The International Energy Agency (IEA) has expressed deep concern that without higher investment levels, Africa risks remaining energy-poor despite global progress in clean energy deployment.
The IEA says policymakers and financiers should work together to design financing systems capable of accelerating large-scale investment in African energy infrastructure.
The agency reports that Africa is attracting only about 3 percent of global energy investment despite being home to about a fifth of the world's population, highlighting the scale of the continent's persistent energy financing gap.
The findings presented in the IEA's latest World Energy Investment Report show that while global spending on energy infrastructure is growing rapidly, Africa remains significantly underfunded in power generation, grid expansion, clean energy deployment and energy access projects.
The imbalance comes as more than 600 million Africans still do not have access to electricity, making the continent the region with the largest energy access deficit in the world. Analysts say insufficient investment is slowing industrialization, economic development and climate adaptation efforts in many African countries.
The IEA estimates that Africa will need more than $200 billion of energy investment annually by 2030 to meet development and climate goals, yet current financing flows are well below that level. The majority of available capital is concentrated in a small number of markets and large-scale projects, leaving many countries struggling to attract long-term financing.
Global clean energy investment now overtakes spending on fossil fuels by a wide margin, with more than $2 trillion expected to flow into renewable energy, battery storage, power grids, electrification and low-emission technologies worldwide, the report said. However, despite having the world's strongest renewable energy capacity, Africa is receiving only a small share of that capital.
Energy experts argue that the continent's low share of investment reflects structural financing constraints rather than a lack of opportunity. High borrowing costs, currency volatility, weak transmission infrastructure, and concerns over political and regulatory stability continue to discourage investors from entering many African energy markets.
The IEA also reported that financing costs for energy projects in Africa are significantly higher than in developed economies, even for renewable energy infrastructure. This increases the overall cost of power generation and reduces the competitiveness of many projects that would otherwise be commercially viable.
Despite these challenges, Africa's renewable energy market continues to expand. Falling prices of solar panels, declining battery storage costs and increasing demand for decentralized energy solutions are driving its adoption in both urban and rural areas. Many African countries have also accelerated solar energy deployment as unreliable grids and expensive diesel generation create demand for alternative power solutions.
Analysts say distributed solar systems, mini-grids and battery-backed energy infrastructure are becoming increasingly important in areas where national electricity networks are weak or underdeveloped. Countries such as Nigeria, Kenya, Egypt and South Africa are attracting increasing interest in renewable energy and energy transition investments.
However, experts warn that clean energy development alone will not solve Africa's widespread energy crisis without significant improvements in transmission networks, industrial capacity and long-term financing systems. Grid infrastructure remains one of the continent's biggest bottlenecks, with many countries unable to efficiently distribute available electricity to businesses and homes.
The report also highlighted the role of public finance institutions and development banks in helping to unlock private capital for African energy projects. Blended finance structures, guarantees and concessional funding are being seen as essential tools for reducing investment risk and improving bankability.
Industry observers argue that Africa's energy investment gap represents both a major development challenge and a huge economic opportunity. With rapid population growth, urbanization and industrial demand expected over the next several decades, the continent is projected to become one of the world's most important future energy markets.