I am reluctant to hazard a guess at the amount of funding allocated to Africa’s power and energy market in the last 24 months. Would you be willing to put an amount to it?
Promised by various development banks and foreign direct investors, loan packages and grants have gained momentum, but too few projects delivered. Naturally, it takes time, but funding into this market is nothing new.
Considering that European direct foreign investors’ portfolio into Africa alone sits at around €15.3 billion ($18.2 billion) into just over 1,754 projects across industries, it is natural to wonder where all this money is going.
One way to bear witness to the impact of funding is to look at how the market has changed over recent years. With new projects peppering the landscape, you can trace where the funding came from and whether more funding in this vein will deliver increasingly capable results.
your choice for the African Power & Energy Elites 2022 edition
Note that development finance from donor countries and multilateral institutions can include public sector loans, private sector investment, grants and aid – all with varying methods. The focus, for me, is not funding’s form but what this looks like at a grassroots level.
The latest funding has mainly set out to address the energy transition and climate-related concerns. While this is a worthwhile endeavour, in my view, development investment should meet the needs as stipulated by the recipient as well.
By taking this stance, would the funding mechanism’s main aim be the energy transition, or would it address achieving 100% street lighting across a district or country?
In a new finance agreement, the African Development Bank will loan $50 million to First City Monument Bank in Nigeria to channel to local enterprises and women-empowered businesses in agribusiness, manufacturing, healthcare and renewable energy businesses.
This loan is one example that is not directly focused on addressing the energy transition directly but will have an effect down the line.
Since all public and private funding do not come cheaply and requires guarantees, it should ultimately deliver a considerable positive impact for energy access, productive use of energy, and grid-tied electrification rates, among others.
Until next week.