Pension funds, insurance companies sit on billions while Africa goes dark

Pension funds and insurance companies in different African countries invest billions abroad despite energy projects on the continent needing investment, says chairperson of the presidential initiative on climate change in Sierra Leone Kandeh Yumkella.

Speaking at the Accelerated Partnership for Renewables in Africa (Apra) investment forum in Sierra Leone, Yumkella said projects in Africa are perceived as too risky by foreign investors, which leaves about 600 million people without electricity.

This while the companies that operate in and make billions from the African continent do not fund grants or loans for renewable energy projects, he added.

“We have projects that need offtakers in Africa while pension funds and insurance companies are holding billions. Africa needs a total investment of US$70 billion annually to meet the energy demand. However, last year the continent only received US$15 billion.”

He noted that the biggest issue is the perceived risk associated with Africa, with the three large credit rating agencies – Moody’s, S&P, and Fitch – deciding the fate of over 1.5 billion people on the continent.

A 2023 joint study by the United Nations Development Programme and the development advisory firm AfriCatalyst found that African countries pay, on average, 1.5% more in interest compared to other nations with similar economic features. This disparity has cost the continent over US$75 billion in excessive borrowing costs.

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