Africa's Renewable Boom Is Expanding. African Ownership Isn't.

OPINION — ENERGY & DEVELOPMENT

Africa's Renewable Boom Is Expanding. African Ownership Isn't.

By: Linda Mabhena-Olagunju

Much of the discourse around the pace at which renewable energy has taken off in Africa has centred largely on two themes: cost of capital and regulatory certainty. Writing in the Financial Times on 22 July 2026 ("The real barrier to Africa's solar energy boom"), Rabah Arezki focused on the former, arguing that Africa continues to pay a premium because of sovereign risk, currency mismatch, domestic market illiquidity and offtaker bankability. These are real constraints. But the wider discourse misses a more foundational question: who owns the power plants? That ownership gap has three sources — a project-preparation gap, a balance-sheet gap and a procurement gap — and none of them is solved by cheaper capital alone.

Arezki's toolkit — guarantees, blended finance, predictable revenue frameworks — makes an already-identified deal cheaper to finance. It says nothing about why there so often isn't a deal to de-risk in the first place. A developer can have the financing structure perfected and still have nothing bankable in front of it, because the binding constraint sits further upstream: in procurement design, permitting, grid connection studies and power-purchase-agreement negotiation. That is a state-capacity problem before it is ever a capital markets one. What little dedicated project-preparation capital exists across Africa's DFIs — approximately $1bn accumulated over more than a decade, against a $130bn–$170bn annual financing gap — also moves too slowly to matter: DFI grants typically take twelve to eighteen months to disburse against the tight timelines needed to have a project ready for a bidding round. By the time the funding clears, the tender has usually closed. The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) worked in South Africa because National Treasury built standardised procurement rules and a reliable process. But even there, South Africa has not produced a substantive number of local developers able to compete with the international IPPs. Without a strong pool of locally owned projects, and local IPPs operating them for the long run, Africa is not building an energy sector. It is warehousing one for someone else.

The second gap sits immediately behind the first: who can afford to be the developer that actually holds equity once a project is fundable? The project-preparation grants described above fund a narrow scope of activities. They don't cover the bid bonds and preferred-bidder guarantees a developer must post from its own balance sheet, entirely at risk, with no revenue and no certainty the project proceeds. This is where ownership is actually decided, not at financial close. A developer who cannot carry that risk cannot hold a meaningful stake once concessional finance arrives. By then the cap table has already been set by whoever could absorb it: usually well-capitalised international sponsors, with local developers brought in later at minority stakes to satisfy an empowerment or local-content requirement, rather than because they originated the deal.

South Africa's REIPPPP, Morocco's Noor complex and Egypt's Benban park are routinely held up as proof that Africa can run credible, bankable renewable energy programmes. We can. But look behind the headline capacity numbers, and a reality seldom discussed emerges: most of these projects aren't African-owned — not because regulation bars local participation, but because the financial barriers to entry are high, early-stage funding for local developers is scarce, and lenders treat it as high risk. The development finance institutions that do fund early-stage development typically cover only 50% of development costs, leaving a developer to find the rest elsewhere. Venture capital, meanwhile, has struggled to make sense of this risk. It has largely shied away from infrastructure to chase technology instead, missing an obvious point: the AI boom the world is so excited about cannot exist without electricity. Capital that won't fund the power behind the compute is capital betting against its own thesis. Local developers can't compete with multinational balance sheets, and where African ownership does exist, it's usually a minority stake with little or no operational involvement. The result is a steady outflow of capital from the very continent generating the returns.

The third gap is procurement itself. Bid evaluation criteria across the continent's IPP programmes have consistently rewarded bankability and track record in ways that favour established overseas original equipment manufacturers, EPC contractors and technology suppliers over local manufacturers — regardless of the local ownership percentage sitting above them on the balance sheet. A project can meet its 49% South African equity requirement and still import nearly every panel, turbine, inverter and skilled engineering hour that built it. Ownership and procurement are two separate places African value leaks out of the same projects, and only one of them shows up on the cap table.

None of this is a single continent-wide story, either. Africa is not one market, and South Africa in particular doesn't fit Arezki's framing. The Public Investment Corporation alone manages more than R3 trillion in assets and invests directly in infrastructure through its Isibaya Fund and its unlisted investments arm — not merely parked in government bonds. South Africa has been mobilising domestic capital into infrastructure at scale for over a decade, largely through REIPPPP itself — evidence that at least one African market already has the capital depth Arezki's piece assumes is missing continent-wide. Morocco, Egypt and Kenya each have their own capital market depth, institutional investor base and procurement track record, and each needs a different diagnosis. Treating dozens of countries as a single cost-of-capital story obscures more than it explains.

Guarantees, blended finance and predictable revenue frameworks remain necessary. But they are not sufficient on their own. Procurement capacity, early-stage development finance and market-specific diagnosis belong at the top of this agenda too, not as a footnote to the price of debt. Get that right, and it will be Africans building the pipeline, carrying the early risk, and holding the equity that concessional capital is meant to protect. The continent will stop warehousing power plants for other people's balance sheets and start building an energy sector of its own — with the returns earned by local developers recycled into the next project, rather than repatriated abroad.

_{*Linda Mabhena-Olagunju is Founder and CEO of DLO Energy Resources Group, a 100% Black-female-owned developer with 244MW of operational wind assets under South Africa's REIPPPP and currently developing a 990MW gas-to-power project in Richards Bay. She is a Foundry Fellow at the MIT Kuo Sharper Center for Prosperity and Entrepreneurship, sits on the Private Sector Council for Mission 300, and is an Advisory Board Member of GFANZ, the Glasgow Financial Alliance for Net Zero. Through the DLO Skills Initiative, she has led the upskilling of over 3,000 South Africans in the energy sector, with the programme now expanding across the continent with a focus on youth and women. She holds an LLB from the University of Cape Town and an LLM from the University of Aberdeen.}