for ~40% of this potential, with Angola, Ethiopia, Tanzania, and Uganda also emerging as major contributors. The opportunity also brings a projected $7 billion improvement in forex balance through reduced fuel and wood imports.
Early growth opportunities already exist, but stronger policy support would be required to unlock the full market
Up to $1.7 billion in value could be unlocked with limited or light policy support—where the economics are already competitive or only modest policy interventions are required.
Three use cases account for roughly 80% of this near-term opportunity:
- Exporting 2G oil-based feedstocks. Africa can supply used cooking oil and purpose-grown oil crops such as castor to international sustainable aviation fuel markets. This requires improved traceability systems, farmer aggregation, and enforcement of health regulations that restrict cooking oil reuse.
- Ethanol for clean cooking. In urban areas where LPG or electricity are unavailable or unreliable, ethanol cooking fuel can provide a clean alternative to charcoal and wood. Carbon credits can help make ethanol cooking solutions cost competitive.
- Bio‑pellets for cooking. Bio‑pellets made from agricultural waste can serve rural and peri‑urban households that purchase fuelwood. Scaling requires improved distribution networks, consumer awareness, and production facilities near biomass sources.
Realizing the full market potential will require stronger policy support—similar to frameworks that enabled biofuels industries to scale globally. Key policy mechanisms may include fuel blending mandates, long‑term procurement frameworks, public‑private partnerships, and policies restricting unsustainable wood harvesting.
Policy support would also unlock additional opportunities, including ethanol blending for road transport, sustainable aviation fuel refining, and biodiesel production.
Biofuels and Africa’s agricultural transformation
While nearly 50% of the full 2035 opportunity can be achieved with 2G feedstocks such as residues and waste oils, reaching full-potential will require growing the production of 1G crops (maize, cassava, sugarcane, palm oil) and diverting some share to fuel production.
While food‑fuel competition must be carefully managed, biofuels could also stimulate agricultural transformation. A reliable market for surplus crops could incentivize investment in productivity improvements and support long‑term food security.
That being said, any mandate needs to be carefully ramped up to avoid food price spikes and food-fuel competition and also needs to have a strong flexing mechanism to account for supply-side shifts (i.e., blending mandates are reduced when anticipated feedstock supply is low due to weather or other production challenges). This requires strong governance of the mandates with good information on projected supply-demand imbalances and patient capital to support the large capital investments in ethanol production facilities while mandates are being ramped up.
A role for investors, governments, and development partners
Unlocking Africa’s biofuels opportunity will require collaboration across stakeholders. Investors can support early‑stage supply chains and distributed production facilities. Governments can create stable policy frameworks that enable private investment. Development partners can provide concessional capital and support agricultural value chain development.
Across all scenarios, location matters. Countries differ significantly in feedstock availability, fuel prices, and infrastructure readiness—meaning investment strategies must be tailored to national and regional conditions.
Download the full report
The full report provides detailed analysis of biofuel pathways, country‑level opportunities, feedstock availability, and policy options for scaling Africa’s biofuels industry.
Download the full report to explore the detailed findings and recommendations.
