Bridging Continents: Connecting Investors Worldwide with Africa’s Energy Potential
More than 600 million people across Africa still lack access to electricity, leaving the continent with an energy access rate of just over
40%—the lowest globally. Nowhere is this deficit more pronounced than in sub-Saharan Africa (excluding South Africa), where annual per capita electricity consumption is a mere 180 kWh. To put this in perspective, the average American consumes approximately 13,000 kWh per year, while their European counterparts use around 6,500 kWh.
Reliable and affordable energy is fundamental to unlocking Africa’s economic potential and driving meaningful social development. Energy access is not just about powering homes—it is a critical enabler of essential services like healthcare and education, a driver of industrial growth, and a catalyst for job creation. The continent’s persistent energy poverty exacerbates several deep-rooted challenges: thousands of preventable deaths annually from indoor air pollution caused by traditional biomass cooking, frequent
disruptions to critical hospital and emergency services, limited digital and learning opportunities for students, and prohibitively high operating costs for businesses. Without decisive action, these energy shortfalls will continue to constrain Africa’s ambition for inclusive and sustainable growth.
Yet, Africa is not a continent without resources; it is a continent of untapped opportunity. With over 125 billion barrels of proven oil reserves and more than 600 trillion cubic feet of natural gas, Africa holds substantial hydrocarbon wealth. At the same time, it boasts abundant renewable energy potential. Hydropower currently meets about 20% of Africa’s electricity demand, though less than
10% of its viable capacity has been developed. Meanwhile, solar, wind, biomass, and geothermal resources
remain vastly underexploited, despite their potential to drive a cleaner, more resilient energy future.
Addressing this imbalance requires strategic investments and policy frameworks that reflect Africa’s dual priorities: accelerating energy access and transitioning toward sustainability. Recognizing this, the African Development Bank (AfDB) has placed renewable energy at the heart of its energy financing strategy. The Bank is actively supporting modern, lower-carbon technologies while acknowledging that, in the near term, fossil fuels will remain an important part of Africa’s energy mix to meet growing demand.
Through balanced investments, the AfDB is committed to supporting Africa’s path to universal energy access while fostering economic growth, enhancing resilience, and ensuring that no community is left behind in the transition.
Closing the Gap for Universal Access
Between 2012 and 2021, Africa attracted approximately $345.76 billion in public and private energy financing from G20 nations and multilateral development banks (MDBs), according to findings from the Carnegie Endowment for International Peace. This averages around $35 billion per year—positioning investment levels within the estimated $31.5– $45 billion range necessary to address Africa’s annual energy finance gap. Yet, while this figure appears promising, it remains insufficient when measured against the scale of Africa’s energy needs and the pace of its population growth.
The Carnegie report underscores that just a small cohort of countries and institutions—including China, France, Italy, the United States, and the World Bank Group—were responsible for the majority of Africa’s energy financing over the past decade. This concentration of support reveals a vulnerability in the continent’s energy finance landscape, as it depends heavily on a limited number of external actors to advance critical infrastructure projects.
A closer look at the $345.76 billion invested during this period reveals a heavy focus on gas and liquefied natural gas (LNG) projects, alongside investments in mixed fossil fuels and solar power. Public institutions accounted for 57% of total financing ($197.17 billion), while private sector players contributed 43% ($148.59 billion). While both streams of capital prioritized gas and LNG developments, public financing displayed greater diversification across multiple energy sources, albeit with relatively modest support for solar
and wind. In contrast, private investment, though still largely fossil fuel-focused, showed a proportionally stronger commitment to renewables like solar and wind.
Despite this inflow of capital, Africa remains significantly behind other regions in scaling up clean and reliable energy. In 2021 alone, China invested $266 billion into energy transition initiatives—over a third of the global total of $755 billion. The United States followed with $114 billion, while Germany, the United Kingdom, and France contributed $47 billion, $31 billion, and $27 billion respectively. These figures dwarf Africa’s decade-long energy investments, underscoring the urgent need for scaled-up, sustained, and targeted financing on the continent.
To reach the ambitious goal of universal electricity access, the African Development Bank (AfDB) projected that by 2025, the continent would require an additional 160 GW of new power generation capacity, 130 million new on-grid connections, 75
million off-grid solutions, and clean cooking technologies for 150 million households. Achieving these outcomes, according to AfDB, would necessitate annual investments of $60–$90 billion. The Bank itself pledged $12 billion over five years to catalyze progress, but as 2025 unfolds, the stark reality is that hundreds of millions of Africans remain without reliable electricity, highlighting a persistent and growing energy access gap.
Africa Needs Investments, Not Loans, to Tackle Energy Poverty
Africa’s journey toward eradicating energy poverty and unlocking sustainable economic growth depends on strategic investments—not loans—according to Nigeria’s Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri. Speaking at the 8th Nigeria International Energy Summit (NIES) in Abuja, Lokpobiri underscored that true development will come through long-term partnerships and direct capital injections rather than debt-financed projects that further burden African economies.
“At Davos in January, I sat on a panel with eight other ministers from around the world, where one of them mentioned Europe’s €300 billion available for loans to Africa,” Lokpobiri recalled. “I made it clear: Africa does not need more loans. What we need are investments and genuine partnerships. Invest in our potential, share in the returns, and help us build sustainable value—not debt.”
Lokpobiri emphasized that global investors increasingly recognize Africa’s immense natural resource wealth, but without infrastructure and market access, those resources remain untapped. What Africa requires, he stressed, is capital that transforms these resources into tangible economic and social value.
Highlighting Nigeria’s own reforms under President Bola Tinubu’s administration, Lokpobiri pointed to the government’s commitment to creating an enabling environment for investment. This, he said, has already led to the resolution of four major divestments that had been stalled for years, restoring investor confidence in the country’s energy sector. “No International Oil Company (IOC) is exiting Nigeria,” Lokpobiri affirmed.
“They understand that Nigeria remains one of the most attractive destinations for energy investments. Even where some IOCs are shifting focus to deep offshore operations, it reflects the scale of opportunities available here, beyond the capacity of domestic independents, but still within Nigeria’s broader value chain.” To further cement its role as a leading energy investment hub, Nigeria
anticipates securing approximately $20 billion in fresh capital inflows, reinforcing its strategic importance in Africa’s energy landscape.
Echoing these sentiments, Dr. Omar Farouk Ibrahim, Secretary-General of the African Petroleum Producers’ Organisation (APPO), also challenged Africa’s dependence on foreign loans. He called for homegrown solutions, built through intra-African
collaboration and resource pooling.
“We are not opposed to foreign finance, technology, or markets,” Ibrahim clarified. “However, our first responsibility is to exhaust our internal capabilities. Only when we’ve done that should we look outward. Collaboration is key—we must unite our financial and technical resources to address our common challenges.
” One of the most ambitious steps in this direction is APPO’s partnership with the African Export-Import Bank (Afreximbank) to establish the African Energy Bank (AEB), with its headquarters in Nigeria. The AEB is designed to mobilize African capital for African energy projects, reducing reliance on external creditors and ensuring that the continent can fund its own transition and development priorities. Ibrahim also pointed to the stark contradiction of Africa’s energy paradox: while the continent exports75% of its oil and 45% of its gas, over 600 million Africans remain without access to electricity. He urged African leaders—from policymakers and academics to the media, military, and industry stakeholders—to reevaluate their strategies and adopt a unified, self-determined approach to managing Africa’s energy future.
“The status quo is no longer accept able,” Ibrahim stressed. “Africa has the resources. Africa has the talent. What we need now is the political will and collective action to build an energy-secure, prosperous future for all Africans.” Fossil Fuels Account for 72% of Africa’s Electricity as Energy Transition
Advances
Despite the global push for renewable energy, fossil fuels remain the foundation of Africa’s power generation, accounting for 72% of the continent’s electricity supply, according to the African Energy Chamber’s 2025 Outlook Report. While the growth of
renewable energy is accelerating, Africa’s immediate power needs continue to be met predominantly through coal, oil, and natural gas. South Africa and Egypt lead the continent in fossil fuel-based electricity production, a position they are expected to maintain well into the next decade.
The report highlights that Africa currently generates over 980 terawatt hours (TWh) of electricity annually, with fossil fuels responsible for the majority of this output. However, this reliance comes with challenges, including high carbon emissions, concerns around long-term sustainability, and persistent issues of affordability.
NJ Ayuk, Executive Chairman of the African Energy Chamber, stressed the importance of a pragmatic approach to Africa’s energy transition— one that reflects the continent’s current realities and infrastructure gaps.
“To achieve a carbon neutral future, African nations must have the underlying infrastructure and industry to make the dominance of renewables possible,” Ayuk stated in a recent article. “As things currently stand, most African states lack said infrastructure and industry, and the most feasible and expedient way for them to achieve both is through leveraging the abundant oil and gas resources so
many of them possess.”
According to the report, renewable energy currently accounts for just over 27% of Africa’s power mix, a share expected to increase to 43% by the end of the decade. Significant investments in solar, wind, and hydroelectric projects are underway, with countries like South Africa, Egypt, Morocco, Ethiopia, and Algeria driving large-scale developments that will help diversify the continent’s energy portfolio.
However, the report draws attention to Africa’s persistent energy access gap. Of the 685 million people worldwide without electricity, 590 million are in Africa, particularly in rural and underserved areas. Even in urban centers, unreliable power supply remains a critical challenge as population growth and urbanization outpace infrastructure development.
Many households, especially in remote regions, continue to rely on traditional biomass, kerosene, and other inefficient fuels for cooking and heating, with negative implications for health and productivity. Closing this gap requires substantial,
balanced investments across both fossil fuel and renewable energy projects. Industry experts emphasize that natural gas, often described as a transition fuel, can play a critical role in providing stable and affordable electricity while the necessary
renewable infrastructure is built out.
The 2025 Outlook Report also calls for increased Western investment to help accelerate Africa’s energy infrastructure development. Ayuk underscored the importance of international collaboration and meaningful financial support to unlock Africa’s
energy potential. “Africa will reach a point where we will rely primarily on low carbon and renewable energy,” Ayuk said. “But
we cannot get to that point without building the proper infrastructure, and we cannot fund the building of said infrastructure without leveraging our natural resources, oil and gas being chief among them. If the West wishes to speed along Africa’s progress on this front, the best way is to work with Africa as partners and investors working towards common goals.”
Rising Energy Demand in Africa Requires Strategic Investment
Africa’s energy demand is rising rapidly, with projections indicating a 40% increase by 2035. This growth is fueled by accelerating industrialization, expanding economic activity, and a fast-growing population. The continent is on the brink of significant demographic shifts, with the United Nations (UN) forecasting that more than half of the world’s population growth by 2050 will occur in Africa.
Even with substantial declines in fertility rates, Sub-Saharan Africa’s population is expected to double within this period, driving greater energy consumption and increasing pressure on already strained infrastructure. Oil and gas exports remain a vital
economic pillar for many African nations. At least half of Africa’s oil- and gas-producing countries depend on hydrocarbons for over 50% of their export earnings. Nigeria, the continent’s largest oil producer, is a prime example, with oil and gas accounting for approximately 70% of government revenues and nearly 90% of foreign exchange earnings. However, the global shift toward low-carbon energy, driven by climate policies, is reshaping the industry.
According to McKinsey’s report The Future of African Oil and Gas: Positioning for the Energy Transition, international oil majors are increasingly scaling back their investments in Africa’s upstream sector and diversifying their portfolios toward renewable and
cleaner energy projects. Developing oil and gas assets in Africa presents additional challenges. McKinsey estimates that projects
across the continent are 15–20% more expensive to develop and operate than the global average, and they are 70–80% more carbon-intensive. These higher costs, coupled with tightening international capital flows for hydrocarbon projects, are
expected to increase production expenses and reduce Africa’s competitiveness in global markets. Under
McKinsey’s “achieved commitments energy transition” scenario, as much as 60% of Africa’s current oil production could become uncompetitive by 2040. As traditional sources of financing retreat from oil and gas investments, exploration and production activities
across Africa have faced growing constraints. In response, the African Export-Import Bank (Afreximbank) has emerged as a crucial alternative financier, stepping in to support the sector. However, given the scale of capital required to develop Africa’s
oil and gas resources, Afreximbank alone cannot bridge the funding gap.
The creation of the African Energy Bank (AEB) represents a strategic step forward, aiming to provide dedicated financing for African energy projects and safeguard the industry’s future. To achieve long-term energy security, experts emphasize the urgent
need for Africa to design and implement localized funding solutions tailored to support oil and gas development while complementing renewable energy expansion. The AEB is positioned to play a critical role in this effort, but broader collaboration,
resource mobilization, and innovative financing mechanisms will be essential to ensure Africa’s energy sector remains viable, competitive, and resilient in the face of the global energy transition.
Why Africa Needs a Multi-Energy Strategy to Achieve Energy Security
Industry experts continue to advocate for a multi-energy strategy as the most realistic and sustainable path for Africa to address its energy challenges. With over 600 million people still living without electricity and nearly 900 million lacking access to clean cooking solutions, the consensus is clear: Africa must harness all available resources—both fossil fuels and renewables—to close its
widening energy access gap and support industrialization.
The African Energy Chamber has been especially outspoken in defending Africa’s right to pursue an energy mix that includes oil and gas. The Chamber has frequently criticized organizations such as the International Energy Agency (IEA) for advancing what it considers to be impractical and unrealistic energy transition models that overlook Africa’s distinct socio-economic conditions. While aggressive renewable energy adoption may be feasible in highly industrialized nations, the Chamber argues that imposing such
expectations on Africa disregards the continent’s developmental needs and infrastructure limitations.
Abandoning fossil fuels prematurely, the Chamber warns, would only exacerbate Africa’s energy crisis. With population growth accelerating, urbanization increasing, and economies diversifying, energy demand is set to rise sharply in the coming
decades. Without adequate and affordable power, the continent risks deepening poverty, stalling industrial progress, and widening inequality. Natural gas, in particular, is positioned as a cornerstone of Africa’s multi-energy future.
With more than 600 trillion cubic feet of proven reserves and significant untapped potential across several basins, gas presents an opportunity to deliver lower-carbon, cost-effective energy to fuel industrialization, power homes, and support economic growth. Gas-to-power projects are increasingly viewed as vital to stabilizing grids and addressing the chronic electricity shortages that have
long impeded development across the continent.
NJ Ayuk, Executive Chairman of the African Energy Chamber, reinforces the case for a pragmatic, inclusive energy strategy:
“To help end energy poverty in Africa, global institutions like the IEA must cease perpetuating the myth that Africa can meet its population’s needs without fossil fuels or can afford to sacrifice economic development for externally imposed climate goals,”
“Europe, the United States and China have made incredible strides in addressing malnutrition, life expectancy and disease by powering economic growth with uninhibited access to coal, oil and natural gas. Why can’t we?” As Africa navigates the global energy transition, its path must be determined by local realities and development priorities. A balanced, multi-energy strategy that leverages
the continent’s full resource base— while gradually expanding renewable energy capacity—offers the most viable route to sustainable, inclusive growth and long-term energy security.
Conclusion
Africa’s energy future depends on strategic investment, a diversified energy portfolio, and the development of localized financing solutions. While the global transition to renewable energy is vital, Africa must pursue a balanced approach—one that
aligns its energy transition with the continent’s urgent economic priorities and infrastructure realities. For the foreseeable future, fossil fuels— particularly natural gas—will remain integral to meeting Africa’s growing demand for reliable and affordable
power.
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To unlock Africa’s full energy potential, collaboration between investors, policymakers, and industry leaders is essential. Financial commitments must focus on sustainable, scalable solutions that drive long-term growth without exacerbating debt. Institutions like the African Energy Bank are a step in the right direction, offering pathways to reduce reliance on external loans and promote greater self-sufficiency in funding Africa’s energy ambitions.
Closing Africa’s energy access gap requires long-term partnerships, targeted technological investments, and a pragmatic strategy that embraces both fossil fuels and renewables. By responsibly harnessing its natural resources while accelerating clean energy deployment, Africa can secure its energy future, fuel industrialization, and lift millions out of energy poverty—creating a more inclusive and prosperous continent for generations to come.
