The European Financial Flows on SDG7 to Africa 2020 report shows the extent that progress has been made in delivering sustainable energy and increasing access in Africa during the past decade.
The supply of electricity from renewable sources has attracted the most investment over the last six years, with an average annual investment of EUR 3.1 billion in 2014-2019. Conversely, investment into non-renewable power generation has stagnated and declined, with average annual investment at EUR 1.3 billion.
These are encouraging trends, but it is imperative that the pace of investment, project implementation and stakeholder engagement is further accelerated, if the goals of SDG7 are to be achieved in Africa by 2030. Data presented in the European Financial Flows on SDG7 to Africa 2021 report shows the considerable progress in mobilising different classes of finance and risk mitigation instruments for electricity generation from renewable sources – albeit with significant scope for future improvement – but also that Official Development Assistance financing still dominates the transmission and distribution, policy and clean cooking sectors.
Data compiled for the report show that African sovereign governments and development institutions are the continent’s primary financier of energy and will continue to play the leading role if SDG7 is to be achieved by 2030. The international community is, and will need to continue, playing a role in assisting Africa towards meeting these ambitious yet achievable targets.
EU Institutions and Member States are the largest contributors of ODA for SDG7-compliant projects in Africa. These flows are complemented by significant amounts of finance by multilateral development banks and the ramping up of private sector participation since 2015, when the Sustainable Development Goals were launched. Emerging actors such as China are investing ever increasing amounts into the continent’s energy and extractive industries – although the terms and sustainability of these loans remain shrouded in secrecy and as such their SDG7-adherence is yet to be revealed.
The overall growth of financing flows, and signs of significantly increased interest in African domestic energy markets by local and international private sector investors, is positive news. However, this cannot detract from the huge challenges that remain: ODA spending and private investments may need to increase by 27% per year throughout the course of this decade (and by an even greater margin for every year this target is not met). This would be alongside a substantial increase in national government spending. This only serves to highlight the need for greater cooperation and coordination.