Catalysing investment in sustainable energy infrastructure in Africa: Overcoming financial and non-financial constraints

The paper examines the challenges of attracting private investment for sustainable energy infrastructure in Africa, specifically focusing on the tensions between liberalization and regulation, risk-return profiles and affordability, and global goals versus local needs. Through case studies of natural gas in Tanzania and electricity in Zambia, it highlights how corruption, poor planning, and low tariffs hinder progress, while suggesting that a combination of public-private partnerships, capacity building, and democratic accountability is essential for sustainable development.

• Sub-Saharan Africa faces a massive infrastructure funding gap, requiring an estimated US$90 billion annually for overall infrastructure and US$55 billion annually over the next 15 years specifically for the energy sector to meet growing demand and universal access goals.
• Private sector investment in infrastructure in the poorest countries is disproportionately low; only 7% of all private-sector infrastructure investment flowed to the 77 poorest (IDA-eligible) countries.
• Sustainable infrastructure development is hindered by a fundamental conflict where projects are often "socially desirable but not privately profitable," as private markets prioritize short-term returns and neglect populations too poor to be attractive customers.
• In Tanzania, the development of natural gas infrastructure has been severely undermined by high-profile corruption scandals, including the Richmond emergency generation tender and the IPTL escrow account scandal, which eroded public and investor confidence.
• Tanzania's energy strategy focuses heavily on liberalization and large-scale infrastructure, potentially neglecting meso- and micro-scale solutions and the necessary institutional reforms to expand rural electricity access.
• Zambia's energy crisis is attributed not only to drought but to a lack of diversity in electricity supply, with hydropower providing more than 95% of total generation capacity as of 2014.
• Low electricity tariffs in Zambia act as a significant barrier to investment, as the average tariff of 5.7 US cents/kWh is too low to cover maintenance costs or attract new private investment.
• Zambia has attempted to catalyze renewable energy through a feed-in tariff policy for small-scale projects (up to 20 MW) and partnerships like the World Bank's Scaling Solar programme to introduce utility-scale PV projects.
• Both Tanzania and Zambia are increasingly utilizing Chinese investment for energy infrastructure, which often features shorter preparation timescales but may lack the stringent environmental and social safeguards of traditional multilateral funders.
• A critical risk for countries like Tanzania is 'carbon lock-in,' where heavy investment in long-lived natural gas infrastructure may prevent a transition to low-carbon energy systems despite significant solar and wind potential.

APA

Johnson, O., Muhoza, C., Osano, P., Senyagwa, J., & Kartha, S. (2017). Catalysing investment in sustainable energy infrastructure in Africa: Overcoming financial and non-financial constraints. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/SEI-WP-2017-03-Africa-energy-infrastructure-finance.pdf

Chicago

Johnson, Oliver, Cassilde Muhoza, Philip Osano, Jacqueline Senyagwa, and Sivan Kartha. Catalysing investment in sustainable energy infrastructure in Africa: Overcoming financial and non-financial constraints. Stockholm Environment Institute, 2017. https://www.sei.org/mediamanager/documents/Publications/SEI-WP-2017-03-Africa-energy-infrastructure-finance.pdf.

Wikipedia

{{cite report |last1=Johnson |first1=Oliver |last2=Muhoza |first2=Cassilde |last3=Osano |first3=Philip |last4=Senyagwa |first4=Jacqueline |last5=Kartha |first5=Sivan |title=Catalysing investment in sustainable energy infrastructure in Africa: Overcoming financial and non-financial constraints |publisher=Stockholm Environment Institute |date=January 2017 |url=https://www.sei.org/mediamanager/documents/Publications/SEI-WP-2017-03-Africa-energy-infrastructure-finance.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{johnson2017catalysing, author = {Johnson, Oliver and Muhoza, Cassilde and Osano, Philip and Senyagwa, Jacqueline and Kartha, Sivan}, title = {{Catalysing investment in sustainable energy infrastructure in Africa: Overcoming financial and non-financial constraints}}, institution = {Stockholm Environment Institute}, year = {2017}, month = jan, url = {https://www.sei.org/mediamanager/documents/Publications/SEI-WP-2017-03-Africa-energy-infrastructure-finance.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }