The energy sector in Africa has traditionally been one of the largest recipients of project finance in the region, primarily due to the stringent bankability requirements typically associated with limited to non-recourse project financings and the export-oriented nature of the sector. The fall in oil prices in 2014 and its knock-on effects on the energy value chain had a devastating effect on the profitability of the energy sector, as well as the ability of projects to service their debt requirements (particularly where those projects had initially been financed in a $100 per barrel oil environment). The contemporaneous development of shale gas reserves in the US and elsewhere, as well as what was considered to be the imminent arrival of Iranian oil into global markets, put additional pressure on the demand for African energy exports which were seen as too highly priced, exerting further downward pressure on oil prices. Ultimately, the prevailing circumstances resulted in a decline in lending to the oil and gas sector (which had been the main recipient of project finance) that saw its nadir in 2015, with total Project Finance raised for the year at a low of $60 million.
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