Financing Sustainable Energy Access with Oil Revenues in Sub-Saharan Africa: Trends and Strategies

Abstract

Africa’s energy access story reflects the paradox of plenty. With almost unlimited solar potential estimated to be 10 terawatts, abundant hydro (350 Gigawatts), wind (110 Gigawatts), and geothermal (15 Gigawatts), West, Central, and East Africa have electricity access rate of 47%, 25%, and 23% respectively. Indeed, energy access in sub-Saharan Africa (SSA) is estimated to be 50%. In a rural part of SSA, access rate is about 18%. Bridging the gap between the renewable energy potential and universal access to electricity will require an annual investment of $55 billion according to the African Progress Panel. With existing commitments from Development Partners, and Climate Investment funds, Africa requires an annual investment of $55 billion according to the African Progress Panel. With existing commitments from Development Partners, and Climate-related funds, SSA has an annual investment gap of $55 billion according to the African Progress Panel. With existing commitments from Development Partners, and Climate Investment funds, Africa requires an annual investment of $38 billion. This represents 31% of annual oil rents to SSA. The study recommends that SSA countries need to prioritise petroleum revenue expenditure to focus on renewable energy, and other areas such as education, health, infrastructure based on needs assessment. In addition, SSA countries need to create a benign business environment for private sector investments and support creative payment system modelled on the mobile money system to encourage rural access to off-grid renewable energy systems.