Written By: Faith Jemosop
Despite being home to 20% of the world’s population and some of the richest renewable energy resources, Africa is set to receive just 2% of global clean energy investment in 2025, according to the International Energy Agency (IEA). This figure represents a glaring disparity in global climate financing and raises pressing questions about equity, opportunity, and climate justice.
The Key Fact: 2% of $2.2 Trillion
In 2025, the world will spend an estimated $2.2 trillion on clean energy. However, only about $44 billion of that will flow to Africa, less than what some individual countries like Germany or India will receive.
This trend persists even as energy poverty in Africa remains dire, with over 600 million people lacking electricity and 1 billion without access to clean cooking solutions.
Why So Little? A Breakdown of the Barriers
1. High Cost of Capital
African countries often face borrowing costs 2 to 3 times higher than those in high-income nations. These elevated costs make renewable energy projects far less viable, despite the continent’s abundant sunshine and wind.
2. Currency and Investment Risk
Foreign investors worry about currency fluctuations, political instability, and weak regulatory frameworks. Many countries in sub-Saharan Africa lack the financial instruments to hedge against these risks.
3. Weak Infrastructure and Regulatory Gaps
Even when energy is produced, the grid infrastructure to transmit it is often lacking. Inconsistent energy policies and unpredictable legal frameworks also deter long-term investment.
The Consequences of Underinvestment
- Slower electrification: Without scaled investments, achieving universal electricity access by 2030, a core Sustainable Development Goal remains elusive.
- Increased reliance on fossil fuels: Many African countries continue to prioritize oil and gas development, often backed by foreign interests. In 2023, 70% of energy investment in Africa still went into fossil fuels.
- Widening global inequality: As the rest of the world transitions to cleaner, cheaper energy, Africa risks being left behind technologically and economically.
Also read: Electricity Shock Hits South Africans as Market Faces Manipulation Claims
Isn’t Africa Rich in Renewable Resources?
Absolutely. Africa has:
- The highest solar potential in the world, most countries receive over 2,000 kWh/m²/year of solar irradiation.
- Vast wind corridors, particularly in North Africa and along coastal regions.
- Significant hydropower and geothermal capacity, especially in the East African Rift.
The IEA estimates Africa’s renewable resources could meet the continent’s projected electricity demand 1,000 times over. Yet only a fraction has been harnessed.
Who’s Funding What?
Public vs. Private Financing
- Private investment has grown, rising from $17 billion in 2019 to nearly $40 billion in 2024. thanks largely to cheaper solar tech and improved access to green finance tools.
- Public financing has fallen from $28 billion in 2015 to about $20 billion today, driven in part by an 85% drop in Chinese development bank lending.
Fossil Fuel Preference
About 50% of total energy investments in Africa over the past decade went to fossil fuel projects, many backed by international financial institutions and governments prioritizing returns over sustainability.
Are There Any Success Stories?
Yes, and they prove Africa’s potential when the right mix of capital, policy, and innovation aligns:
- Egypt’s green hydrogen sector has attracted over $40 billion in planned investments, primarily in the Suez Canal Economic Zone.
- Kenya’s mini-grid revolution has empowered rural communities, with incomes in some areas increasing fourfold thanks to decentralized solar power.
- South Africa’s renewable procurement program has added more than 6 GW of solar and wind capacity since 2011, proving large-scale renewables are bankable in Africa.
What Solutions Exist?
1. Lower the Cost of Capital
International financial institutions can reduce risk through first-loss guarantees, currency hedging, and concessional loans to level the playing field.
2. Scale Domestic Capital Markets
Africa needs strong, local financial institutions that can offer long-term, local-currency debt through green bonds and infrastructure funds.
3. Promote Policy Stability
Governments must ensure transparent regulatory environments and legally binding power purchase agreements (PPAs) to encourage investment.
4. Invest in Grids and Storage
Expanding national grids and investing in battery storage is critical for managing intermittent renewable energy and reaching underserved regions.
5. Support Decentralized Solutions
Off-grid and mini-grid solutions should be a priority, especially for rural communities. Clean cooking, currently neglected, requires targeted public subsidies and business innovation.
How Big is the Opportunity?
If Africa’s clean energy sector were unlocked:
- It could generate millions of jobs. Some estimates suggest up to 3.3 million green jobs by 2030.
- It could position the continent as a leader in critical mineral supply chains, such as lithium, cobalt, and copper, crucial for EV batteries and renewable infrastructure.
- It could transform development by enabling digitized schools, hospitals, and businesses in off-grid areas.
Also read: How Did a Remote Senegalese Village Replace Diesel Generators with Solar Power
What Should the Global Community Do?
1. Fulfill Climate Finance Pledges
Rich nations must honor their commitment to mobilize $100 billion per year for climate financing and ensure that a fair portion reaches Africa.
2. Coordinate Multilateral Support
Institutions like the World Bank, African Development Bank, and new players like the Green Climate Fund should work together to avoid duplication and target high-impact projects.
3. Rebalance Global Energy Equity
Africa contributes just 3% of global CO₂ emissions yet suffers disproportionately from climate impacts. Correcting the investment imbalance is not charity, it’s climate justice.
