Our monthly look at who funds Africa's energy transition

From the newsletter

The renewable energy funding space keeps growing with increased bilateral agreements as well as the entry of new funders. In August, one long-time infrastructure investor, Japan, pledged $424 million for Nigeria's power grid upgrades. CrossBoundary Energy welcomed a $40 million equity investment from new partner Impact Fund Denmark.

• Also this month, Afreximbank, Africa’s own trade finance institution, signed a $300 million loan to Malawi to de-risk investments across multiple sectors, including energy. It also pledged $4.4 million for the 1 GW floating solar PV project in Zimbabwe.

• In July, the sector had welcomed the first yuan-denominated financing from China Development Bank (CDB) in a 2.1 billion yuan ($290 million) loan agreement with the Development Bank of Southern Africa (DBSA).

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• Anzana Electric, a US-based energy company, formed a joint venture with ZESCO, Zambia’s national utility, for a $300 million electrification project. The deal is one of the largest energy investments in Zambia, a country grappling with severe load-shedding. It aims to electrify about 2 million people in the copper-rich Lobito Corridor.

• Anzana is increasingly focusing its investments in mineral-rich regions. In June, the company also signed a deal to finance a hydropower plant to supply electricity to mining areas in the Democratic Republic of Congo.

• Beyond minerals, North Africa has emerged as an attractive market, thanks to its proximity to Europe and its positioning as an alternative to Chinese firms facing US tariffs and stricter trade barriers. In August, a consortium of Egyptian, Chinese, Bahraini, and Emirati investors launched a $220 million solar component and battery manufacturing complex, targeting both export markets and local demand. Gulf nations, in particular, are stepping up their presence in Africa’s renewable energy landscape.

• Traditional development financiers such as the World Bank, AfDB, EBRD, and FMO remain key players, continuing to channel concessional loans and grants to crowd in private capital. To date, they account for over 80% of total renewable energy funding flows in African countries, with investments spread across the full spectrum of renewable technologies.

• These institutions have also supported local banking sectors. For instance, Afreximbank signed a $300 million deal with NBS Bank of Malawi to de-risk investments across multiple sectors, including energy. The EBRD provided a $100 million sustainability-linked loan to Banque Misr to expand financing for women-led MSMEs, affordable housing, and green lending.

• August saw no commercial bank-led renewable energy deals. Standard Bank South Africa, which has long dominated this space, was absent from this month’s flows. However, the renewed push from multilateral institutions into local banks suggests the financing landscape for renewable energy could soon shift, broadening access to capital across the continent.

Our take

• Development Finance Institutions (DFIs) and multilateral institutions providing funding to local commercial banks could democratise access to finance and reduce the reliance on a handful of dominant players. However, this funding needs to scale up significantly for these local banks to be able to finance major projects.

• The entry of new funders and the re-emergence of old ones will lead to greater diversification and strengthen Africa’s bargaining power to secure better deals.

• To close Africa’s vast electricity access gap, particularly for rural populations, more grant support is needed to lower technology costs. Without this, Africa risks widening the energy divide, with only certain segments of the population making progress.