The International Energy Agency (IEA) has pointed out a big opportunity for Africa: using local money can really help Africa’s clean energy transition, as per their newest report from September 6 on the continent’s clean energy funds.
The Current Situation of Africa’s Clean Energy Transition
Right now, Africa finds it hard to fund clean energy projects because it relies heavily on foreign money, and local funding options are not well-developed. This means high costs and not enough savings in the domestic market.
Spotlight on Sub-Saharan Africa
The good news is that there has been growth in savings in Sub-Saharan Africa, going from 19% of the total domestic product in 2017 to 25% in 2021. Yet, very few working-age people in Africa are contributing to pension schemes, which is far below the worldwide average.
The report suggests that to grow further, governments need to create pension plans that more people can use, including those working in unofficial jobs, which make up a huge part of the workforce.
Building a Stronger Financial Future
By encouraging more people to save and enhancing economic conditions, local money can play a bigger role. This could create a more stable financial environment, lowering the risk connected to using foreign currencies and protecting against outside economic issues.
Working Together for a Better Tomorrow
As the local markets grow, both local governments and international partners can help steer this new money into energy and infrastructure projects. They can help create a safe environment for investment, guiding people on the risks and benefits of different kinds of investments.
Moreover, joining forces with international investors can bring together the best of both worlds: the expertise of foreign investors and the local understanding of the market.
Africa is at a turning point. The IEA report shows a path where local investments fuel Africa’s clean energy transition, offering a sense of independence and stability. It invites governments and global investors to work together, harnessing local resources for a greener, more sustainable future.
Find out more about the new paths to Africa’s clean energy transition in the latest IEA report. Share your insights on how local investments can shape Africa’s energy future.