Regulatory reforms will help attract private sector investment in Africa's energy market

UNECA
Private sector investment in Africa
3 April 2023
Content from a Premium Partner
United Nations Economic Commission for Africa (Addis Ababa)
press release

Addis Ababa, 31 March 2023 (ECA) -  A timely regulatory overhaul of Africa’s fledgling electricity sector will attract private sector investment and ensure energy security on the continent, stakeholders meeting at an electricity dialogue,  have agreed.

More than 600 million Africans have no access to electricity and Africa generates only 4% of the global energy. Despite vast opportunities in the development of the electricity sector in Africa, there is low private sector investment in energy infrastructure and service delivery, participants at the recent High-Level Public-Private Dialogue on Private Sector Investment in Electricity and Infrastructure Development in Africa, heard.

The two-day dialogue, hosted by the United Nations Economic Commission for Africa (ECA) and the RES4Africa Foundation brought together stakeholders from the public and private sectors, including policymakers, international organizations, and decision-makers working in energy and infrastructure. They discussed the changes needed in policy and regulatory frameworks to ensure adequate openness, attractiveness, and readiness of African markets to private investments.

Mr. Yohannes Hailu, an energy policy expert at ECA Private Sector Development and Finance Division, highlighted the work of ECA and RES4Africa in 16 African countries on the assessment of the regulatory environment and risks as an essential entry point to address regulatory barriers that limit effective private sector investment in energy infrastructure.

"Advancing electricity market regulatory improvement and reform is a significant part of the solution towards de-risking investment in Africa’s energy infrastructure," Mr. Hailu said, emphasizing that credible regulatory framework and policy remained key instruments for member countries striving to crowd-in private capital in their electricity markets via generation, transmission, distribution, and off-grid system development.

The ECA and AUC continental framework, which was validated during the Dialogue, offers guidance on mainstreaming the key regulatory instruments at regional and national levels to crowd-in private investment. In addition, representatives from Ministries of Energy and Regional Energy Regulatory institutions provided feedback on regulatory areas for technical cooperation with ECA and the RES4Africa Foundation.

They also identified areas of regulatory technical cooperation including green hydrogen, storage of batteries, standardization of contracts, development of grid codes and risk-mapping. The Dialogue also discussed developing a regional framework for private sector participation in electricity markets.

Mr. Andrea Renzulli, head of policy and regulation at RES4Africa, commended the partnership with the ECA in raising awareness and sharing knowledge on the electricity reform agenda across African markets. He reaffirmed the commitment of RES4Africa Foundation and its members in collaboration with ECA and interested African countries to advance policy and regulatory reforms towards better market openness, attractiveness and readiness for private sector participation.

Mr. Renzulli acknowledged the importance of continued exchanges of knowledge between energy regulatory authorities across the Continent and the private sector.

At the closing of the technical training on regulation and private sector investment session held on the margins of the Dialogue, Mr. Robert Lisinge, Officer-in-Charge of the Private Sector Development and Finance Division at the ECA said an enabling environment is essential to meeting the major investment needs for national and regional infrastructure in Africa through public private sector partnerships.

"Our aim at ECA is to stay close to the continental, regional and national infrastructure agenda guided by Agenda 2063 and SDGs," said Mr. Lisinge, explaining that the ECA was providing capacity development and technical cooperation related to private sector participation to close the large financing gap in infrastructure development in the continent.

"The high-level dialogue this week highlighted the commitment of member States and the private sector to work together through facilitation of a conducive business environment for private investment and developing the right PPP framework for successful application of PPP in infrastructure finance,” he said.

Issued by:
Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Ethiopia

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