Energy funding slumps in August

From the newsletter

The month of August saw Africa's energy sector receive at least $3.1 billion in funding and commitments, which was almost five times less than what it received in July. The funding was spread across twelve African countries. Nigeria was the biggest recipient with $494 million, followed by Ethiopia at $424 million and Zambia at $400 million.

• The funding climate in Africa remains attractive as many countries push towards electrification. This is reflected in solar panel imports, where at least 26 countries are expected to import more than 100 MW of solar capacity from China.

• Countries with weak grids and low electrification rates, like Nigeria and DR Congo, are expected to be prime destinations for off-grid solar solutions and are likely to attract big funding as investors look for markets where they can scale quickly.

More details

• In terms of regions, West Africa led with $732 million, displacing Southern Africa, which has long been the dominant beneficiary. Southern Africa followed with $704 million, then East Africa with $658 million, and North Africa with $320 million. This does not suggest that Southern Africa is experiencing a funding dry spell, but rather reflects shifting market dynamics. Funding that cut across countries and regions amounted to $653 million.

• Nigeria and Ethiopia are among the 20 countries with the highest electrification gaps. Given their huge challenges, these countries should be attracting a good share of funding to close the gap, and this trend just reflects the available opportunity that investors are looking to tap into. Zambia also has plenty of issues, with load shedding worsening and residential customers now guaranteed just five hours of electricity per day.

• Egypt and Malawi close out the top five, getting $320 million and $300 million, respectively. Egypt continues its dominance in renewable energy projects, with more than 5 GW currently under development, with solar and wind taking precedence. Hybrid projects of solar and batteries, and wind and batteries, are also becoming common. Malawi's funding will cut across sectors, including energy, transport, management, and tourism, and comes after another $350 million major funding in May from the World Bank for the Mpatamanga hydropower project.

• Other countries that rarely get mentioned in funding but made it this month include Niger with $144 million, Benin with $52 million, and Burkina Faso with $40 million. These countries are making major moves in connecting their populations, and solar imports from China reflect this, with Benin in particular having imported 75 MW of solar capacity in the past seven months, just 5 MW below what it did in the entire 2024.

• Energy companies like CrossBoundary Energy and Axian Energy continued their funding and project expansion. CrossBoundary secured $40 million from a new partner, Impact Fund Denmark. This is after securing $60 million in July from Standard Bank South Africa and a $495 million de-risking facility from the World Bank's MIGA. Axian Energy partnered with the Sika Capital fund to build a $52 million solar project in Benin.

Our take

• The sector needs more blended structures combining DFIs, commercial banks, and impact investors for it to see faster growth in nascent markets.

• Funding for Niger, Benin, and Burkina Faso shows that smaller economies with clear policy frameworks can increasingly attract capital. This could inspire more balanced, pan-African investment flows beyond the big five markets.

• Funding of energy companies like Axian and CrossBoundary Energy indicates a growing market. Investors are no longer just looking at large-scale, single-project deals but are increasingly confident in the business models of specialised companies that can scale across multiple markets.