African demographics are a boon for retail industry

Renewable Energy – Africa Joins the Fray

When it comes to global greenhouse gas emissions, Africa’s current contribution is relatively small but, as the continent continues to expand economically, this will increase as will the demand for greater power. Cultivating long-term renewable energy projects is therefore crucial to long-term sustainable development across the continent.

Time to invest

Meeting at the Africa Carbon Forum in Senegal’s capital Dakar, United Nations officials, World Bank specialists, and business leaders exchanged strategies for Clean Development Mechanism (CDM) projects on the continent. CDM projects are greenhouse gas-reducing initiatives that industrialized countries can use to compensate for their excess emissions.

Africa has benefited the least among all continents from the $7 billion annual CDM market, with sub-Saharan Africa set to receive only 1.4 percent of the 3,700 CDM projects under way worldwide as of September this year. Since the European Union began trading carbon credits through its Emissions Trading Scheme in 2005, only 27 of the 1,156 CDM projects included under the scheme have been registered in Africa, reported Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change (UNFCCC).

Unlocking Africa’s Potential

But a recent World Bank report proves that the continent has potential for just these kinds of initiatives. In fact, the report notes that Sub-Saharan Africa could provide more than 170 gigawatts of additional power-generation capacity (more than double the region’s current installations) through 3,200 low-carbon energy projects, such as combined heat-and-power, biofuels production, mass transportation, and energy efficiency.

Together these projects could avoid some 740 million tons of carbon dioxide-equivalent reductions each year. While the total capital costs are estimated to be at least $157 billion, the report explains that “the pipeline of similar projects in other regions shows us that such projects are often economically viable when carbon revenues are added.”

Capitalising on Africa’s natural resources

While Africa boasts abundant sun and wind resources, financial resources are scarce and infrastructure and support resources can be problematic at times. Despite these setbacks and a number of failed initial attempts, renewable energy projects are still in the pipeline, from an African energy grid to Kenya’s geothermal energy plans, to a solar powered university in Nigeria, and  a wind farm in Senegal.

What is clear is that investment in new technology and innovative business ideas is essential for sustainable development, especially in the relatively new fields of green technology and clean energy. The Africa Enterprise Challenge Fund (AECF), for example, is a US$205m private sector fund, backed by some of the biggest names in development finance and hosted by the Alliance for a Green Revolution in Africa (AGRA). Their aim is to encourage private sector companies to compete for investment support for their innovative, high impact, business ideas.


AECF manages special funding windows focused on renewable energy and adaptation to climate change technologies (REACT) projects. The REACT window has grown to USD35m, with 33 grantees across Kenya, Tanzania, Uganda, and Rwanda. These grantees are exploring exciting, innovative business models designed to bring sustainable energy and adaptation technologies to rural consumers. Projects range from a mobile money solution to a pedal charger for LED lights.

Projects such as these aim to facilitate economic growth and transform the way in which energy is generated and used on the African continent. This will help (largely rural) inhabitants to power businesses and improve the quality of their daily lives, while reducing their vulnerability to climate change.


David Okwara

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