Zakhele Mayisa, co-head of Nedbank Corporate and Investment Banking’s Africa Infrastructure Finance.
Sub-Saharan Africa is at a turning point in its energy journey, with vast renewable resources set to revolutionise its energy landscape. By leveraging solar, wind, and hydroelectric power, Africa can drive sustainable growth and economic resilience, writes Zakhele Mayisa, co-head of Nedbank Corporate and Investment Banking’s Africa Infrastructure Finance.
Sub-Saharan Africa stands at a crossroads with the potential to redefine its energy landscape. Despite grappling with energy deficits, the region holds untapped reservoirs of renewable energy. The Sahara’s solar potential, central Africa’s water resources for hydroelectric power, geothermal gas in East Africa, and wind energy capacity in various regions paint a picture of a future ripe for an energy revolution. This diverse energy mix is more than a solution; it is an opportunity to fundamentally transform the continent’s energy infrastructure.
Realising this potential requires unprecedented collaboration. Financial institutions, technology solution providers, and development banks must come together. South Africa is setting the benchmark in renewable energy adoption, inspiring other nations to follow suit. The emergence of the green hydrogen sector highlights Africa’s potential. With the capability to produce up to 5 000 Mt of hydrogen annually, Africa could contribute to a global hydrogen market projected to reach $2,5 trillion by 2050. Countries such as South Africa, Namibia, and Egypt are already leading this charge with strategic initiatives like Namibia’s National Hydrogen Strategy and South Africa’s Hydrogen Valley project. By 2030, green hydrogen production in Africa could generate over 1,7 million jobs, driving economic growth and fostering sustainable development.
Recent statistics underscore the potential and challenges in renewable energy for Africa. In 2020 only 9% of Africa’s power came from renewable sources, predominantly hydropower. However, from 2019 to 2020, solar and wind capacity increased by 13% and 11%, respectively, with hydropower growing by 25%. The continent aims to boost renewable energy production capacity from 56 GW in 2022 to at least 300 GW by 2030. These ambitious targets reflect the commitment to a sustainable energy future in the region.
This narrative of transformation extends beyond energy production. Nedbank’s vision is to expand its footprint in countries like Tanzania and Uganda, building on its success in South Africa. Addressing the energy needs of marginalised areas, particularly in agriculture and remote regions, is essential. These areas often lack high-growth capital investment but hold the potential for economic development. We can foster inclusive growth and bridge the energy gap by directing resources to these regions. Our commitment to supporting underserved areas aligns with a broader mission to promote sustainable development across the continent.
Transportation infrastructure is another critical piece of the puzzle. Decarbonising transport logistics by introducing hydrogen-powered trains and electric vehicles for mass transit can revolutionise the sector. Although the aviation industry is slower to adopt these changes due to stringent safety requirements, it is on the brink of a transformative shift. The African Continental Free Trade Area (AfCFTA) provides a framework to accelerate trade within the continent, highlighting the need for efficient port operations to ensure seamless movement of goods. This shift towards greener transport solutions is essential for reducing carbon emissions.
Information communication technology infrastructure is equally important for economic growth. Telecommunications infrastructure, including fibre networks and data centres, are crucial for facilitating market communication and connections. The rise of artificial intelligence and the growing need for data storage present growth opportunities for data centres. These facilities, however, require sustainable solutions to manage their intense water and power needs.
Water and sanitation are fundamental for public health, yet growth has been slow in this sector. Recent flagship projects, particularly in South Africa’s mining sector, are changing this trend. Nedbank is working on water treatment solutions for mines and social use, with the potential for similar initiatives in water scarce countries. These efforts not only improve public health but also support industrial processes critical for economic development. Investing in water infrastructure is crucial for ensuring sustainable water management and supporting the health and well-being of communities.
In the face of it, urbanisation across Africa necessitates robust infrastructure. Transportation, electricity, water, and communication are essential for urban environments. Health infrastructure, often overlooked, is critical. The pandemic highlighted the need for adequate facilities, and we have responded by supporting the construction of hospitals in Zambia. Such investments are vital for ensuring a healthy workforce capable of driving economic growth. Strengthening health infrastructure is essential for improving public health outcomes and supporting the continent’s financial resilience.
However, private sector investment in Africa faces barriers such as instability, poor regulatory frameworks, and policy uncertainty. South Africa’s energy infrastructure issues, as revealed by, for example, load-shedding, deter investment. Efficient ports and rail networks are essential to support economic activity and attract investment. A skilled labour force is necessary to operate sophisticated processing plants, and robust health systems are needed to ensure a healthy workforce. Addressing these barriers requires coordinated policy changes and strategic investments. Creating a favourable business environment is crucial for attracting investment and fostering sustainable development.
Policy changes are needed to create a conducive environment for private sector investment. Transparent regulatory frameworks, appropriate tariffs, and responsible governance are essential. Private sector efficiency should be prioritised to attract investment and create jobs. By fostering a stable and predictable business environment, African countries can attract more investment and drive sustainable economic growth. Effective policies and regulatory reforms are critical for unlocking the continent’s economic potential.
Looking ahead, our infrastructure finance agenda aims to expand across the continent. By leveraging existing relationships through sovereign lending, we’re exploring connections across west and east Africa. Transport logistics, the water sector, and digital infrastructure are key focus areas for us. Collaboration with advisory teams and local stakeholders is crucial to identifying and following infrastructure growth trends. This strategic approach will enable the bank to support sustainable development and drive economic growth across Africa.
Cross-border infrastructure projects, such as the upgrading of the Beitbridge border post, serve as models for future investments. Public-private partnerships are critical for improving border efficiency and supporting infrastructure development. We are committed to being part of these projects, leveraging our expertise and resources to drive growth and development across the continent. These partnerships are critical for improving regional connectivity and promoting economic integration.
However, the road ahead requires coordinated efforts across various sectors. By embracing renewable energy and fostering infrastructure development, Africa can harness its potential for sustainable growth. The efforts of financial institutions, policymakers, and private sector stakeholders will be crucial in achieving this vision. Together we can build a more sustainable and prosperous future.
This post and content is sponsored, written and produced by Nedbank.
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Publish date : 2024-06-05 10:00:45
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