By Africa Links 24
Published on 2024-04-09 12:20:09
Infrastructure projects in Africa have long depended on external financing, especially in sectors like renewable energy. Development finance institutions, mainly from European countries, have played a crucial role in funding wind farms and solar parks across the continent. However, there is now a growing optimism that Africa can tap into its own financial resources to accelerate the deployment of renewable energy projects.
Anas Charafi, a senior investment director at Africa50, an infrastructure investment platform, believes that mobilizing local funding, particularly from institutional investors, is key to unlocking Africa’s potential in renewable energy. Africa50, which is owned by 31 African countries, the African Development Bank, the Central Bank of West African States, and Morocco’s Bank Al-Maghrib, has recently made significant strides in mobilizing African capital. The platform’s Infrastructure Acceleration Fund has received commitments from 16 African institutional investors, including leading pension funds and insurance companies on the continent.
The launch of the Infrastructure Acceleration Fund marks the first time that capital from local institutional investors has been mobilized for infrastructure projects in Africa. With $225.5 million secured from African investors and the International Finance Corporation, Africa50 is paving the way for increased local participation in funding renewable energy projects on the continent.
Despite the significant growth in assets managed by institutional investors in Africa in recent years, there has been a reluctance to invest in infrastructure assets due to perceived risks. Charafi acknowledges the need to support African institutional investors in becoming more familiar with the asset class. However, he believes that investing in infrastructure makes sense for funds with a long-term investment mandate, as the asset class offers returns over an extended period.
A positive trend highlighted by Charafi is the increasing capacity of African developers to deliver projects. He points to companies like Madagascar’s Axian Group, Egypt’s Taqa Arabia, and Morocco’s Nareva, which are now on par with international developers. This trend bodes well for the future of renewable energy projects in Africa, as local developers and investors build credibility and expand their presence in the market.
Looking ahead to 2024, Charafi is optimistic about the prospects for renewable energy projects in Africa. The sector is benefiting from the momentum generated at the recent climate summit in Dubai, with projects pledged there now materializing. Africa50 has signed deals to fund a major solar and battery storage project in Mozambique, including the continent’s first large-scale floating solar infrastructure, as well as an electricity transmission project in the same country.
Charafi also sees a modest improvement in the macroeconomic environment in most African countries, which should support further investment in infrastructure. As early-stage projects initiated in 2023 begin to bear fruit in 2024, there is growing momentum for the development of renewable energy infrastructure across the continent.
In conclusion, Charafi emphasizes the importance of Africa positioning itself to attract global investment in renewable energy projects. With significant funding available globally for green projects, Africa has the opportunity to capture a share of this capital and drive improvements in its renewable energy infrastructure. By mobilizing local resources and building the capacity of African developers and investors, the continent can accelerate the transition towards sustainable energy solutions.
