Online Reporter
Let US start with the obvious. Africa has energy: sun, wind, hydro, and geothermal energy. But having the resource does not necessarily mean having the electricity and that is because energy does not flow on optimism – it flows on financing.
Roughly 600 million people across the continent still do not have reliable access to electricity. And that affects everything.
No power means no productivity, no clinics that can refrigerate vaccines, and no digital classrooms. It slows development, stalls investment and holds people back. However, generation is only part of the equation.
The real challenge, and the question we are asked most often is how to make these projects bankable.
Because, until capital can move, power cannot either.
Ambitions are not the problem. The African Renewable Energy Initiative is targeting 300 gigawatts of renewable energy by 2030. Mission 300, launched earlier this year by the World Bank and the African Development Bank, aims to connect 300 million people to electricity by then, too.
Nigeria has already kicked off a US$200 million mini-grid deal to bring power to rural communities.
The momentum is there, but there is a sticking point
So what gets in the way? The cost of capital in Africa remains two to three times higher than in Europe or the United States. And that is not because the technology is different. It is because the financial environment is.
Foreign exchange risk, limited hedging tools, weak credit ratings for utilities and underdeveloped secondary markets all make it harder to fund what should be straightforward energy infrastructure.
That is why structure matters.
South Africa’s Renewable Energy Independent Power Producer Procurement Programme works because it has reduced uncertainty. You have credible off-takers, transparent bidding and enforceable power purchase agreements. Everyone can price their risk and act accordingly.
But even that system is showing cracks. Transmission capacity is under strain. Projects that have cleared every regulatory and environmental hurdle are now waiting for grid connections.
In many countries, the wires are not keeping up with the will.
In some places, wheeling frameworks are helping. These let generators send electricity across someone else’s grid to reach the buyer.
It is a clever workaround, and dedicated intermediary companies are popping up to exploit energy trading opportunities. But it works only if the rules are clear and everyone trusts the process.
And centralised systems can only take us so far.
That is where decentralised energy steps in. Think rooftop solar, mini-grids and embedded generation. These are not edge cases anymore. They are central to how we think about electrification. And they often make more sense financially.
Smaller systems are faster to build, easier to finance in local currency, and when backed by the right aggregation model, can be grouped into investment portfolios that attract serious capital.
Aggregation makes sense
Aggregation takes dozens of small, scattered producers and bundles them into something lenders can understand – and that insurers can cover.
It also reduces the administrative drag that comes with one-off deals. As long as there is room to scale, everyone wins.
But even with momentum behind wheeling, decentralisation and aggregation, you cannot build a market without a way to recycle capital.
That means functioning secondary markets.
Projects cannot live
on development
funding forever
There must be a path to commercial debt, refinancing, credit enhancements and institutional uptake.
Currency mismatches also need attention. A project might raise dollars or euros, but it is generated in local currency. That gap hurts viability.
Guarantee-backed local tranches and dual-currency contracts are starting to close the loop, but they are not yet widespread enough.
We are seeing local institutional investors, pension funds, infrastructure arms and insurers wanting to get involved.
But they need creditworthy products and transparency. They need to see that someone else has taken the early risk off the table.
Africa is not a single energy market. And it should not be priced like one. Ghana is not the Democratic Republic of Congo. Kenya is not Malawi. Each country has its own regulatory pace, political climate and enforcement muscle. Lumping them all together just keeps the cost of capital unnecessarily high.
That is why tailored
finance matters
At Nedbank Corporate and Investment Banking, we treat all those details as non-negotiable. We spend time in the weeds. We look at legislation, licensing frameworks, track records, grid access and legal enforceability — all the stuff that turns an idea into a financeable project. It is not just about putting money into energy; it is about structuring it in a way that makes sense for everyone involved, from development finance institutions and developers to commercial banks and communities.
By 2030, the story should be different
There should be more energy closer to where people live and work, more regional trade between markets, more blended structures that mix public and private capital, and more infrastructure built with long-term ownership in mind. We are starting to see that shift already. And it is encouraging.
But there is still a gap between ambition and action. Closing it will take smart structuring, clearer regulation and localised funding models that understand both the risk and the opportunity.
The good news is that none of this is hypothetical. The work is already happening. Projects are being signed, capital is being deployed and solutions are evolving.
The question now is not whether Africa has the power. It is whether we will fund it properly. That is the gap. That is the opportunity.
And that is what we focus on every day. – Moneyweb
The article was written by Jan Malan, UK head of power and generation; and Sne Mnguni, head of structured sales and markets, Nedbank Corporate and Investment Banking.
