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KPMG says there are $250bn in untapped green investment opportunities in Africa

By Larry Claasen

There are nearly $250-billion in untapped green investment opportunities in Africa in areas such as solar, wind, and hydrogen in Africa.

This is according to a new KPMG whitepaper, Climate Investing in Africa, which found that the continent was fast approaching a period of economic prosperity which created an “untapped investment opportunity for private sector financiers.”

The report notes that Africa needs $277-billion a year between 2020 and 2030 to reach its Paris Agreement climate targets, which will contribute to limiting global warming to 1,5°C. The current annual flows into Africa, however, only stands at only $29,5-billion.

Though Africa’s share of of global renewable energy investments is only 3%, the report points out that there are “ample opportunity for investment in renewable energy resources such as wind, solar and low‐carbon hydrogen.”

Even though investment in renewable energy projects on the continent is picking up speed, the acceleration is too slow to provide energy to the 600 million Africans that still doesn’t have access to energy, and to help the world’s decarbonisation efforts. 

Despite the slow pace, the opportunity is particularly big when it comes to wind energy. 

“The untapped promise of wind is particularly marked, with recent research showing that 27 countries in Africa have sufficient wind potential on their own to satisfy the entire continental electricity demand, despite the fact that Africa only uses 0,01% of its wind potential.”

Research conducted in 2020 indicated that Africa’s potential wind power generation is almost 180 000 TWh, which is more than sufficient to meet the continent’s electricity demand.

Big challenges

Though there are lucrative opportunities for investors, funding green investments comes with risks and and huge challenges.

The report says unreliable infrastructure, for example, are significant hurdles to business operations and can drive up costs.

The diverse and and complex economic landscape – Africa comprises 54 countries – also brings challenges, as it makes difficult to navigate the differing rules and regulations, as well as judge which countries are more conducive for new and existing investment.

The report also pointed out that the lack of regulatory certainty can couse issues, like South Africa’s Renewable Energy Independent Power Producer Procurement (REIPPP) program experiencing delays in 2015 due to concerns about electricity pricing, causing investor apprehension.

Despite these issues, the KPMG report says the potential is still huge.

“If Africa were to exploit all of its wind resources for renewable energy generation, it could easily bridge the current energy provision gap on the continent.”

The world needs Africa

Investing in Africa’s renewable energy is not just good for the continent, but is also needed to reduce the world’s overall reach carbon reduction target.

“It is unlikely that global climate change mitigation efforts can be successful without taking Africa into consideration. The continent offers some of the planet’s biggest and most profitable options for investments in the global energy transition,” says Pieter Scholtz

KPMG’s ESG Africa Partner Lead, KPMG International.

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