On the 25th October, the PEI held a successful Africa Breakfast Club meeting focused on Financing Renewable Energy in Africa: Challenges and Opportunities. Featuring a keynote presentation from Yvonne Ike, Managing Director, Sub-Saharan (Ex-RSA), Bank of America Merrill Lynch, our guests included African Heads of Mission, senior diplomats, academics, and high-level representatives from the private sector.
First, Ms Ike provided a comprehensive overview of Africa’s energy landscape, and the varied access to electricity across the continent. She observed that there are currently 600 million people who lack access to energy on the continent, and over 30 countries that experience regular power outages. What’s more, over 700 million people are still using traditional biomass fuels as a source of energy every day, which present significant health and environmental issues. Due to population growth and economic advancement, energy demand is expected to triple by 2030.
However, Ms Ike argued that Africa itself has many of the solutions and high-quality renewable energy sources to address these challenges. From biomass to solar and geothermal, she noted that Africa has some of the best renewable energy sources in the world. In addition, due to technological advances, the continent is in a unique position to leapfrog the traditional centralised methods of delivering utility. This should help drive down the cost and enhance the efficiency of implementing renewable energy over time.
She also noted that traditional private sector investors have been slow to embrace the renewable energy market due to concerns around access to capital, high inflation, and the enabling environment. As a result, governments need to create the regulatory framework and policies needed to incentivise private investors to enter the market. Similarly, Ms Ike observed that local governments should provide grants and concessional financing to create the first layer of capital in an environment that can bring other sources of funding in.
In the near future, Ms Ike expects to see a shift from traditional investors entering the space to groups such as pension funds and sovereign wealth funds prepared to invest over the long term. Green bonds are an also important means of accelerating investment in renewable energy, as these investors are not purely motivated by high financial returns, but have factored environmental and social impact into their investment models. Finally, Ms Ike called on stakeholders to work together to unlock the $55 billion per year needed to address the continent’s energy needs until 2030. Policy and advocacy, capacity building in financial institutions, and enhancing access to capital markets will be essential in this endeavour.
The presentation led to a dynamic discussion among attendees whose comments focused on access to technology, enhancing investment in R&D, and crowdfunding to address energy needs. We were delighted to welcome a range of African High Commissions in London, including distinguished representatives from Senegal, Rwanda, Ghana, and Russia. Furthermore, the PEI was grateful for the attendance of representatives from businesses including IBM, Investec Asset Management, Emerging Africa Infrastructure Fund, and the Royal Academy of Engineering (RAENG).
Thank you to the distinguished guests who attended and, especially, the members of the PEI Partners Forum whose support makes these events possible.