Africa is a large continent not just by geographical demography, but also by population. This is because most African countries are communalistic in nature, hence the need to have a large society or community of people.
The bigger these societies, the bigger the number of people, and the bigger the consumption rate. It is this higher rate of consumption and the ecology of African environments that makes Africa a fertile area for investment in renewable energy.
Investing in renewable energy in Africa will be a rewarding venture for both the investors, and the continent Africa. It is true that so many African countries are guilty of a very high rate of importation, and very low rate of exportation, despite the abundance of mineral resources, and the favourable climate of the continent.
However, it is also true that the sources required for renewable energy are everywhere in Africa; they abound in Africa, which makes an investment in renewable energy in Africa a plausible investment.
This article will focus on investment in renewable energy in Africa, how such investment can be achieved, benefits accrued to investing in renewable energy in Africa, and why renewable energy investors must think about Africa whenever they think about an investment in renewable energy.
Importance of Energy to Africa’s Development and Economy
One of the major economic importance of investing in renewable energy in Africa is the diversification of the economy.
Most African countries rely solely on the exportation of mineral resources for the growth and the development of the economy, and the country in general.
However diversifying the African economy by investing in renewable energy has a lot of economic significance for the growth and development of African societies.
An investment in renewable energy in Africa will result in an increase in power generation. One of the basic challenges that affect production in Africa is poor power generation, because power supply is needed for intense industrialisation.
Investing in renewable energy; say solar in Africa will conquer the challenge of power, which will inversely promote industrialisation in Africa and boost the economy.
Thirdly, investing in renewable energy in Africa is another poverty alleviation scheme. Poverty and economic meltdown are ripping nations and continents apart, crushing their incomes, and leaving people to aggression of hunger and eventually the cold hands of death.
The continent Africa is also a victim of such predicament. Investing in renewable energy in Africa will reduce poverty rate because renewable projects will avail the society with more job opportunities (employments), and encouraging entrepreneurs, and generally startup businesses.
More so, the renewable projects in Africa can indirectly be beneficial to the African economy by availing African societies energy for space heating, energy for lighting the society, and also energy for cooking.
This too is a poverty alleviation scheme for Africa.
Fourthly, investing in renewable energy projects in Africa promotes good health which promotes a better economy.
The World Health Organization (WHO) has it that over two billion people in the population use traditional biomass which includes wood and other fossils for cooking fire. This means of generating cooking fire causes global warming, greenhouse effect, and affects the health of users as a result of the production of the carbon monoxide.
Sadly, more people die from breathing in these fumes in Africa.
An investment in renewable energy will reduce the rate of exposure to indoor pollution of these fumes, thereby improving the health of the society, and the ecology.
Renewable energy projects will also provide energy to refrigerate medicines, vaccines, and even sterilize medical equipment in African rural areas with little or no power supply. Through the project of renewable energy in Africa, power can be provided for the supply of fresh water and sewerage services needed to reduce the spread of infectious diseases in any community.
Consequently, improving the health of the working demography will improve the economy because there will be no need to import drugs, or seek foreign health aids, and more so, there will be an increase in the working population which will improve the gross domestic profit of the society.
The fifth economic importance of investing in renewable energy in Africa is its contribution to education.
The importance of education in the growth and the development of a nation’s economy cannot be overemphasized because to build a successful economy, people must be informed and education is one channel that brings people the right information.
Investing in renewable energy in Africa will provide electricity as well as some equipment needed for practical teachings in the schools; in the primary level, in the secondary level, and in the tertiary level as well.
Potential of renewable energy in Africa:
To understand and to appreciate the potential of renewable energy in Africa, it is important to know the sources of renewable energy.
The major sources of renewable energy are:
Emerging & Emissions Boosters
These sources of renewable energy abound in Africa and need to be put to good use for the growth and the development of Africa.
Another factor that should be considered as a potential of renewable energy in Africa is that it is still a new innovation in Africa. This simply means that there are not many investors investing in renewable energy projects in most Africa countries at the moment, and any group of investors who takes up the task will invest hugely and also make tremendous profit from the venture.
The potential of renewable energy in Africa is crystal clear and very glaring. Investors must grab this opportunity to sow renewable energy in the fertile African soil.
Africa’s energy problem
The problems of renewable energy in Africa are numerous and cannot be over emphasized, only a few of those problems will be shared here.
- Lack of social infrastructure
- Government policies
- Wasteful habits of African societies
- Inter community wars
- Lack of economy diversification
Lack of social infrastructure:
Every society needs social infrastructures to facilitate growth and development in the society. It is fundamental, which is why they are also called basic amenities.
Some of these amenities include, good roads, good health centres, power supply, and schools. Data and technology needs to be added to the list as well seeing that artificial intelligence is fast becoming the order of the day in today’s society.
Sadly, these amenities are lacking in Africa, and the absence of these amenities will make Africa’s invest resources in battling hunger and trying to survive, rather than investing in renewable energy projects.
Another problem of investing in renewable energy in Africa is government policies. Sometimes the government comes up with policies discourage foreign investors from visiting and investing in Africa.
It affects local investors as well. This could be as a result of the government not thinking of the progress of the people, or perhaps its selfish interest.
African leaders need to review their business policies to enhance investment in renewable energy in Africa, as well as investment in other African businesses. This will increase exportation in Africa, and reduce the continent’s dependence ratio.
Wasteful habits of African societies:
It is true that African societies are rich in mineral resources, and have the best climate in the globe. Sadly, the wasteful habits of African societies which often lead to lack of conservation and preservations deprive Africans the benefits of recycling and renewable energy.
This wasteful habit is seen in the poor refuse disposal, waste of food despite the rising hunger, and waste of other resources that can even contaminate clean water.
Africa must develop conservative habits for a better investment in renewable energy.
While war is a part of human existence, the rate of inter community wars in Africa are on the rise. This is a very terrible development, that will scare both local investors and foreign investors away because in the cause of war, people get killed, facilities get damaged, so the unrest in the environment cannot accommodate investors and innovations.
Corruption is an African problem that Africans must stand up against. This is because African societies like Nigeria will keep going on vicious cycles of discovering and relooting looted funds, as well as embezzlement of funds and the misappropriation of funds.
Lack of economy diversification:
One major challenge of renewable energy projects in Africa is the cancker worm of mono income eating deep into African societies. Some African societies rely on one mineral resources, say gold or crude oil.
The reliance on this particular means, and the income from it is only useful in the short term, but in the long term planning it amounts to nothing, but blinded by the short term, Africa fails to diversify her economy.
The inability to diversify the economy, and high dependency on only one source of foreign exchange will be hurdle to investing in renewable energy in Africa because if the government keeps overlooking it, no investment will be made and Africa will remain underdeveloped.
The nature of the problems of African societies will double the problem of funding. For such an intensive project, funding is needed.
Funds will be needed to startup, to buy equipment, to hire the services of experts, and to grow the venture.
To solve this problem, the government, and local investors must take the lead, that way foreign investors will be attracted to invest in renewable energy projects in Africa.
Laws guiding investing in renewable energy in Africa
While all stated above are essential, it is also necessary to note the laws guiding investing in renewable energy in Africa.
For instance in the Nigerian case, eleven laws have been introduced, which includes the national directive for renewable energy and energy efficiency, a mini-grid regulation, a building energy efficiency code and an energy efficiency label for household appliances.
Other laws include:
Promoting equal treatment of both foreign investors and domestic investors in renewable energy, intellectual property rights, contract enforcement, and land rights.
An investment in renewable energy in Africa will surely be a rewarding venture especially in line with the laws guiding investing in renewable energy in Africa.
Finally, if you are considering investing in renewable energy in Africa, Shikana group can guide you through the legal processes, and also provide you with the needed expertise for profiting and rewarding investment contracts.