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Investors must change perception of Africa – Alweendo

Minister of mines and energy Tom Alweendo

Mines and energy minister Tom Alweendo says investors must change their perceptions towards Africa.

He asserts that investing in Africa is not as high risk as believed globally.

Alweendo says the perceived investment risk associated with Africa hinders investment on the continent, as well as the just energy transition.

“The return on investment in Africa is probably one of the highest you can find anywhere.

The absolute return on investment here is much higher than anywhere else and, therefore, we need to look at them more realistically,” says Alweendo.

The minister said this during a ministerial discussion at the International Renewable Energy Agency (Irena) in Abu Dhabi, United Arab Emirates yesterday.

Alweendo said while policies and regulations are necessary, they are not enough to address the challenge of attracting capital to the African economy.

“We have made significant strides in improving our policy-making processes and regulations, especially in tackling termination issues, yet the figures we have now still show we aren’t seeing enough capital flowing into Africa.”

Additionally, the World Bank, International Monetary Fund and other institutions should play a bigger role in mitigating some of the risks associated with the continent, said Alweendo.

One of the spaces these institutions can play into is the issue with guarantees that Africa struggles to offer, he added.

“We need to open up some guarantees before investors will commit, but unfortunately, most of us are not in a position to offer these guarantees right now.”

He said institutions like the World Bank need to change how they view investments in Africa and concentrate on how to increase investment into the energy sector.

“The World Bank in particular should concentrate more on energy issues and tailor their guarantees to support investments in the energy sector,” said Alweendo.

Kevin Kariuki, vice president for power energy climate and green growth at the African Development Bank, said the bank has been working to ensure funding for energy projects.

Kariuki said currently there is a Sustainable Energy Fund and the Alliance for Green Infrastructure, which supports long-term sustainability projects that African countries can leverage.

“We would have a greater impact if we were able to leverage these existing facilities.

It is important that we avoid fragmentation in our efforts,” Kariuki added.

Alweendo noted that the southern part of Namibia has several approved wind projects that are not able to raise funding.

“We have a couple of wind projects, especially in the southern part of the country, where people have got licences, which they got from the regulator, but they are not able to raise the funds,” said Alweendo.

Seth Mahu, director of renewable energy in Ghana’s energy ministry, says funding is an issue across the continent.

According to Mahu, the country has energy projects totalling 1 263.4 megawatts, which require an investment of US$2.7 billion (about N$51 billion).

“It cuts across wind energy which is about 434 megawatts and solar energy which ranges between 550 to 700 megawatts,” says Mahu.

Senior energy adviser in Ethiopia’s water and energy ministry, Gosaye Mengistie says the continent has been looking for investments from private companies as governments do not have the capital to fund the energy projects.

He says Ethiopia has many wind and solar projects with feasibility studies already completed which are just waiting for investors.

“We have a lot of wind and solar projects and are looking for private investment, because our energy demand is huge.”

However, he says when private investment comes in, it has to be in partnership with public enterprises to ensure benefits for citizens and returns for investors.

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