As the world tilts more towards energy transition, there is still the looming African energy sector conundrum. Despite the continent having a high resource potential for renewable energy, it is often overlooked for clean energy development. This is a high resource, low result situation.
With an almost lack of investment in renewable energy, it is safe to say Africa is not moving at the same pace as the rest of the world in this energy transition. Although, this development, or lack of it, cannot entirely be blamed on investors.
To invest in a sector, one must be sure that there are guiding policies that reassure profits and general support for the growth of the investment. There also must be the willingness to accept investment. In any other case, it becomes a high resource, low (or no) result situation.
In the case of Africa’s energy sector, when it comes to the energy transition, there are a lot of factors at play. There is, of course, low finance for new clean energy projects, but why is this? The continent is blessed with an abundance of renewable resources like adequate sunshine, water resources and even wind.
Why is there little investment in the continent’s renewable energy space if this is the case? As stated earlier, investors do not just look for resource-rich industries to put their money into. Instead, they (the investors) need to be sure the guiding policies of the said industry guarantees the growth of their investment.
There is little or no social legitimacy despite regulations and policies seeming to encourage external investments in the African energy markets. And being that public (government) funding cannot single-handedly improve the energy transition in Africa, there is a need to create and employ frameworks that boost investor confidence on the continent or else Africa will remain stuck in the high resource, low result situation.