High capital costs remain a significant barrier to scaling up clean energy investments in Africa.
To effectively reduce risks at both country and project levels, policymakers need to step up, alongside substantial international financial and technical support.
Investment Trends and Shortfalls
While spending patterns vary across African nations, the current total investment and the portion dedicated to clean energy are insufficient to put the continent on track to achieve its Sustainable Development Goals (SDGs).
The International Energy Agency’s (IEA) “World Energy Investment 2024” report reveals that energy investments account for a mere 1.2% of Africa’s GDP, and clean energy investments, though growing, represent only 2% of the global total.
Debt Burden and Credit Ratings Impact Investment
The IEA highlights the impact of rising debt repayments, which have severely limited governments’ ability to access funds for capital-intensive clean energy projects. Low sovereign debt ratings further restrict access to foreign investment, with only Botswana and Mauritius holding “investment grade” ratings in 2023.
Grid Modernization: A Critical Need
Although recent clean energy investments have largely focused on renewable power generation, growth prospects will remain limited without substantial investment in modernizing and expanding the power grid itself.
Inefficient grids with average line losses of 15%, coupled with inadequate interconnections, are already creating bottlenecks for new renewable energy projects in the region.
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