Gulf investors seen likely to keep funding Africa renewable energy

Middle Eastern sovereign wealth funds and -backed companies are unlikely to scale back renewable energy investments in Africa despite disruptions from the Iran war, analysts say, given the strong long-term economic and strategic reasons driving such funding.

Investors made wealthy by the Gulf region’s abundant oil and gas increasingly are turning to Africa’s clean energy sector, attracted by rising electricity demand, rapid urbanisation and the continent’s growing role in global supply chains tied to critical minerals and manufacturing. A report released last month by the Clean Air Task Force found that more than $101.9 billion had flowed into Africa’s renewable energy sector from Gulf countries by end of 2024, led by the United Arab Emirates, Saudi Arabia, Qatar, Kuwait and Bahrain.

Much of the investment has been concentrated in North Africa, Southern Africa and parts of East Africa, while West Africa has attracted relatively limited funding.

“Africa remains one of the few regions where demand growth is unequivocal,” said Matthew Tilleard, chief executive of Cross Boundary Energy, a Nairobi-based firm that develops and operates renewable energy projects.

“Short-term shocks may delay individual transactions, but the biggest infrastructure opportunities require a long-term view of risk and value.”

Africa faces one of the world’s largest electricity gaps. About 600 million people across the continent still lack access to power and many more face unreliable supplies. Governments have increasingly turned to private investors to help finance solar, wind and hybrid power projects to expand generation capacity without overstretching public finances.

That gap has created opportunities for Gulf investors looking to diversify beyond oil and gas.

“Ultimately, Gulf investments in Africa tend to be driven by pragmatic national interests and strategic returns,” said Louw Nelson, a political analyst at Oxford Economics.

“There is currently a significant amount of energy investment underway across Africa, which are long-term projects that have been years in the making, so we don’t anticipate major disruptions.”