The pathway to meet SDG7 by 2030
A comparison of estimated investment requirements and financial flows between 2014-2020 towards SDG7 in Africa shows a significant funding gap. Despite this, a pathway to meeting SDG7 by 2030 exists.
The following observations are based on what is necessary to reach the IEA’s SAS for SDG7 financing set-out by the IEA in its 2022 Africa Energy Outlook. It has estimated that investments of EUR 25 billion/year are needed from 2022 to 2030, amounting to a total of EUR 200 billion over the whole period. The seven-year average between 2014 and 2020 of financial flows into Africa for SDG7 was EUR 16.7 billion from all donors, including national government spending – this leaves a funding gap of EUR 9.8 billion each year.
A pathway to achieving total SDG7 investment of EUR 200 billion by 2030 also exists, requiring a year-on-year growth rate of 9.7%. This means an additional EUR 60 billion or EUR 6.6 billion a year is required between 2022 and 2030.
If the current rate of commitments for each category of finance continues between 2022 and 2030, calculated to be 3.3% year-on-year, we can expect the IEA’s EUR 200 billion benchmark to be passed in 2034.
The gap is not insurmountable. However, global ODA support has been falling since 2018, and private sector investments have not increased year-on-year as many had expected. Much of the international support, whether in the form of ODA or private investment, will come off the back of concerted action on behalf of African national governments.
Each year the USD 25 billion target is not reached, the cumulative total will increase towards 2030. The 2014-2020 period saw EUR 117 billion worth of ODA finance, private investment and African national governments spending for SDG7 projects in Africa.
Great progress has already been made across the continent in significantly improving access levels and other key energy targets, as shown in the data. However, it is essential that external lenders and international financiers, along with African national governments and financial sources, commit to mobilising and disbursing increasing levels of finance.
This will leverage a trajectory where finance flows at levels above those recorded over the past seven years, thus enabling Africa to achieve SDG7 shortly after 2030.
To achieve this, several key issues must be addressed, including the following:
- The requirement for multilateral and external public sector financiers, such as Team Europe, to maintain or increase the trajectory of increased commitments that they have already delivered over the past seven years.
- African national governments must also increase their commitments. However, it is not realistic to place the burden entirely on increased national public sector spending across the continent.
- African national governments and external state and multilateral lenders must urgently work together to catalyse a substantially increased participation from domestic and international private sector investors and lenders. Thus, efforts to mobilise other sources of finance that have been discussed over several years (such as local markets and pension funds) must be accelerated.