May, 2026 Memo: African clean energy. Where's the money?
Clean energy $$ flows from few sources and is concentrated in a few African countries, missing opportunities to create real impact/return in many other countries with strong fundamentals.
Note
This is not another argument about the mismatch between solar, wind, and geothermal potential and investment. Neither is it a reminder of the fact that financing towards African clean energy is generally inadequate. By showing 5 realities and 5 insights from them, this memo uncovers African clean energy finance maldistribution & contradictions and argues that DFIs and private capital are overcrowding, missing the right places to make real frontier impact/return, and gives practical points for geopolitical deciders1, DFI allocators, and private capital allocators to consider.
Africa
Most Africa (clean energy) finance literature assumes Africa is a landmass altogether leapfrogging in the energy transition. For instance, private investment in clean energy in “Africa” rose from about $17B to about $41B in the last 5 years; but as you will see below, this is not an African story — it is the story of 6 countries in Africa distorting the finance statistics of the other 48 countries. DFI is not necessarily active in ‘Africa′, neither is substantial private necessarily flowing into ‘Africa’ — they are flowing into individual countries, and there are questions whether DFIs and private capital are optimizing their mandates in Africa. One thing is certain though: the big headlines are blinding of the realities of clean energy finance in Africa.
5 realities
1: $60B
The $60B annual clean energy finance that Africa receives is not a unitary package; $40B (67%) of it is private finance, and $20B (33%) is public/DFI.
Hypothetically
Distributing each part of the whole equally in Africa, each country would receive ~$740M in private capital and $370M in DFI/public capital. Even with these hypothetical figures (equal share among African countries), Africa lags behind ‘comparable’ “frontier” markets across the world.
The comparison raises 3 uncomfortable truths:
DFI $$ — functionally misplaced? A country with over $4,000 GDP per capita and relatively high private capital confidence receives more DFI finance than African countries majority of whose individual GDP per capita is less than $1,700 and enjoy less private capital confidence. If DFI finance should crowd in private capital, and solve for greater need/impact, then they should double or triple down on a country with a lower GDP per capita and lower private capital confidence, greater structural challenges but better natural resources and better fundamentals.
Natural resource concentration compounds the contradiction. Ideally, natural resource abundance (solar, wind, geothermal heat) should equal more financing. Africa’s Sahel, for instance, enjoys more solar irradiance than most of the countries in the above table, but receive less DFI & private financing. Africa holds the world's largest untapped renewable energy resource base than any comparable region on earth. Its population is the youngest and fastest-growing, meaning the demand for electricity will compound for decades. It has the highest rate of energy poverty of any inhabited region (4/5 of the world’s energy poverty cases are in Africa). By every measure of need, resource endowment, and long-run demand, Africa should be the world's premier destination for renewable energy investment; public and private.
Policy constrains the power of resources and fundamentals. The paradox is not just that Africa receives less despite having more. It is that the countries receiving more have, in some cases, structurally identical problems to Africa and solved them through policy design, not through better resources or better fundamentals. Vietnam does not have better sunshine than Senegal. The Philippines does not have better wind than Kenya. Pakistan is not a more creditworthy sovereign than Ghana. The gap is institutional and political, not physical or financial.
Note: Africa’s real (not hypothetical / per country equal share) shows a worse situation than the above comparison for reasons shared in the risk section below.
2: Private 3x; 3 stories
Annual private investment in Africa's clean energy has tripled, from about $17B in 2019 to over $40B in 2024.
The tripling from $17B to $40B is not a continental story. It is 3 stories/mechanisms in 6 countries that happened to compound in the same 5-year window:
Policy changes in South Africa, Nigeria. Domestic policy changes unlocked C&I solar markets that had been structurally suppressed.
Gulf equity in 3 countries. Post-COP27 geopolitical repositioning drove Gulf sovereign equity into North African utility-scale projects in Egypt, Morocco, Mauritania2 at unprecedented scale — about $101.9B3.
Geothermal in Kenya. A decades-long geothermal development pipeline reached financial close in 2023, producing a record single-year investment figure of $3.2B (the largest single-year geothermal investment figure in Africa’s history) — spread across multiple projects, like Menegai.
Absent those three drivers, the private investment picture across the remaining 48 African countries is roughly flat over the same five years.
Interestingly
The tripling is almost entirely explained by 6 countries and 3 mechanisms, none of which involved replicating themselves broadly across the continent, and none of which was primarily driven by DFI de-risking — which raises an interesting question; what’s actually the most effective way to catalyse investment in African clean energy?
3: DFI 1/3 decline
In the same decade that annual private investment in Africa’s clean energy has tripled, over $40B, annual DFI/public financing has fallen by about one-third from a peak of around $28–30B in 2014/2015 to around $20B today.
This is largely due to a steep 85%+ withdrawal from Africa of Chinese DFI financing to just under $2B. China has not filled that gap with alternative capital. And no one else has either. The danger is that no credible commitment exists to fill it.
4: Risk: concentration
This is where the actual data tells a starker story than the hypothetical one above ($60B shared equally among 54 African countries). Most clean energy investments went to 10 or less countries, leaving the majority 44+ behind.
4.1: Destination concentration
Over 50% of Africa's combined public+private clean energy investment (over $30B/yr) flows into just 4 countries: South Africa, Egypt, Morocco, and Kenya.
4.1.1: Private concentration
Only 3 countries account for over 54% of all private investment in Africa’s clean energy: South Africa, Egypt, Nigeria. Top 10 countries (those 3 included) account for about 78%, while the rest 44 countries share only 22% ($8.8). One country, South Africa, receives more private capital ($10.5B) than the bottom 44 countries combined ($8.8B).
The implication of this concentration is stark.
The three countries receiving 54% of all private clean energy capital (South Africa, Egypt, and Nigeria) represent just 27% of Africa’s population. Egypt has achieved near-universal electricity access. South Africa’s electrification rate exceeds 85%. Together, Egypt and South Africa are among the most energy-secure economies on the continent. The 44 countries sharing the remaining 22% of private investment ($8.8B between them) are home to 73% of Africa’s population and the vast majority of the continent’s 600 million people without electricity. Private capital is flowing overwhelmingly to the markets that need it least, and trickling to the markets that need it most.
Why this is the case:
4.1.2: DFI/public concentration
Only 3 countries account for over 52% of all DFI/public financing in Africa’s clean energy: Egypt, South Africa, Morocco. Top 10 countries (those 3 included) account for about 74%, while the rest 44 countries share only 22% ($4.3). One country, South Africa, receives almost equal financing ($4B) to the bottom 44 countries combined ($4.3B).
The contradiction — DFIs following, not catalysing success?
The 3 countries receiving 52% of all DFI/public clean energy financing (Egypt, South Africa, and Morocco) together account for just 16% of Africa's population. Egypt and Morocco, have already achieved 100% electricity access. The 44 countries sharing the almost equivalent of South Africa's share host 84% of Africa's population and almost all of Africa’s energy poor. DFI $$ (the world's most concessional and development-mandated finance) is concentrating in markets that have, by DFIs’ own development metrics, already succeeded.
4.2: Source concentration
4.2.1: 40%+
Most of the flowing into African clean energy comes from the European private sector at 28%. Gulf (13%), China (12%), the US (9%), Africa (6%), India (2%) account for much smaller percentages.4
Sourcing more than 40% from one region (Europe) is a concentration risk for Africa. The risk is not European intent; it is African exposure. A clean energy investment portfolio 40%+ dependent on a single source facing domestic fiscal pressure, political will erosion, and competing strategic priorities is a portfolio with concentration risk that no institutional investor would accept in any other context.
Africa's energy diplomacy priority should be diversification; not away from Europe, but toward the Gulf, BRICS, and Asian capital pools that have the appetite, the resources, and increasingly the strategic motive to deploy at scale. The countries that have already understood this, like the North African countries, are negotiating from a position of genuine optionality.
4.2.2: African capital — constrained
Pension fund regulation reform needed. Africa’s institutional capital in most African countries, with the exception of South Africa, is structurally constrained and unable to invest substantively in Africa’s clean energy as most of their capital is tied by regulators to government securities (pension fund regulators often require about 50% to 80% of assets to be held in government securities), a prudential framework that was designed for a past era and needs reform.
4.2.3: Euro DFI concentration
The World Bank/IFC account for most (28%) of DFI $$ flowing into Africa. The AfDB follows at 18%, and EIB Global at 16%. Most other DFIs are European (again, European concentration).5
Energy diplomacy opportunities: AfDB, NDB, Gulf
Africa’s energy diplomacy can diversify by focusing on:
Stretching the AfDB’s share, and stretching the AfDB to serve countries that actually need DFI $$ — see above analysis on destination concentration.
Getting NDB $$ into more and strategic African countries on “beyond-energy” projects (clean energy projects that lead to bigger plays — like industrial plays)
Attracting more Gulf funds into countries beyond North Africa.
If $$ from the AfDB, the NDB (BRICS), and IsDB+ADFD (Gulf) are each stretched by at least 10% in the next 5 years through aggressive energy diplomacy, then African countries will enjoy more optionality, less concentration.
5: Danger: Stark inequality
When 1 country gets almost as much clean energy financing as 44 countries combined, energy transition will happen mostly in 1 country and distort the data of 54 countries. When over 50% goes to countries with almost universal energy access at the expense of those with deep energy poverty, 3 things will happen:
The DFI mandate will fail. When the granular data, not the headlines, become clearer, questions will arise as to whether DFIs actually addressed energy poverty.
Private capital will be constrained to overcrowded markets, missing potential Alpha in so-called “secondary” and “less privileged” markets.
“African clean energy success” will happen in only a few countries, constraining opportunities in 5+ countries, constraining opportunities in 49+.
5 insights
1. The capital is not missing. The architecture is wrong.
Africa’s clean energy problem is frequently framed as a capital shortage. It isn’t. Private clean energy investment on the continent has tripled in five years, from $17B in 2019 to nearly $40B in 2024. Gulf sovereign entities have quietly deployed over $100B into African clean energy since 2010, mostly as equity, mostly without the concessional scaffolding Western DFIs insist is necessary before private capital can move. The capital exists and it is moving.
What is failing is the system designed to route it where it’s most needed. Countries with near-universal electricity access, like Egypt, attract 50 times more international renewable investment per capita than countries where most people have no electricity at all, like Sudan. That is not a market imperfection at the margins. That is the architecture failing at its most basic purpose.
The question worth asking, for DFIs, for allocators, for anyone deploying concessional capital in Africa right now, is why so much of what already exists is flowing to markets that have already benefitted from it, while the markets that do need it get the residual.
More finance is definitely needed, but more in the same distribution will not cure Africa’s energy poverty or unlock opportunities for private capital.
2. The DFI mobilisation ratio tells what’s wrong with the system.
Development finance institutions defend their presence in South Africa and Egypt partly on the grounds that their capital catalyses private investment. The data makes that argument harder to sustain than it used to be.
Between 2016 and 2022, every $ of DFI energy finance mobilised approximately 33 cents of private capital. To meet Africa’s energy access goals by 2035, that ratio needs to reach seven $ of private capital per one $ of public. That is a 20-fold improvement on current performance, and it will not happen by doing more of the same.
The reason the ratio is so low is not a lack of commitment. It is a structural problem. DFIs are predominantly acting as senior lenders, sitting at par in the capital stack as commercial banks, in markets where commercial banks are already willing to lend without concessional support. In South Africa’s renewable auctions, European IPPs, Gulf equity, and domestic commercial banks all compete actively for deals where DFIs also participate as senior co-lenders. The private wascomingregardless.Theconcessional did not move it.
Repositioning DFI capital into first-loss positions, subordinated equity, and guarantees in less privileged markets, the instruments that genuinely change the risk-return calculus for private capital, is what moves the mobilisation ratio. It is also, not coincidentally, what the markets that need it most are asking for and not getting.
3. Policy has outperformed finance as a catalyst. We are not drawing the right lesson.
The two largest mobilisation events in African renewable energy in the last five years were not produced by blended finance. They were produced by governments changing rules.
South Africa removed generator licensing thresholds in January 2023 and introduced a business solar tax incentive in March 2023. Within a year, small-scale solar investment had grown fivefold, contributing over $6B to the market, with no concessional finance involved. Nigeria removed fuel subsidies in 2023, made diesel generation uncompetitive overnight, and triggered a private solar boom across West Africa’s largest economy. Both interventions cost governments nothing in capital terms. Both unlocked billions within months.
More than 40% of African countries still have unproven renewable energy auction or tender programmes. That single gap, the absence of a structured procurement framework with a creditworthy offtaker, explains more of the investment shortfall than any capital constraint. The World Bank aggregated four West African countries into a single competitive solar tender and cut costs by over 70%. That result has not been replicated at scale.
The most leveraged use of upstream public capital in Africa right now is not project-level co-financing in established markets. It is building the policy and regulatory conditions — auction frameworks, PPA templates, grid connection rules — under which private capital moves without needing to be subsidised into every individual transaction.
4. The risk premium is not reflecting the actual risk. That difference has a price, and ordinary people are paying it.
A solar project in Senegal with a structured PPA, a proven contractor, and an IFC partial guarantee is priced at 12 to 15 percent cost of debt. The same project in Spain costs 4 to 6 percent. That gap, 300 to 400 basis points, is not primarily a function of what is happening inside the project. It is a function of sovereign credit ratings being applied as a proxy for project risk in the absence of better data.
Actual default rates on African renewable energy projects, where they have been recorded, are materially lower than what the sovereign premium implies. The problem is that the dataset is thin, inconsistently published, and not systematically used by the institutional investors whose credit committees rely on rating agency signals because nothing more granular is available.
The result is a loop that sustains itself. High perceived risk keeps the cost of capital elevated. Elevated cost of capital raises the electricity tariff. Higher tariffs either kill projects or price electricity out of reach for the households that need it most. Fewer projects generate less performance data. Less data keeps the perception intact.
The entry point for breaking that loop is not a structural reform programme. It is a rigorous, regularly updated, publicly accessible dataset of project-level performance across secondary African markets: construction completion rates, PPA payment histories, actual default rates — that gives allocator committees something real to price against, rather than a sovereign rating that was never designed to answer the question being asked of it. That dataset does not exist in consolidated form. Its absence is not incidental to the problem. It is the problem.
5. For the first time, African governments have genuine alternatives. Most are not fully using them.
For most of the last three decades, the terms on which development finance reached Africa were largely set by the providers. Western MDBs and bilateral DFIs determined the conditionality, the instruments, the currency, and the timeline. African governments negotiated within those terms because there were few credible alternatives.
That is no longer the situation. Gulf sovereign developers are deploying equity at world-record low electricity costs, with no conditionality, no fossil fuel exclusions, and faster execution than any Western DFI can match. China’s retreat from infrastructure lending has been partially replaced by a green pivot, Chinese companies agreed to participate in over 20 GW of African solar projects between 2021 and 2024. The EU’s Global Gateway and the JETPs are now explicitly motivated by supply chain security and geopolitical positioning, not purely development logic. Capital is competing for African renewable energy in a way it simply was not a decade ago.
This has created something that did not previously exist: a seller’s market in African development finance, at least in bankable markets. Governments running explicit multi-alignment strategies, borrowing from the NDB, accepting Gulf equity, negotiating JETP terms with Western partners, and using each to improve the conditions of the others, are extracting meaningfully better financing terms than those engaging with a single source.
For DFIs, the strategic implication is clear. The comparative advantage of Western concessional capital is now concentrated in the frontier markets that Gulf and Chinese capital will not enter — fragile states, post-conflict re-entry markets, LDC mini-grid programmes, small island aggregation vehicles. Deploying it in markets that Gulf equity already serves is not just inefficient. It is a misallocation of whatever development finance leverage remains. For African governments and their advisors, the competition between blocs has produced more negotiating power than is currently being used. The countries that understand this are getting better deals. The countries that don’t are not.
Geopolitical strategists, diplomats, foreign policy analysts, political leaders who determine foreign policy; public finance often follows politics and geopolitics.
As a result of the Gulf capital injection (equity), Mauritania now constitutes over 25% of Africa’s wind capacity additions.
That is a 14-year cumulative figure. Divided across 14 years it averages roughly $7.3B per year — which is consistent with, and actually a subset of, the $40B annual private envelope for 2024 specifically.
These figures are estimates, not exact figures and may vary slightly; they have been drawn from various sources, not a single source.
These figures are estimates, not exact figures and may vary slightly; they have been drawn from various sources, not a single source.