African nations, including Nigeria, face a significant challenge: simultaneously expanding energy access and transitioning to cleaner sources. A new International Energy Agency (IEA) World Energy Investment 2024 report reveals that over $200 billion annually is required to meet the continent’s energy and climate-related goals by 2030. However, current investment levels are alarmingly low, with only $110 billion invested across Africa in 2024, representing a mere 1.2 per cent of Africa’s GDP.
The report, released over the weekend, underscores the critical need for reliable power, noting that approximately 600 million people across Africa currently lack electricity access. This deficit continues to hinder development across key sectors like agriculture, industry, education, and healthcare.
Africa consistently attracts relatively small amounts of energy investment despite its vast potential. For instance, between 2000 and 2020, only 2 per cent of the global $2.8 trillion invested in renewables flowed into Africa. From 2000 to 2019, the continent secured about $110 billion in public commitments for energy projects, with $64 billion directed towards renewables. Funding primarily came from bilateral donors (like China, EU) and multilateral organisations (World Bank, AfDB), and Development Finance Institutions (KfW, Proparco).
The report highlights Nigeria’s semi-privatized energy market since 2013, noting mixed results despite its position as a top performer in attracting funding. Though Nigeria’s economy is the fourth largest by GDP in Africa (at $472.67 billion in 2024), its electricity sector, with a generating capacity of 14.5 GW as of 2024, also ranks fourth. Electricity sector growth has been slower than the continent-wide average of 2.5 per cent (Nigeria at 2.1 per cent annually from 2020-2024), hampered by corruption and issues from its 2013 privatization.
In contrast, South Africa stands out as the continent’s strongest performer in investment, especially in solar following 2023 deregulation. Egypt has expanded its renewable sector significantly with Gulf-based funding, and Kenya leads in geothermal energy.
The report identifies several interconnected issues hindering investment:
- Rising interest rates
- Reluctance of traditional Western funders for fossil fuel projects
- Low sovereign debt ratings for most African countries, making international investment expensive (only Botswana and Mauritius hold investment-grade ratings as of early 2025).
Africa represents enormous potential for electricity sector growth due to unmet demand. To achieve 2030 energy and climate goals, the IEA suggests replicating successful models such as Public-Private Partnership (PPP) structures (Build, Own, Operate (BOO) and Build, Operate, Transfer (BOT)) seen in South Africa and Egypt. These two models accounted for over 90 per cent of private investments in electricity generation projects in Africa ($68.7 billion from 2000-2023), with BOO contracts making up 66 per cent ($45.3 billion) and BOT contracts 25 per cent ($16.8 billion).
Emerging markets like Zambia, Ghana, and Mozambique are gaining traction, especially in renewable and geothermal energy, supported by public sector backing and auction-led procurement. The report concludes that blended finance, carbon credit trading, and structured green bond programs will be crucial for unlocking private capital at scale, emphasizing Africa’s need to align with global climate funding trends while addressing local risks and regulatory hurdles.
