The African Energy Chamber, in collaboration with Afreximbank and S&P Global Commodity Insights, is set to debut the African Energy Finance Summit during African Energy Week 2024. This initiative seeks to streamline and bolster financing within Africa’s energy sector, fostering the rapid transition towards sustainability.
Objective of the African Energy Financing Summit
The « African Energy Week : Invest in African Energy » conference is scheduled to take place from November 4 to 8, 2024, in Cape Town, South Africa. This significant annual event for the continent’s energy sector will introduce the inaugural « African Energy Finance Summit ». This groundbreaking initiative serves as a platform for financial agreements across various sectors, including oil, gas, renewable energies, and strategic mining resources.
The African Energy Finance Summit brings together a diverse range of financial stakeholders, senior government officials, state representatives, and project developers. Its primary objective is to forge connections between investors and emerging projects, thus fostering new opportunities across the continent. The conference underscores the vital role of partnerships between the financial and energy sectors in cultivating attractive business environments.
Consolidating energy finance partnerships
To drive the energy and climate transition in Africa, annual financing exceeding 200 billion USD until 2030 is required. Developing energy projects and encouraging the adoption of green technologies are crucial steps. However, the continent grapples with a substantial investment shortfall.
Africa only garners 3 % of global climate finance, with a mere 14 % originating from the private sector. Over the period from 2012 to 2021, financing for the energy transition from G20 countries and multilateral development banks averaged 35 billion USD per year.
Closing the energy investment gap
Countries are dedicated to utilizing their resources to alleviate energy accessibility issues by 2030. Despite strides towards sustainability, the exploration and extraction of oil and gas continue to be central to many national development agendas in Africa.
Numerous oil-dependent nations, such as Nigeria and Angola, hold firm positions in international markets. Additionally, countries like Algeria and Egypt are actively endeavoring to enhance their presence in this sector. Meanwhile, other nations are steadily emerging as discoveries uncover high-potential deposits.
Prospects in the African energy sector
Africa possesses substantial potential in oil, gas, and renewable energy, presenting lucrative investment opportunities. Moreover, an increasing number of African nations are advancing in this sector, laying the groundwork for promising prospects. Examples include Madagascar’s green energy financing solutions.
Potential of the strategic minerals sector
With a substantial reserve of various strategic minerals, Africa is positioning itself as a key player in the global energy transition. Global-scale mining projects are underway, including Eisenberg Rare Earth Minerals in Namibia, the Congolese Metalkol RTR mine and the Bikita lithium deposit in Zimbabwe. On a global scale, the continent holds significant proportions of essential resources:
- 85 % of the world’s manganese resources
- 80 % of the world’s platinum and chromium resources
- 47 % of the world’s cobalt resources
- 21 % of the world’s graphite resources
These resources, essential to the manufacture of green technologies such as solar panels, represent an emerging market for the continent. A real boon, offering a major opportunity to stimulate the local economy and develop infrastructure. The sector is also a source of income for many African households.
Renewable energy potential
Africa boasts remarkable renewable energy resources, presenting a significant opportunity to address fuel poverty. The continent holds approximately 40 % of the world’s solar energy production potential, yet installations account for only 1.48 % of the global total. Similarly, Africa’s hydroelectric potential is estimated at 340 GW, but only 11 % of this capacity has been utilized so far. Furthermore, Africa’s annual wind power potential amounts to 180,000 TWh.
These figures underscore the lucrative opportunities available for developers of clean energy projects. Initiatives like South Africa’s Renewable Energy Independent Power Producer scheme are paving the way for increased private investment in this sector. Additionally, efforts to develop large-scale green hydrogen projects in Namibia and Mauritania are nearing fruition, further enhancing the continent’s renewable energy landscape.
Emergence of the oil and gas sector
Several exploration and production (E&P) companies have recently expanded their presence in the Orange Basin, estimated to have 11 billion barrels of stock.
Since 2022, Namibia has recorded eight major hydrocarbon discoveries in this region, boosting its ambitions to launch its first oil production by 2030. These finds underline the lucrative capacity of investments in the upstream sector of the oil industry in Africa, valued in the millions of dollars. The most noteworthy are :
- Yakaar-Teranga in Senegal, with reserves estimated at 20 trillion cubic feet
- Orca in Mauritania
- Eban-Akoma in Ghana, with 650 billion cubic feet
- Mukuyu-2 gas field in Zimbabwe
In Angola, ExxonMobil plans to invest 15 billion USD in the country, in response to improved conditions for exploration and development. TotalEnergies announces a long-term strategy including the development of the Begonia oil field, worth 850 million USD in this country. In Nigeria, the French multinational plans to inject 6 billion USD, while Shell intends to invest 5 billion USD. Across the continent, considerable efforts are being made to attract more investment into the energy sector through policy reforms.
