Catalysing investment in sustainable energy infrastructure in Africa: overcoming financial and non-financial constraints

Energy infrastructure investment is crucial to development and poverty reduction across Africa. Given the scale of finance needed, governments are increasingly looking to attract private-sector investment. However, it is clear that building infrastructure does not automatically bring broad-based growth and social development.

This paper focuses on how to drive investment in sustainable infrastructure – that is, infrastructure that meets local needs in a socially acceptable, environmentally friendly and equitable manner. It identifies four tensions or challenges that arise in energy infrastructure development: balancing liberalization with regulation and control over resources; achieving attractive risk-return profiles while ensuring access and affordability of services; balancing the push for private-sector investment with effective public investments; and balancing local and national needs with the global sustainable development agenda.

The authors use two case studies to examine these issues: natural gas infrastructure development in Tanzania, and electricity infrastructure development in Zambia. In both countries, infrastructure development has involved slow progress and constant struggle. Private-sector investment has been very difficult to attract, and there are clear tensions between the goal of attracting investors to the energy sector and other priorities, such as ensuring the broad and equitable distribution of benefits and keeping electricity affordable even for the poor.

In both countries, there is a great need to build local capacity both to work in and to regulate the energy sector. Strong, effective, democratic governance institutions are also essential, combined with an engaged civil society.

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