A recent article by the Carnegie Endowment reveals that a select group of African nations is receiving the majority of energy financing, leaving the rest of the continent struggling to meet their energy objectives. This disparity is attributed to a small consortium of financiers, spearheaded by China, whose individual interests dictate the direction of most energy financing allocated to Africa.
According to a study by Oyintarelado Moses from the Carnegie Endowment, Africa boasts an extensive and underexploited array of energy potential, including hydropower, wind, and solar resources. This presents a significant opportunity for enhancing domestic energy access and promoting energy exports. To realize the United Nations' seventh Sustainable Development Goal - ensuring universal access to affordable and clean energy - Africa requires an estimated annual energy finance between $31.5 billion and $45 billion.
Moses' paper revealed that from 2012 to 2021, public and private energy finance directed towards Africa totalled $345.76 billion. This equates to an average of approximately $35 billion per year, sufficient to bridge the annual energy finance deficit in Africa. However, about 600 million people (equivalent to 43% of Africa’s total population) lacked electricity in 2021 due to unequal distribution of financing; ten nations secured 77% of total finance over this decade. Egypt, Mozambique, Nigeria, South Africa, and Angola alone received 61% of the total.
Moses argued that this inequality arises because only a handful of countries and multilateral financing entities - such as China, France, Italy, the US, and the World Bank Group - dominate in providing energy finance to Africa. The paper underscored how this limited group's influence over circumstances hinges on their individual policies and priorities controlling substantial amounts of energy finance. It was suggested that this restricted number of key contributors results in volatility due to potential shifts in funding priorities among these players.
In comparing the various financiers, particularly those providing public energy finance to Africa, Carnegie's analysis identified China as the second-highest financier collectively and the country committing the most funds. Moses' data indicated that China has contributed $35.13 billion, constituting 18% of total energy finance.
Moses urged policymakers to prioritize historically underserved regions in energy financing, involve African regional banks, and leverage public finance to attract private investment for high-potential projects. She suggested that countries' public financing institutions should be encouraged to direct more funds towards regional banks and investors aligned with African countries' energy goals. This shift would move focus from the interests of China and other contributors towards Africa's interests.
According to its website, the Carnegie Endowment for International Peace was established by Andrew Carnegie in 1910. It aims to generate strategic ideas, provide independent analysis, and support diplomacy. With over 150 global experts, it offers analysis on a wide range of global topics and regions including East and South Asia, Africa, Europe, Russia, the Middle East, democracy, governance, nuclear issues, sustainability, geopolitics, global institutions and technology.
The Carnegie Endowment states that Oyintarelado Moses serves as the data analyst and database manager for the Global China Initiative at Boston University's Global Development Policy Center. Her research focuses on subjects such as Chinese loans to Africa, finance for development and alternative approaches to China's Belt and Road Initiative.
