You are here

Conducive regulatory policies needed to attract private sector investment in Africa’s energy transition

13 July, 2023
Conducive regulatory policies needed to attract private sector investment in Africa’s energy transition

New York, 13 July 2023 (ECA) – Infrastructure experts have reiterated the need for conducive policy and business environment in Africa, which they say, is a critical first step to attract the private sector in urgently needed renewable energy investments needed for economic and social development.

Robert Lisinge, Acting Director Private Sector Development and Finance Division, Economic Commission for Africa (ECA) said Africa needs to rapidly scale up investment in clean and renewable energy to seize much of the 8,000 GW of added clean energy sources expected globally by 2030 but needs the right framework to attract private sector financing. 

Increasing investments in sustainable energy

“We must address the critical challenge of our policy and regulatory environment that often inhibit scaled investment and effective private sector participation,” Mr. Lisinge said in opening an event on Advancing Regulatory Improvements to Accelerate Private Sector Investment to Meet SDG7 and Energy Transition Goals in Africa on the sidelines of the High-Level Political Forum on Sustainable Development in New York this week.

“We must close the energy access gap that has left more than 600 million people in Africa without access to electricity,” Mr. Lisinge stressed, noting that the climate goal of 1.5 0C warming calls for significant changes in how energy is produced and consumed globally and in Africa.

The High-Level Political Forum is this year being under the theme “accelerating the recovery from coronavirus disease and the full implementation of the 2030 agenda for sustainable development at all levels”. Recovery from the impacts of COVID-19 and increasing momentum towards achieving SDG goals are essential to remain on track towards the 2030 goals.

The side event focused on private sector investment participation in accelerating electricity access and renewable energy development in Africa, accelerating energy transition and building further resilience in addressing the negative impacts of COVID-19 on SDG7 in Africa.

Mr. Lisinge noted that the crises of COVID-19, the war in Ukraine, energy and macroeconomic stability, and climate change have pushed African economies to the edge and increased vulnerability. He said the challenges must be confronted without “losing sight of required investments for sustainable development, economic and social transformation and long-term prosperity”.

Regulatory and policy reforms to attract private sector

The investment requirement for electricity in Africa is huge, Mr. Lisinge said, underscoring that Public Private Partnerships are key to attracting the private sector and promoting innovative financing in sustainable energy development.

Presenting an assessment of Africa’s SDG7 status and challenges, ECA Economic Affairs Officer, Anthony Monganeli Mehlwana, highlighted that 43 percent of Africa’s population is still without access to electricity and 170 million Africans need clean cooking technologies.

“We need to update legislative and regulatory systems and put in place incentives to attract private sector investment in cutting edge power sector projects. We also need to raise the profile of clean cooking in Africa as we have done with solar energy said Mr. Mehlwana.

There is immense need for investment in Africa’s electricity sector, said Mr. Andrea Renzulli, Head of Policy and Regulation at the RES4Africa Foundation, in a presentation on a project encouraging electricity sector reform in 16 African countries.

According to the African Development Bank, Africa’s power sector needs an annual investment of $90 billion until 2030 if the continent is to meet key energy demands.

Africa’s electricity demand represents 2 percent of global electricity demand, and this is expected to quadruple by 2040, yet the continent has received the least investment in electricity sector as regulatory frameworks in many African countries do not allow private sector participation in some parts of the electricity value chain, Mr. Renzulli said.

Contributing to the discussion, the Secretary General of RES4Africa Foundation, Mr. Roberto Vigotti, emphasized the need for bankable clean energy projects, robust investment frameworks and mechanisms to de-risk investment on the continent.

“We need to decrease the cost of capital; sometimes a solar project in Italy costs seven times less than doing the same in Uganda. This is because the perspective of risk is high. We need to decrease the cost of capital by mobilizing green bonds and de-risking investment,” Mr. Vigotti said.

Issued by:
Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Tel: +251 11 551 5826


Follow ECA on  Facebook    YouTube    LinkedIn