Africa’s energy investment needs are acute. Less than 35 per cent of households in sub-Saharan Africa currently have access to energy, and the World Bank estimates that insufficient or unreliable power supplies costs the continent 2 per cent of GDP each year. To put this into context: Nigeria, with a population of 190 million people, consumes less electricity than London, where around 9 million people live.
African leaders and the international community have made addressing this gap a priority. It is articulated both in national government strategies and in the United Nations’ Sustainable Development Goal 7, which targets universal access to electricity by 2030.
Meeting these ambitious targets is an investment challenge. Recent developments, both financial and technological, such as the emergence of capital from the private sector and China, and rapidly decreasing costs for renewable technologies, could see universal access reached faster and more cheaply than would previously have been possible. However, this also brings increased complexity in making and delivering on investment decisions, not only from expanded choice, but also from an expanded set of competing interests promoting their technology or financing solution.
For many governments across Africa, making and implementing investment decisions is hard. Clear and realistic plans and policies need to be developed, while reforms are often needed to ensure the sector is financially viable. Achieving both of these can be extremely challenging, with vested interests, both domestic and international, trying to pull governments—whose institutional capacity is often low—in different directions. This is where our Energy Practice support comes in.