Closing the Financing Gap for African Energy Infrastructure Trends Challenges and Opportunities

Financing to address Africa’s energy infrastructure needs is estimated to have reached $8 billion in 2013 (APP 2015). Domestic public financing comprised nearly half of these investments while external financing—including private participation in infrastructure (PPI), official development finance (ODF), and Chinese investments—accounted for the rest. Still, the estimated cost of contending with Africa’s energy infrastructure needs is staggering, amounting to approximately $63 billion in 2013 alone. The following paper analyzes the trends, strengths, and weaknesses of various sources of energy infrastructure financing in Africa—including domestic public domestic investment, PPI, ODF, and Chinese financing. Furthermore, it contends that although lack of both capital and bankable projects poses a significant obstacle for expanding infrastructure financing in the continent, particularly for renewable energy projects, a solution involving a greater participation of development banks in the earlier stage of projects and leaving private funds to finance the less risky, latter stages of projects should be explored.