A recent report by the United Nations Economic Commission for Africa has highlighted the continent’s huge untapped renewable energy potential, as well as the investment opportunities it presents.
North Africa is currently the region with the most rapid development in clean energy, with a renewable energy capacity of 24,840 megawatts.
The report, titled ‘Investing in a Just and Sustainable Transition in Africa’ notes that: ‘Despite Africa’s huge potential, investment in its sustainability transition, and in renewable energy sources especially, remains negligible.’
The returns on investment in renewable energy sources are ‘very high’, says the report, with 80% of investment opportunity areas having a return on investment of more than 15% and all areas having a gross profit margin of over 25%. Many of these opportunities are suitable for small-scale investment and small and medium-sized enterprises (SMEs).
Despite this, investment in renewables has to date been concentrated in a few countries, with 90% of investment going to only 14 out of 54 African countries.
Solar energy is one example of how these investment opportunities remain untapped; while the continent has 40% of the world’s potential, it currently only has 1% of installed solar energy capacity.
The report notes that while Africa has only had a small part to play in the global climate crisis, ‘a just and sustainable transition’ is vital to the continent, to avoid further climate disasters, and will require ‘systemic shifts from a growth-centred to a well-being-focused economy’.
At Eltumi Partners we regularly advise companies looking to explore investment opportunities in the renewables sector in Libya and the wider region.
For more market updates, follow our LinkedIn page or visit our Insights page.