The African Development Bank (AfDB) has said that Africa will require an estimated annual investment of $32 – to $40 billion in the energy value chain to achieve universal access for electricity by the year 2030.
This was unveiled in the AfDB’s African Economic Outlook 2022, during the Bank’s Annual Meetings on 9th June 2022 in Accra, Ghana. The Bank said that the findings were done under the Bank’s New Deal on Energy for Africa. The Report revealed that a total annual climate financing gap for energy under the New Deal stood at $17 billion to $25 billion.
The Bank further stated that the continent’s large economies like Egypt, Nigeria and South Africa accounted for about 33 per cent of the gap.
The Outlook said about $15.5 billion, which represented 26 per cent of the total climate finance inflows to Africa, were channelled to the energy sector between 2019 and 2020. However, it stated that despite energy being the most funded sector on the continent, resources mobilised so far were dwarfed by Africa’s energy investment needs.
The Outlook said developed countries should demonstrate political will to address climate adaptation and mitigation challenges in developing countries. It noted further that developed countries would achieve this by honouring their commitment to provide 100 billion dollars annually to developing countries to support climate action.
It said the Special Drawing Rights (SDRs) amounts allocated to developed countries should be channelled to African countries through the AfDB or African Development Fund (ADF).
The Outlook said this would ensure greater leveraging to support climate resilience and just energy transition on the continent.
What does this mean for African Countries?
It is not in doubt that greater energy access in Africa holds the key to unlocking its developmental potentials and setting it on the path to economic prosperity. Sadly, Africa is still referred to as the “dark continent” and this description ought to be a thing of the past within the next decade. As the rest of the developed world starts to move towards cleaner energy sources in pursuit of their various energy transition objectives, Africa should not be left behind. Therefore, the commitment of developed countries to provide funding to support Africa’s climate action drive, ought to be honoured and timeously so.