Attracting Finance and Investment for the Energy Transition in Africa

Why is investment crucial for Africa’s energy transition?

International investment is essential for the energy transition and achieving the 2030 Agenda and Paris Agreement goals. Developing countries require $1.7 trillion annually for renewable energy but secured only $544 billion in clean energy FDI in 2022. While financing for SDG 7 (clean energy) and SDG 13 (climate action) has grown, it remains concentrated in developed economies. Africa faces a $780 billion annual investment gap, attracting just 6% of global private renewable financing.

Project Details and Key Stakeholders

Project Code: 2427B

What are the objectives of the project?

This initiative addresses Africa’s energy investment gap by strengthening the capacity of five countries—Ethiopia, Malawi, Namibia, Seychelles, and Tanzania—to attract and manage international private financing, supporting their energy transition and contribution to the SDGs.

What are the expected outcomes of the project?

1. Strategy for attracting energy investments

The project will work with national IPAs to attract energy investments aligned with national goals and the Paris Agreement. It will provide a sector overview, investment opportunities, and an action plan for project preparation and investor targeting, including institutional investors (Years 1-2).

2. Building Capacity for Developing Renewable Energy Projects

Training sessions will be provided for IPA staff and related agencies, including subnational IPAs, SEZs, and PPP Units, to enhance their capacity to design, promote, and facilitate viable renewable energy projects. (Years 1-2).

3. Digital Platforms for Promoting Investment Projects

Digital Marketing platforms and investment guides will be developed to promote renewable energy projects in each country. Managed by national IPAs, they may later expand to other SDG-related sectors. (Years 2-3).

4. Partnerships for Attracting Energy Investment 

The project will foster national and international partnerships, enhancing collaboration among IPAs, ministries, SEZs, NGOs, and private sector associations. It will also connect OIPAs, IPAs, SEZs, and domestic green enterprises to boost energy investment. (Years 2-3).

5. Investors gathering and promotion through SDG Investment Fair

A session on increasing renewable energy financing in Africa will be held at the UN DESA-led SDG Investment Fair. DESA will provide training materials, coach on investment presentations, and support public-private collaboration to promote energy investments.

 

How does this project contribute to the SDGs?

SDG 1: Contributes to poverty eradication efforts.

SDG 7: Supports access to affordable, reliable, and modern energy for all.

SDG 9: Promotes infrastructure development and technology upgrading for sustainable energy, with a focus on developing countries, including LDCs, SIDs, and landlocked developing countries.

SDG 8: Encourages mobilization of financial resources, including official development assistance and foreign direct investment.