- An IEA report shows that investors are increasing funding for electricity access in Africa, but still fall short of the $150 billion needed for universal access by 2035.
- In 2023, they committed only $2.5 billion, mostly from public sources.
The International Energy Agency (IEA) on Monday, October 20, urged governments and investors to sharply increase funding for electricity access in Africa, warning that current investment levels remain far below what is needed to achieve universal access by 2035.
In its Financing Electricity Access in Africa report, the IEA said investors committed less than $2.5 billion to new electricity connections in sub-Saharan Africa in 2023. The agency noted that while this amount marked a 25% rise from 2019, it still represents only a fraction of the $15 billion required yearly to reach universal access within the next decade.
The IEA estimated that Africa must mobilise about $150 billion over the next ten years to provide electricity to roughly 600 million people without power. It said limited fiscal space, weak macroeconomic conditions, and recent reductions in development aid have slowed progress.
The agency called on African governments, private investors, and development finance institutions to act decisively to accelerate investment and implement policies that support electricity access.
Meanwhile, the IEA reported that international public finance supplied more than 70% of commitments in 2023, while private investment accounted for less than 30%. It said private capital must provide about 45% of total investment to meet the 2035 target. The agency urged governments to reform regulations, align electrification plans with rural development programmes, and create stronger demand to attract private investors.
The report directed financiers to increase equity funding for electricity access projects tenfold and to strengthen the effectiveness of grants and results-based financing. It said concessional finance should represent around 40% of total investment and target low-income communities, early-stage ventures, and capacity-building programmes.
Furthermore, IEA said that financiers currently channel most of their funds to urban areas, even though 80% of people without electricity live in rural regions. It said half of the total finance flows went to only six countries. The agency urged investors to expand support for decentralised energy systems, including mini-grids and solar home systems, particularly in informal settlements and fragile states.
The IEA highlighted that Africa needs at least $2 billion in additional annual investment to make electricity affordable for low-income households. It estimated that 220 million Africans cannot afford minimal electricity use, while 400 million would struggle to pay for essential energy services. The agency encouraged governments to deploy concessional finance to reduce borrowing costs and to introduce time-bound subsidies to improve affordability.