+27 71 448 3496
leon@whyafrica.co.za

How to fund energy projects in Africa

Share Article
Sustainable renewable energy development will play a pivotal role in how Africa meets its ambitious goals. Image credit: Leon Louw for WhyAfrica.

How to fund energy projects in Africa 

Sustainable economic growth across Africa depends on infrastructure development and the distribution of clean energy. However, raising capital for energy projects is not always that simple.

Raising capital for energy projects and building sustainable pipelines is complex in a market that is challenged by demand for fossil fuels, while simultaneously trying to satisfy carbon-neutral policies and commitments.

Data shows that despite Africa’s sizeable population, it only attracts sub-5 % of global energy investment.

Undoubtedly, Africa is abundant in opportunities and resources, but many of the continent’s countries have yet to unlock barriers to trade and prove themselves to be reliable global partners.

The countries that stand to benefit from energy project development and attract meaningful investments are those with governments that seek to lower risks through pricing reforms, transparent tendering systems, strong anti-corruption law enforcement, and the development of skilled labour.

Green energy development attracts the biggest backing (Financing energy projects in Africa)

Experts agree that sustainable economic growth throughout Africa depends on the infrastructural development and distribution of clean energy. This means:

  • A move from fossil fuel sources to renewables
  • Decentralisation of energy generation, transmission, and distribution
  • The integration of digital technology to support and speed up transition

To make this shift possible and enable meaningful socio-economic reform, the continent will need more than double the current energy investment by 2030. In real terms, this requires a minimum investment of roughly USD1-billion per year.

Private sector contributes the most (Financing energy projects in Africa)

Between 2016 and 2020, the private sector contributed to 60% of all energy investment in Africa. Public sector enterprises also play an important role, although, in recent years, many public utility companies have been plagued by a high level of debt, requiring capital injections from public finance institutions.

It is likely that public entities will become more valuable as co-investors by helping to lower the perceived risks of financing novel projects. This, in turn, will serve to attract more significant private sector support.

Africa’s clean energy success hinges on the implementation of a well-integrated financial framework aimed at accelerating green energy projects.

Each country has its own unique requirements contextualised by its existing energy supply environment. This makes a one-size-fits-all approach unproductive when it comes to financing solutions.

Naturally, investors will also require cooperation from policymakers as well as the governance structures necessary to support the implementation and roll-out of purpose-built financial solutions. 

Where to look for energy project investment? (Financing energy projects in Africa)

Depending on the project, its size, and its purpose there is an abundance of funding options available. Below is a list a few notable organisations that are helping to power Africa’s renewable energy development projects.

African Renewable Energy Fund (AREF)

Investing in small hydro, wind, geothermal, solar, stranded gas and biomass projects throughout Sub-Saharan Africa, the AREF aims to invest in up to 12 renewable energy projects. It is a closed-end private equity fund keen to support medium-sized projects at all development stages that aim to produce an energy output between 5 and 50 MW.

Energy and Environment Partnership Trust Fund (EEP Africa) 

Hosted and managed by the Nordic Development Fund (NDF), the EEP is aligned with the targets set by the Paris Agreement on climate change and sustainable development.

Present in 15 countries throughout southern and east Africa, the EEP provides not only early-stage grant and catalytic financing but also technical support and knowledge enrichment.

Sustainable Energy Fund for Africa (SEFA)

Established in 2011, SEFA is a multi-donor facility backed by leading global economies such as the United Kingdom, Denmark and the United States. The fund helps to unlock private investments for small to medium-scale sustainable energy projects in cooperation with the Africa Hub.

Small and medium sized projects play key role (How to fund energy projects in Africa)

Africa finds itself in a unique position where energy supply is concerned. Keen to industrialise and plug into the global digital supply chain, its leaders recognise that sustainable renewable energy development will play a pivotal role in how the continent meets its ambitious goals and supports the demands of a relatively young demographic.

While large-scale infrastructural projects are necessary to facilitate this development, investors also have the unique opportunity to contribute towards small and medium-sized projects that will play an essential role in bringing connectivity and upliftment to the continent’s widely scattered communities.

The aspect of financing energy project development will take centre stage at the Africa Energy Indaba that will take place in Cape Town, South Africa from 7 to 9 March 2023.

How to fund energy projects in Africa 

WhyAfrica reports about, and publishes newsletters, magazines and research reports about natural resources and the primary sectors of African economies, and the infrastructure, equipment and engineering methods needed to extract and utilise these resources in an efficient, responsible, sustainable, ethic and environmentally friendly way, so that it will benefit the people of Africa.

Furthermore, WhyAfrica promotes Africa as an investment and travel destination, analyses the continent’s business environment and investment opportunities, and reports on how the political economies of African countries affect their development.         

WhyAfrica provides you with business intelligence that matters. Africa is our business, and we want it to be yours too. To subscribe to WhyAfrica’s free newsletter or digital magazine, and for more news on Africa, visit the website at www.whyafrica.co.za or send a direct message. WhyAfrica launched its first ever digital magazine in November 2021.

The company will undertake its annual road trip through South Africa, Zimbabwe, Zambia, the DRC, Malawi, Tanzania and Kenya in 2023. If you are interested in sponsorship or advertising opportunities, please contact me at leon@whyafrica.co.za. We have a wide range of different packages and combo deals to give your company the greatest exposure to a rapidly growing, African readership.  

The 2022 Southern Africa Road trip issue of WhyAfrica’s magazine is now available in print. The magazine was distributed in South Africa, Namibia, Zambia, Zimbabwe, and Botswana during WhyAfrica’s 2022 Southern Africa Overland Road Trip, the company’s new and innovative platform. WhyAfrica has expanded its product range and now offers its readers, followers, advertisers, subscribers and partners the following:

  • Daily 24/7 online articles on WhyAfrica’s website (FREE)
  • Daily updates on WhyAfrica’s social media platforms (FREE)
  • Newsletters delivered to a handpicked audience every two weeks (FREE)
  • Two printed magazine per year distributed at large events and during our road trips across Africa featuring original, in-depth articles (FREE) with great, on-site photographs by the WhyAfrica team (FOR SALE UPON REQUEST)
  • Four digital magazines per year (FREE)
  • Live updates, video clips, articles, and podcasts during and after WhyAfrica’s annual road trips (Southern Africa in 2022, East Africa in 2023 and West Africa in 2024) (FREE)
  • Sponsorship and advertising opportunities for the annual WhyAfrica Overland Road Trips (PAID FOR)
  • A library where companies doing business in Africa can display scientific or research papers (PAID FOR)
  • A product section where companies doing business in Africa can display new offerings or services (PAID FOR)
  • Media partnerships with, and a presence at, most of the major conferences and exhibitions in the African mining, energy, agriculture, infrastructure, water management, ESG, environmental management, tourism, development, and conservation sectors (FREE)
  • WhyAfrica connects potential investors with new ventures in Africa and suppliers and service providers with existing companies in Africa (PAID FOR)
  • WhyAfrica assists companies in generating content focused on the wider African business community (PAID FOR)
  • Partnerships with companies doing business in Africa (PAID FOR)
  • Partnerships with companies thinking about expanding into Africa (PAID FOR)
  • In 2023 WhyAfrica members will have access to our in-depth articles about the African political economy, research, and country reports about the countries we visit on our road trips, and trends in the sectors that we cover (PAID FOR)
  • A WhyAfrica book is in the pipeline and if all goes according to plan, should be published towards the end of 2023 (PAID FOR)
  • The WhyAfrica consultancy arm assists and advises companies doing business in Africa through utilising our extensive global business network (PAID FOR)

 Become part of the WhyAfrica community. Tell us your story. Expand your footprint across Africa and partner with us to make the most of your African experience. 

How to fund energy projects in Africa

 

Share Article

Sectors

AgricultureEnvironmental Management & Climate ChangeEnergyESGInfrastructureMiningPolitical EconomyTourism and ConservationWater Management