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7 Feb 2023

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The Dire State of Renewables Investment in Africa

The African continent has plentiful resources to develop renewable energy, but precious little investment in them, according to a new report from Bloomberg. In 2021, the latest year for which statistics were available for this report, investment in renewable energy in Africa fell to $2.6 billion, an 11-year low and only 0.6% of all investment in renewables worldwide.

At its peak in 2018, renewables investment in Africa reached $11.4 billion, or 3.4% of the world total.

Africa's total population of roughly 1.2 billion people is 15% of the world's total. Yet its collective annual GDP of about $2.7 trillion is less than 3% of the world total.

The State of Africa's Grid
Africa's electricity grids often support only about 3% to 5% of the per-person consumption of the average consumption within the EU, according to IDCA research. The ray of light in this statistic is that the continent's countries as a whole emit far fewer GHG emissions than the developed world. Bringing renewable electricity online can thus improve national grids substantially, and make a far greater relative impact than in most developed nations.

In IDCA's recent EESG Digital Readiness Index of Nations, several African countries score well above the world average (and well above most developed countries) in their environmental scores, because of a lack of emissions from their underdeveloped electricity grids. Notable countries in this group include Kenya, Uganda, Ethiopia, and both the Republic and Democratic Republic of Congo.

Africa has clearly-defined major regions, and serious analyses must treat each region and specific characteristics separately. The electricity grids in reality vary widely in size and percentage of renewables.

Required Investments vs. Present Reality
That said, a grid falling into Africa's median development range can be improved with investments of only 0.5% to 0.7% of national GDP for each percentage point of development. Ghana and neighboring Ivory Coast could both double their existing power resources for $2 to $3 billion each. Even that modest development, though, equals the total 2021 investment in renewables for the entire continent.

IDCA research has copious other data that can be used to outline the situation throughout all of Africa's regions, and be used as a basis for deeper analysis and action.

The Bloomberg report cited above quotes a local observer on Africa's potential: “African cities and economies are growing faster than anywhere in the world, so it’s ripe for transformation. The question is why we are not seeing the uptick in investment we should expect,” said Wanjira Mathai, regional director for Africa at the World Resources Institute. “The biggest challenge right now is the cost of capital. To unlock that would be absolutely catalytic.”

Indeed.

Photograph of Accra, Ghana.

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