Socio-economic transformation gains related to sustainable energy development and clean energy transition in Africa

Under the Sustainable Development Goals (SDG) framework, Africa is pursuing broad-based development by addressing constraints to its long-term growth and transformation. The development vision of Africa is anchored on Agenda 2063, articulated through the Africa We Want, and the United Nations Agenda 2030. To meet these goals, by leveraging the immense potential of the continent, further bold steps are needed both in addressing barriers to growth and in adopting forwardlooking policies to create new opportunities for improving livelihoods and increasing prosperity on the continent.

The infrastructure gap in Africa is among the greatest barriers to growth, impacting investment across sectors. Beyond the key tenets of SDG7 on bridging electricity access, agricultural, industrial, and service sectors development is tied to the ability to supply sufficient, affordable, and reliable energy. Based on 50 years of observation, we have learned that industrial output is elastic to electricity supply, and a 1 percent growth in GDP induces 0.5 percent additional demand for electricity services. Energy is, therefore, at the center of socioeconomic transformation. In the last few years, due to sustained investment to implement SDG7, more than 115 million people gained access to energy. With a goal of at least 75 million new access per year through 2030 to meet SDG7, further bold action is required. This translates into over $90 billion per year of investment to sustain progress. The current funding gap calls for a robust partnership with the private sector. Through UNECA studies, we have demonstrated that a 1 percent increase in private investment in the broader economy in Africa could boost GDP per capita by up to 1.6 percent in the long-run. Investment to bridge the infrastructure gap for transformation through robust private sector participation is also an investment into our future growth.

Energy transition and decarbonization goals further require thorough reflection about the future of Africa’s energy system. Energy transition and sustainable energy development in Africa bode well with the renewable energy endowments of Africa. Estimates indicate that by 2040, the renewable energy capacity of Africa is expected to grow twelve fold. We need to make sure that Africa equally benefits from the associated economic, social, and environmental benefits. A recent ECA study shows that an energy transition under a 1.5°C climate scenario offers Africa the possibility of a 6.4 percent higher GDP from 2021 to 2050 with the implementation of climate and energy-transition smart policies. It further showed that 8 million renewable energy jobs across the value chain are possible, with a 34 percent in manufacturing. Maximizing these benefits of the energy transition through bold actions is essential.

These assessments are consistent with the observation of the High-Level Dialogue on Energy (HLDE) of the UN in September 2021. The roadmap from the HLDE called for tripling investment in clean energy, accelerating progress on electricity access, improving access to social services, energy transition, and benefiting from at least 60 million new jobs globally in clean energy development.

How will member States, therefore, maximize the socio-economic benefits associated with sustainable energy development and clean energy transition in Africa? First, we must ensure that investment flows to Africa are commensurate with its potential returns. Beyond correcting the risk profile of Africa, we need an attractive regulatory and business environment. Through collateral investments in social infrastructure and by committing to leave no one behind, we face a better chance of increasing the socioeconomic benefits of energy transition-related investments. Second, we will need to focus on the manufacturing and value addition opportunities in green technologies, including recycling and repurposing of batteries. Clean energy technologies are dependent on components that rely on rare minerals from Africa. The energy-mining industry cluster offers viable opportunities for value addition. Industrial strategies and local content policies compatible with national strategic advantages should support this value-addition drive. Third, member States should explore de-risking instruments to mitigate the cost of investment in energy projects. Moving beyond risk perceptions, real risks need to be managed to sustain large-scale investments. This could be further supported by innovative financing schemes, such as the SDG7 bond initiative ECA is implementing. Fourth, partnerships are crucial in supporting not only financing needs, but also strengthening institutional and human capital gaps through exchange of experiences. The system of governance and institutional capacities should be brought to compatibility with ambitious clean energy transitions.

Finally, the potential costs of energy transition to segments of the society, such as in coal-dependent energy systems and oil-exporting countries, will need to be carefully evaluated, appreciated, and taken into consideration in devising transition plans.

Africa today has vibrancy, as a youthful continent, and a tradition of enterprise and resilience. The continent has in-built nimbleness enabled by mitigated lock on technologies of the past. In some areas, it is starting nearly afresh. This offers Africa an operational strategic edge to adopt and pursue sustainable solutions without substantial legacy costs. By accelerating progress, leveraging the immense potential of partnership with the private sector using strategies outlined in this report, Africa can leverage existing opportunities to accelerate its development, provide jobs and improve livelihoods.

Vera Songwe, United Nations Under-Secretary-General and Executive Secretary of the Economic Commission for Africa

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Africa is a continent in continuous transformation, with a sustained economic and population growth, a fast-paced urbanization and a young generation of talents who is leading its business revolution. This transformation requires energy and will require it even more in the next decades.
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