A new joint report from the International Energy Agency and the African Development Bank has put a stark number on the continent’s energy investment gap: despite accounting for almost 20% of the world’s population, Africa currently receives only around 2% of global clean energy spending. The report, launched at the Africa Climate Summit in Nairobi, argues that closing this gap requires urgent action on the cost of capital, not just more pledges of funding.
The core problem, according to the report, is price: the cost of capital for utility-scale clean energy projects in Africa runs at least two to three times higher than in advanced economies, largely due to real and perceived investment risk plus borrowing costs that climbed sharply after the pandemic and the war in Ukraine. That premium is enough to make commercially viable projects unaffordable, even when the underlying economics would otherwise work.
Drawing on more than 85 case studies and over 40 stakeholder interviews, the report calls for scaling up early-stage financing and expanding the use of tools that reduce perceived investment risk for lenders — arguing that without fixing the financing mechanics first, pledges to more than double Africa’s energy investment by 2030 will remain largely theoretical.