by Faith Jemosop.
In a significant development for Southern Africa’s sustainable development, private equity investments are increasingly focusing on clean energy and digital infrastructure. These sectors are vital for addressing the region’s energy deficits and bridging the digital divide, thereby fostering economic growth and resilience.
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Major Investments in Clean Energy
One of the notable initiatives is the launch of the Regional Transmission Infrastructure Financing Facility (RTIFF) by the Southern African Power Pool (SAPP) and Climate Fund Managers.
This $1.3 billion fund aims to enhance high-voltage transmission networks across Southern Africa, facilitating better energy integration among the 12 SAPP member countries. Initial commitments of $20 million have been secured, with a target of $500 million by 2025.
Key projects include connecting Angola to Namibia, Malawi to Mozambique, and Tanzania to Zambia, which are crucial for improving energy trade and reducing blackouts in the region.
A pan-African private equity firm, has achieved a successful first close of its third fund, Evolution III, with $199.4 million in commitments. The fund targets a total of $400 million to invest in renewable energy and resource-efficiency assets across sub-Saharan Africa.
The African Development Bank has contributed $20 million to this fund, which aims to add over 2,000 MW of renewable power capacity and create approximately 2,480 full-time jobs.
Convergence Partners has closed its Digital Infrastructure Fund at $296 million, surpassing its initial target. This fund focuses on investments in fibre networks, data centres, wireless technologies, and emerging areas like 5G, cloud computing, and artificial intelligence.
The fund’s backers include prominent institutions such as the CDC Group, the U.S. International Development Finance Corporation, the European Investment Bank, and the International Finance Corporation.
Another significant development is the International Finance Corporation’s $100 million investment in Raxio Group to expand data centre infrastructure across Africa. This investment supports the construction of facilities in countries like Ethiopia, Angola, Ivory Coast, Mozambique, the Democratic Republic of Congo, and Uganda.
As mobile data usage in Africa grows by approximately 40% annually, such investments are critical for enhancing local data hosting capabilities, improving internet speeds, and ensuring data security.
The Challenges are:
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Africa faces a substantial funding gap in achieving its climate and digital goals. The continent requires an estimated $277 billion annually to meet its climate objectives by 2030.
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While private sector financing is on the rise, it still lags behind public funding. Efforts are ongoing to attract more diverse investments and address challenges such as currency instability and regulatory complexities.
