Page 8 - AfrElec Week 34 2021

AfrElec INVESTMENT AfrElec

Green energy offers key

FDI hope for Africa

AFRICA RENEWABLE energy offers the best opportuni- Yet between 2016 and 2020, new projects in
ties for foreign direct investment (FDI) in Africa these sectors accounted for less than 25% of the
as the continent recovers from the pandemic. total.
There is significant scope for Africa to build a Other sectors that have continued to attract
climate-resilient and low-carbon continent with significant new investment on the continent
attractive investment opportunities on renew- include logistics, communications and IT ser-
able energy., according to the World Economic vices and renewable energy.
Forum, with renewable energy capacity across As well as renewables, e-commerce is a major
the continent set to reach 310 GW by 2030. growth area, with mobile and internet penetra-
This would put Africa at the forefront of tion likely to stand at 50% in 2025, and growing
renewable energy generation globally and will consumer spending is expected to hit $2.1 tril-
define the continent’s growth in the short and lion in 2025.
long term. This figure of 25% shows that companies have
Green energy’s potential comes as global FDI largely failed to tap into sub-Saharan Africa’s
collapsed in 2020, falling by 35%, according to e-commerce potential, owing to infrastructure
figures from the UN’s 2021 World Investment and logistical challenges, which represent an
Report. excellent opportunity for foreign investment.
For Africa, inflows fell by a more modest Other potential areas include sustainable
16% from $47bn to $40bn, while the collapse for tourism and the circular economy. Circular
developing economies as a whole was 8%, from food systems alone can help create a trillion-dol-
$723mn to $663mn. lar industry by 2030 while generating millions of
However, Africa’s GDP is anticipated to grow inclusive green jobs, the World Economic Forum
by 3.4% in 2021 after shrinking by 2.1% in 2020 said.
because of the coronavirus (COVID-19) pan- Yet there are still hurdles to overcome. The
demic, AfDB figures said. Forum identified the weakness of governments’
The rebound in economic growth will be ability to promote and support FDI.
underpinned by a rebound in FDI and commod- Building the capacity of investment promo-
ity prices, the World Economic Forum said. tion agencies on FDI promotion and facilita-
Green energy’s potential as a driver of FDI tion would go a long way towards helping the
recovery comes as oil and gas and other extrac- continent build back better, more so for the 33
tive industries, such as mining, have seen their least developed countries (LDCs) within the
share of FDI into Africa fall over the last 10 years. continent.
Between 2006 and 2010, resource extraction, Some efforts are being made, such as the
petroleum and coal processing projects made World Association for Investment Promotion
up more than half of the estimated $236bn of Agencies’ Integrated Framework, which aims
greenfield FDI projects announced in Africa, to actively assist investment promotion agencies
the World Economic Forum said. from the LDCs (15 of which are in Africa).™

P8 www. NEWSBASE .com Week 34 26•August•2021