Investment in Africa's clean energy

Investment in Africa's clean energy sector is expected to outstrip its oil and gas industry, according to a recent report from law firm Fieldfisher. The research indicates that about $36 billion is projected to flow into the continent's clean energy sector, surpassing pre-pandemic levels and slightly edging out the $34 billion expected to be invested in the oil and gas sector this year. CNBC Africa recently interviewed Cecily Davis, the Co-Head of Africa & ESG Specialist at Fieldfisher, to delve deeper into the reasons behind this trend and its implications for Africa's energy landscape. Davis highlighted the promising momentum that has underpinned the increased interest in clean energy, citing a strong resurgence across various technologies such as solar, wind, geothermal, and even hydrogen advancement. While the investment landscape varies across different African countries, South Africa emerges as a key recipient of clean energy investments due to its dominant economy. However, other nations like Egypt, Morocco, and Kenya are quickly closing the gap, showcasing the continent's overall progress in embracing renewable energy solutions. Surprisingly, Nigeria, with its vast potential, has seen less investment in comparison. Davis attributed this phenomenon to the need for traditional economies to mine essential resources like lithium and cobalt, which are crucial for renewable energy technologies. Despite the substantial investment flowing into the oil and gas sector, Davis emphasized that renewable energy will not immediately replace traditional fossil fuels. The renewable energy transition will take time, with oil and gas likely to remain dominant for the foreseeable future. However, there is a growing focus on scaling up and making clean energy technologies more accessible and cost-effective to meet global demand. Davis also touched upon the influence of the Russia-Ukraine war on investment activities in Africa, noting that the conflict has heightened the importance of energy security globally. This has led to increased investments in clean energy projects within the continent, with a significant portion coming from international and European lenders and investors. Moreover, smaller jurisdictions like Rwanda are leveraging partnerships to undertake large-scale hydropower projects, attracting substantial investment interest. Despite the resurgence in clean energy investments, Davis acknowledged that more substantial funding is required to combat climate change effectively. The annual investment needed to limit climate change and adapt to its impacts is estimated at $190 billion, highlighting a significant shortfall compared to the current level of investment in clean energy. Nonetheless, Davis remains optimistic about the progress made so far, emphasizing the need for governments to create a conducive environment for overseas investors and continue developing social and demographic improvements to attract more investments. She also addressed the economic spinoffs of clean energy investments, emphasizing the potential for job creation and economic growth in various sectors like agriculture. The shift towards clean energy presents a win-win situation, offering opportunities for sustainable development, job creation, and enhanced social cohesion across Africa.