⚡Africa’s Energy Investment Paradox.

Africa accounts for 19% of the world’s population but only 3% of global GDP. This disparity is starkly visible in its energy investment: while Africa spends 3.6% of GDP on energy, slightly more than the global average of 2.9%—its investment per capita is just USD 68, compared to the global average of USD 402. According to World Energy Investment 2025 - IEA.

The regional imbalance is acute. South Africa and North Africa, home to under 20% of the continent’s population, attract nearly half of all energy investment and control over 65% of installed electricity capacity. Meanwhile, Sub-Saharan Africa, where most Africans live, continues to lag in access to reliable power. As of 2024, 600 million people lack electricity, and over 1 billion still use polluting fuels for cooking.

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Old fuels, new money

Historically, oil and gas dominated African energy investment, with private capital focused on export potential. Clean energy received less than USD 30 billion annually until 2021. But global cost declines—especially in solar PV—have changed the game. Clean energy investment is expected to triple to nearly USD 40 billion by 2024, with solar now the cheapest power source in many African markets.

Yet public and development finance—vital for frontier markets—has shrunk by a third over the last decade. Notably, Chinese development finance fell 85%, dragging total DFI support down to USD 20 billion in 2024. These funds are critical for projects where private investors fear low returns.

Power to the few

Venture capital and private equity have stepped in to finance early-stage energy access businesses, especially in off-grid solar. Since 2015, VCs have supplied 40% of energy access start-up capital. But deal sizes remain modest—USD 7 million on average—and appetite is shifting from residential solar to commercial & industrial systems and electric vehicles, where risk is perceived to be lower. Spending on EVs alone grew eightfold between 2021 and 2023.

The road ahead

Africa’s energy story is not just about gaps in infrastructure. It is about misaligned capital flows, with finance chasing returns, not needs. Bridging this divide will require a rebalancing of risk, and greater commitment from both public and private sectors to serve the regions most in need.

Read more here: World Energy Investment 2025 - IEA.