africa

Due South: Dr. Yagiz Sullu Talks African Economics.

September 28, 2026 · 1h 9m

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Transcript

Note: this transcript was generated by AI and may contain errors or inconsistencies.

Ladies and gentlemen, good morning, good evening, good afternoon, whenever and wherever you're listening to us from, this is the DSL Podcast with me, your host, Wilfred Marino-Aimeri. And today I am joined by a brand new guest, someone we have not had on our podcast before, and someone I am very, very excited to speak with.

Yagiz Sulu, he is a PhD who recently completed his studies at Virginia Tech, and he's the Founder and Principal Analyst at Sulu Strategic Advisory, LLC.

So I'm going to throw it to him to let him introduce himself, and tell you guys a little bit about himself, and yeah, let's just take it from there. Yagiz, say hi to the people. Thank you for having me, Wilfred.

My name is Yagiz Sulu, and as you mentioned, I just finished my PhD studies at Virginia Tech. My research focused on energy policy and how oil-dependent economies respond to declining oil production, including comparative research on Gabon and Equatorial Guinea.

And today, my broader work focuses on assessing geopolitical risk, energy security, and how global developments affect economies and businesses.

I'm looking forward to discussing our topic today, and thank you for your invitation. All right, Yagiz, so since this is your first time on our podcast, and this is the first time our audience is getting to meet you, tell us a little bit about how you got into the field, and why you have a passion for Africa, and why you do the things you do. Of course.

So in the United States, Africa remains as a very understudied region, and with the Trump administration's...

New policy over Africa, which is trade, not aid, we are likely to see new developments emerging between the U.S.-African relations, and with China's interest in Africa, the U.S. is now competing with a major superpower in the region, and therefore, Africa will be very relevant in the coming months. And as we see from the

Iranian war, and the instability in the Middle East, we see that Africa becomes a major alternative for the United States' interests, especially about its oil, and also the critical minerals. So because of these new developments, I wanted to study the understudied region, and I learned a lot about Equatorial Guinea and Gabon during my PhD work. So

It's very interesting to learn more about the region. All right, so it seems like you have a lot of deep love for the region. So tell us a little bit more about what you do with Sulu Strategic Advisories LLC, and then we'll get into the final topic of the day.

Of course. Not the first, but the first one. Of course, so basically at Sulu Strategic Advisory, I work with multinational companies on

Giving them research and intelligence services about how they should approach entering the markets. I especially work with Middle East entities right now, who are trying to expand their operations overseas. And I provide them with political risk assessment reports, and also strategic advising on how they should have precautions, and so forth.

And I provide them with political risk assessment reports, and also strategic advising on how they should have precautions, and so forth. And I provide them with political risk assessment reports, and also strategic advising on how they should have precautions, and so forth.

And I provide them with political risk assessment reports, and also strategic advising on how they should have precautions, and so forth.

And I provide them with political risk assessment reports, and also strategic advising on how they should have precautions, and so forth. And I provide them with political risk assessment reports, and also strategic advising on how they should have precautions, and so forth.

And I provide them with political risk assessment reports, and so forth. reports and also strategic advising on how they should have precautions before entering foreign markets as part of their operations.

So basically, the firm also publishes weekly reports and articles about the geopolitical developments around the world and informing its audience how those risks and developments are relevant for U.S. interests. So it's basically a company that is focusing on geopolitical risk and energy security specifically. All right.

So let's take it from there. That idea of geopolitical risk and the stability of nations. So this is something you covered in your PhD, right?

Yes. I've been thinking about it and I've been trying to think. Okay.

The best question I could ask you for this. So I had to get some help from ChatGP just to get a little more familiar with your dissertation. So this is a question I've had some help coming up with.

So when people think about the political dangers facing an oil-producing country, they normally think about an oil price crash, right? And that's the opposite of what you're experiencing right now. The price of oil has gone through the roof and, you know, it's good for all those oil-producing nations, right?

Your work focuses instead on terminal decline. What is the difference and why is terminal decline potentially much harder for governments to manage? So when we see a price shock, it is almost temporary.

The oil prices are volatile. So that's why. When a country experiences a boom or a bust, this is only a temporary period where it can provide a short revenue margin, but in the longer term, the revenues can come back and basically support oil-dependent countries' economies.

But when we look at decline in production, and especially it's being terminal, which means that there is a really... Unlikely prospect that the oil production will be reversed back into peak levels. So the terminal decline is a term that I came up with during my PhD work.

And basically, terminal decline is a very structural problem because every barrel that is lost because of the oil reserve depletion, a country would experience... Economic pressure, and therefore will be unable to meet its public spending budgets, and also distributing oil revenues throughout the society.

So it is more of a structural problem compared to the traditional oil booms and busts, and it's becoming highly relevant for countries dependent on oil, because as we see, oil prices are falling.

So it's more of a structural problem compared to the traditional oil booms and busts, and it's becoming highly relevant for countries dependent on oil, because as we see, oil prices are going up and down, and it's becoming more of a structural problem compared to the traditional oil booms and busts, and it's becoming highly relevant for countries dependent

On oil, because as we see, oil prices are going up and down, and it's becoming more of a structural problem compared to the traditional oil booms and busts, and it's becoming highly relevant for countries dependent on oil, because as we see, countries in Africa specifically are suffering from this terminal decline.

Some examples include Angola, Equatorial Guinea, and Gabon, and also Cameroon as well. So when terminal decline happens, what will entail is that countries that are traditionally exporting oil from these countries would have to find other resources, and may not be able to find oil from these countries.

So when the terminal decline happens, what will entail is that countries that are traditionally exporting oil from these countries would have to find other resources, and may not be able to find oil from these countries. and may shift their operations in other regions.

And we see this from the African economies that in Equatorial Guinea and Gabon specifically, oil companies which operated in these countries for many decades decided to pull out from these countries.

So it was a major blow to these African economies because when an oil company exits their country and halts operations, that will mean that the country is no longer an attractive field for prospective oil companies who might be interested in their resources.

So that's why terminal decline is really relevant today because as we see the clean energy transition is still slow and some countries are also determined to use fossil fuels in the future. So that's why oil is still very, very relevant.

And with the Iran war, we see that the spike in oil prices are affecting every member of the society. - All right, so that idea of terminal decline is very, very interesting for me.

So this is something I will be, I will be thinking about long after we record this podcast. So I have just one follow up question. Oh, actually two, but let's start with the first one.

At what point does the declining production stop becoming primarily an energy problem and an economics problem and transition to becoming a political problem? - So after peak production, which is the highest rate of production that a country experiences, the production enters into a steep decline and we see the symptoms of terminal decline in this situation.

So think about the bell curve. So there's the peak moments and then from the peak, there's a steep decline period.

And some countries are already prepared for this terminal decline issue because when they do field assessments, they can actually assess the viability of reserves and which reserves are going to be depleted anytime soon. So some countries are prepared for this and they have sovereign wealth funds to buffer revenues losing from terminal decline.

So these sovereign wealth funds are actually very relevant, but in other countries, they're not fully prepared for this moment because oil, boom gives high prospects and it's basically a celebration in a country because oil is also a national identity of some countries.

They really cherish their fossil fuels and their resources. So when terminal decline hits, some countries experience political instability because now the state has less revenues in their coffers. And therefore they're not able to increase public spending and provide the services needed by their respective societies.

And when that happens, we see protests happening and also regime changes. And one case that is highly relevant to this scenario is Gabon. So after almost 50 years in power, the Bongo regime was ousted.

It was ousted by a military coup in 2023 by the military forces in the country. And we see the political instability taking place when oil production entered terminal decline in the country. The state was unable to meet its public spending goals.

And there were like extremely high protests during the 2020s. And we see this in the 2016 elections. And also there was a previously attempted coup in 2019 as well.

And finally, people had enough. And also the military forces turned against the regime itself and they ousted President Bongo from power.

So this was very interesting to see because when a regime is in power, after for 50 years almost, seeing that regime collapsing is very important because it really forces its allies to reconsider and re-evaluate their relationships with those countries. - All right.

So the risk of a political crisis does exist. I want to briefly discuss the risk of an economic crisis. So when I was coming here, the first thing I did was, you know, an economic crisis.

So when I was coming here, the first thing I did was, you know, an economic crisis. So when I was coming here, the first thing I did was, you know, an economic crisis. So when I was coming here, the first thing I did was, you know, an economic crisis.

So when I was coming here, the first thing I did was, you know, an economic crisis. So when I was coming here, the first thing I did was, you know, an economic crisis. So when I was coming here, when I was covering the crisis in the DRC, the Democratic Republic of the Congo, I honed in on a very interesting phenomenon, the idea of the resource curse.

So this is the counterintuitive phenomenon where countries that are rich in natural resources often experience less economic growth and worse development outcomes than resources for countries. And, you know, there are two reasons for this, right?

First, an abundance of minerals, seems to make countries susceptible to the Dutch disease, a phenomenon where one sector of a country's economy experiences rapid expansion, outpacing everything else.

And then the government becomes over-dependent on the revenue that this industry produces and incentivizes further expansion to the detriment of other sectors. So the world that this creates yields workers away from other industries, diminishing them even further.

And then second, mineral wealth, seems to attract conflict, like fruit flies over a banana that's been left out overnight.

So, Yagiz, have you seen this phenomenon or the resource curse in the countries you've covered? And how does terminal decline play into that? I did observe the resource curse when I was studying the countries that I was focusing on.

As you mentioned, one of the symptoms of the resource curse is the Dutch disease. So when mineral sector dominates the economy, the regimes are investing less in other industries, such as agriculture and manufacturing. And when that happens, they become overly dependent on minerals and hydrocarbons.

So when a price shock hits or when production interest goes down, then there is a terminal decline. And basically, the country wouldn't have any alternative sources of revenues unless they invest in a sovereign wealth fund. And the concept of the sovereign wealth fund applies not just Africa, but in other countries around the world as well.

Like, for example, Norway has the highest portfolio in its sovereign wealth fund. It has, like, trillions basically embedded in the fund itself. But when some countries are not diversified enough, that means that they're suffering from the resource curse itself.

And also, besides the economic diversification angle, what is really important is also how resource curse limits development in resource-dependent countries.

For example, during my research about the African economies and based on my interviews with government officials, former government officials and analysts covering the region, what I learned is that the regimes have some sort of patronal networks consisting of elites from the politics and the economics field.

And the incumbent president has really good relationships with these people.

And through the resource revenues that they have, the presidents are able to provide contracts to these people or other economic opportunities.

So we see that in resource-dependent countries experiencing the resource curse, only a few, networks are actually seeing the benefits of the oil revenues, but the larger society itself is not getting the full benefits that they're entitled to, which raises corruption and transparency issues.

And when you look at Freedom House's reports on Africa and the corruption perceptions indexed by Transparency International, the African countries are not listed as transparent countries.

They're almost at the bottom of the corruption perception index, for example, in Transparency International's reports. And this is a serious issue because that deters investors entering these markets. Thank you for that.

And I think that's a really interesting answer. So thinking of the idea of the resource curse, the only way to truly avoid it and for our country to truly protect its economy is by diversification. One of the countries we've spent a lot of time thinking about, Gabon, has the opportunity to diversify.

It has oil, manganese, timber and potentially major iron ore production. Oil becomes less important, but mining becomes more important. They won't really have diversified, right?

Do you see a pathway where Gabon can transition from oil perhaps to these other minerals and then to full diversification? Or will it just move from oil and minerals and then just stick there? Under the leadership of the Mongol regime, Gabon experienced very high economic growth when oil was relevant in its economy.

But after the coup and the new administration took place in the country, it really became an attractive destination, not for its oil, but for its critical minerals. And in 2025, Gabon was one of just five African countries that the leaders were invited to the White House for talks focused on trade, investment and other business opportunities.

And Gabon's new president, President Nugiyama, made clear that Gabon is seeking win-win partnerships with the U.S. entities and said that it seeks American investments to help process more of the country's mineral sources.

So a major power such as the U.S. still relies on critical minerals. For its battery production and steel production as well. And Gabon is a very attractive destination for them because it is the second largest manganese producer, accounting for 25% of global production.

So now we see a competition between China and the U.S. in Gabon. For example, before the White House meeting in 2025, in 2023, China and Gabon launched their comprehensive strategic partnership where both countries committed to strengthen their relationships and also increase their trade of critical minerals.

So now for Gabon itself, what will be really important is whether Gabon will work closely with China or it will shift this approach to the U.S. Gabon's current president was actually very favorable to form a new relationship with the United States during that White House meeting.

But also China has invested billions of dollars for Gabon's infrastructure projects. So now Gabon, has to make a strategic decision on which partner it should rely on when it's experiencing thermal decline oil production.

Because now with less oil revenues accumulating in the country's reserves, it has to make a strategic change towards critical minerals to actually open a new revenue stream.

All right. So, Yagiz, let's move away from, you know, the idea of terminal decline for a minute to talk about what is happening in other areas of the world, right? So, right now, terminal decline might not really be a worry for, you know, African oil producing nations because oil prices are extremely high because of the war in Iran.

At the time that we are speaking today, we are talking about the fact that oil prices are going up. So, let's talk a little bit about that. So, let's talk a little bit about what is happening in other areas of the world, right?

So, let's talk a little bit about what is happening in other areas of the world, right? So, let's talk a little bit about what is happening in other areas of the world, right? So, let's talk a little bit about what is happening in other areas of the world, right?

So, let's talk a little bit about what is happening in other areas of the world, right? owners which means that and you know this is a global benchmark which means that oil producing countries are getting a lot a lot of money right for their oil even though in some cases there might not be enough oil to sell right so how is this current crisis being felt in

Africa let's start there so i think the crisis is highly relevant to not just africa but around the world as well as the global oil prices are increasing consumers are feeling the pressure at the pump and this applies to the residents in african countries as well so basically when we look at this crisis you it is likely that we will see this war going on not

Just for weeks but months so my forecast would be we will see increasing fuel prices even more and even in the united states right now consumers are really feeling the pressure at the pump and people are actually trying to limit their driving times or engaging in carpooling or taking public transportation as a means to travel so in africa the scale of this

Issue will be much bigger because although rising oil prices can benefit an administration because high oil prices would mean larger revenues for the state coffers but in africa the oil prices will be much higher than the state coffers but in africa the oil prices will be much higher than the state coffers but in africa the oil prices will be much higher

Than the state coffers but in africa the oil prices will be much higher than the state coffers but in africa the oil prices will be much higher than the state coffers but in africa the oil prices will be much higher than the state coffers but in africa the oil prices will be much higher than the state coffers but in africa the oil prices will be much higher

Than the state coffers but in africa the oil prices will be much higher than the state coffers but in africa the oil prices will be much higher than the state coffers but in africa the oil prices will be much higher than the state coffers but also but in africa the oil prices will be much higher than the state coffers but also the prices of the fuel will be

Increasing as but in africa the oil prices will be much higher than the state coffers but also the prices of the fuel will be increasing as but in africa the oil prices will be much higher than the state coffers but also the prices of the fuel will be increasing as well domestically the prices of the fuel will be increasing as well domestically the prices of

The fuel will be increasing as well domestically so i think africa is at a crossroads at this so i think africa is at a crossroads at this so i think africa is at a crossroads at this time trying to decide whether pursue oil trying to decide whether pursue oil as a resource to sell or diversify its portfolio and engage in other industries so that it could

Provide the services for its people so the strait of hormuz definitely had a big impact on the global oil price rise but it also gave countries an option to actually not depend on oil and pursue clean energy to for fuel and also for heating so higher prices can provide fiscal breathing room for regimes in africa but they cannot reverse geological decline as

We discussed previously so that is really relevant for the fact that oil dependent governments have to prepare not only for fluctuations and oil prices but also for any future disruptions as well this was just beginning the iran war and now we see the clash between the hooties and saudi arabia so that's another crisis that is evolving rapidly and will

Definitely have an impact on the oil prices so what i would say would be that african countries should use this time very efficiently and start thinking about the future without oil and try to adopt clean energy technologies and accumulate investment so that its citizens will also not be hurt by the rising oil prices in the future so whenever i think about

The crisis that hit africa in the immediate aftermath of the israel war the first country that comes to mind is usually ethiopia because there were reports from madisababa of petrol stations running out of fuel and drivers spending days on end you know with their cars basically in mobile because they couldn't you know really get the amount of fuel that they

Needed which is a very big catastrophe is considering how rapidly developing the ethiopian economy was so in response to this the ethiopian government activated the national logistics carrier ethiopian shipping lines to try and mitigate the worst of this disaster if you have a sheet of lands brought fuel all the way from nigeria to ethiopia about 120 000

Liters if memory serves me correct it might not even be the exact figure or you know the right units it could have been 120 000 tons yeah i think that's more accurate 120 000 tons of fuel and it helped mitigate the worst of the disaster for ethiopia it could be had the benefit of you having a national carrier line that it could activate activate when push

Came to shelf what other countries in your view or in your professional opinion had as good or your generally a good way of approaching this crisis you know what countries were fundamentally better prepared the ethiopia crisis really shows that how africa some african countries are actually getting affected by the iran war because ethiopia imports all of its

Petroleum fuels and the middle east war disrupted one of its major supply arrangements so this ethiopia case is a really good lesson on why african countries should focus on not using fossil fuels in the future and adopting clean energy technologies and i think after ethiopia what comes to my mind is basically ghana and also burkina faso and mali as well

These are actually excellent cases for our conversation because ghana's state-owned post has reduced diesel and gasoline exports to burkina faso and mali to prioritize ghanian demand amid the iranian war so i think that's a really good lesson for us and i think that's a really good lesson for us and i think that's a really good lesson for us to take a look

At and to think about how we can and to think about how we can take a look at and to think about how we can take a look at and to think about how we can and burkina faso reported the requested oil and mali also requested that but it demonstrates how a global energy shock can move through african regional supply chains and another case that we burkina faso

Reported that but it demonstrates how a global energy shock can move through african regional supply chains and another case that we should focus on would be nigeria as well should focus on would be nigeria as well so nigeria is endowed with high oil so nigeria is endowed with high oil reserves and higher crude prices can reserves and higher crude prices can

Increase export earnings for the country increase export earnings for the country but nigeria's growing domestic refining but nigeria's growing domestic refining and capacity gives it more of an insulation capacity gives it more of an insulation and potentially an opportunity than many and capacity gives it more of an insulation and opportunity than many

Other african economies other african economies because nigeria still because nigeria still has lots of oil reserves and rich in lots of oil reserves and rich in hydrocarbons so i think nigeria was hydrocarbons so i think nigeria was prepared for this prepared for this crisis crisis and then and then one of the least one of the least ready countries was i

Think equatorial ready countries was i think equatorial guinea as well guinea as well because we don't see because we don't see much because we don't see much efforts undertaken by the regime to much efforts undertaken by the regime to much efforts undertaken by the regime to transition away from transition away from transition away from fossil fuels fossil

Fuels fossil fuels although although although production is at historical lows at production is at historical lows at production is at historical lows at equatorial guinea equatorial guinea equatorial guinea we see that we see that we see that the country is not using its clean energy the country is not using its clean energy the country is not using its

Clean energy potential potential potential during this crisis during this crisis during this crisis and still relies on fossil fuels for its and still relies on fossil fuels for its and still relies on fossil fuels for its economy economy economy so i think it's a country that was so i think it's a country that was so i think it's a country that was affected

By the resource curse phenomenon affected by the resource curse phenomenon affected by the resource curse phenomenon and in this crisis and in this crisis and in this crisis i don't think that the country i don't think that the country i don't think that the country is actually pursuing is actually pursuing is actually pursuing the viable options that it has

To the viable options that it has to the viable options that it has to pursue and basically pursue and basically pursue and basically in kenya too in kenya too in kenya too which imports almost all of its which imports almost all of its which imports almost all of its petroleum petroleum petroleum rising fuel prices fed directly into rising fuel prices fed

Directly into rising fuel prices fed directly into domestic domestic domestic economic pressures in the country economic pressures in the country economic pressures in the country and the and the and the situation remains very relevant today situation remains very relevant today situation remains very relevant today because renewed disruption to sell the

Because renewed disruption to sell the because renewed disruption to sell the alternative export infrastructure is alternative export infrastructure is alternative export infrastructure is adding uncertainty to kenya's supply adding uncertainty to kenya's supply adding uncertainty to kenya's supply outlook outlook outlook so in general so in general so in

General the level that the african countries are level that the african countries are level that the african countries are affected by the crisis varies affected by the crisis varies affected by the crisis varies some countries who have some countries who have some countries who have vast oil vast oil resources such as Nigeria or let's say Angola, they would

Be better prepared to offset the shortage problem.

But other countries such as Kenya and also Burkina Faso, Mali are at risk right now because they're importing their oils from other countries and this could turn into a broader crisis once fuel prices go up and there will be more shortages in the future.

As someone who lives and works in Kenya, I can tell you guys for a fact that everything that Yagiz has said is true.

Our government was definitely not prepared for the energy shock and there has been a lot and a lot of economic pressure on every other sector of the economy because of just how ubiquitous oil is nearly everywhere. We don't think about it but the price of oil affects everything.

So if petrol becomes more expensive, fertilizer also becomes more expensive, food becomes more expensive and you know governments like Kenya, governments that don't have the energy to do that, they don't have the energy to do that.

So I think there's a lot of that economic buffer that comes from you enjoying higher oil prices. There's very little money available to the government in order for it to subsidize, that's the word, in order for it to subsidize the lives of its people because living at some point becomes extremely expensive.

So Yagiz, with that in mind, right, how are governments navigating the political consequences of this economic shock?

So as we discussed previously, the oil shortages and also the rise in prices are especially important periods in a country's political trajectory because these are the moments that people can go to the streets and protest and the incumbents may lose their legitimacy in front of its people because once the country is actually getting all of its oil from

Overseas or other countries, the people are not feeling the pressure at the pump but at these moments it's really important to consider what will happen in Kenya.

So what I envision will be that Kenya will experience the shortages and also the rise in fuel prices more than just a few weeks because we see that the sides are not looking to halt the hostilities anytime soon. So I think I would expect that people in Kenya would start complaining even more about the oil, about the fuel crisis itself.

And this will actually may influence the incumbent administration's strategy towards securing oil from other countries. And I think diversification of suppliers will be really relevant in this case. I think the biggest, bigger risk in Kenya will be how to keep paying more for resources to secure oil.

That means that we will see higher transportation and food costs in the country, greater inflation, a larger import bill and more pressure on government finances, and the government then will face with a difficult choice whether it will allow consumers to absorb higher fuel prices or spend scarce public resources on cushioning them.

So it will be dependent on the government's risk assessment on what would happen in the country. But the longer the disruption lasts, the more an external energy shock becomes a broader Kenyan economic shock, I think.

So as someone who has lived through economic shocks within Kenya, I can guarantee you for a fact that this is not going to be the end of the world. And I think that the political backlash is going to be real, you know, past a certain point of economic pain, because the Kenyan people can only take so much pain before they just rebel, right?

So that's one of the main takeaways that I have whenever I think about the political costs of such economic catastrophes.

So when we look at history, we basically had oil shocks in the past, and one of the memorable historical events is the Iranian revolution in 1979. And during this period, the oil prices were actually high, but people still protested over the regime. And so the oil prices were actually high, but people still protested over the regime.

And so the oil prices were actually high, but people still protested over the regime. And so the oil prices were actually high, but people still protested over the regime. And so the oil prices were actually high, but people still protested over the regime.

And so the oil prices were actually high, but people still protested over the regime. And so the oil prices were actually high, but people still protested over the regime. And so the oil prices were actually high, but people still protested over the regime. authoritarian nature and thus the shock was overthrown from power.

So I think when a shock takes place, people reevaluate their government's ability to be empowered. And when they see that the incumbent administration is weakening, they use the opportunity to actually articulate their demands from the government itself.

So in the case of an oil shock that everybody is experiencing around the world, this is a historical moment that is indicating how a major war can disrupt oil prices and lead to fuel shortages in other countries.

So I think in this moment, we will see, and this applies to Kenya.

And also other countries as well in the region, people will start reevaluating their government's performance and make strategic decisions on whether to continue to support the government by absorbing the high prices and also experiencing the shortages, or they would start to rebel and articulate their demands more straight.

And think about maybe a future with a new incumbent administration and pursue their interests.

So I think if this war continues for, let's say, six months to up to a year, we will definitely see more political instability appearing in the African region. And thus, we will see how public opinion changes about the government. And I think that's the key to the future.

And I think that's the key to the future. And I think that's the key to the future. And I think that's the key to the future.

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