The Missing Link: what open, attractive and ready markets can do in Africa

Energy means development, development means future. A simple axiom, that today appears to be almost obvious, but which contains the problem (and the solution) of the African socio-economic transformation. We will never get tired of reiterating how energy plays an essential role in the socio-economic development of a country: without energy, there is no industry, there is no education, there is no health. And Africa, the continent with the greatest natural resources in the world, has the possibility of designing its own future - bright, green, and sustainable - thanks to the renewable energy sources that it is able to transform independently in its territories.

In recent years, African governments have accelerated their efforts to ensure universal access to electricity by channeling public finances to electricity infrastructure and capacity expansion and by adopting reforms to strengthen the energy sector governance. However, despite various indisputable advances, important structural challenges remain.

While it is a fact that private sector investments in African electricity infrastructures are essential for bridging the financing gap and supporting its continuously growing markets, it is equally clear that most African markets are not yet prepared to crowd them in: the policy and regulatory system uncertainty of the continent strongly discourage private investors, especially international, who therefore prefer to direct their capital elsewhere. It is not a problem of capital availability or unfavorable market conditions, but a lack of a clear, stable and transparent policy and regulatory environment: the African legal and regulatory framework is among the least favorable to business in the world, capable of attracting only 2% of global flows of foreign direct investments.

At RES4Africa, we are deeply aware of this primary urgency: in order to pursue our mission to make the continent's sustainable energetic transformation happen, we conduct the multi-year strategic initiative the Missing Link to work towards a better openness, attractiveness and readiness of African electricity markets to captivate private investments. In partnership with the United Nations Economic Commission for Africa (UNECA), we work to review the regulatory environments of 17 sub-Saharan African countries and support the expansion of private sector investments along the entire value chain of the electricity sector, from generation and transmission to distribution and off-grid. Based on data-driven analysis, the project will help identify areas of strength and areas for improvement in policy and regulatory environments, promoting a peer-learning approach based on African best practices for regulatory reform.

In light of the United Nations High Level Dialogue on Energy, we insist and we will continue to insist on supporting policy and regulatory reforms towards better openness, attractiveness and readiness of African markets to effective private sector participation. Succeeding in planning, designing and implementing such reforms would play an indispensable role in crowding-in the much-needed private investments to achieve SDG-7 targets and pave the way towards Africa’s prosperous future. ??