Interest Rate Cut: Growing your Investments in a Low Interest Environment

By Emmanuel Allottey

Africa as the poorest continent in the world is in desperate need for economic transformation. Most economies in Africa are still based on the production and export of unprocessed agricultural products, minerals, and crude oil with little to no manufacturing or processing.

Renewable energy offers a substantive opportunity to convert Africa’s natural wealth into a revenue generating industry. Africa is rich in renewable energy sources, including hydro, sun, wind amongst others, which once harnessed will significantly augment the current cost of energy demands.

According to a report by the International Renewable Energy Agency (IRENA), Africa could meet nearly a quarter of its energy needs through the use of indigenous, clean, renewable energy by 2030. The investment required however can be daunting as these projects require large sums of upfront capital. African governments face difficult investment allocation decisions between short term revenue generating projects and longer-term revenue generating projects such renewable energy.

Across Africa, hydropower is responsible for 84 per cent of all non-fossil fuel energy use. Africa is a continent rich in lakes and rivers however climate change and drought is threatening the sustainability of this as an energy source.

Solar is particularly promising in Africa nations: albeit with varying potentials, this type of energy could be harnessed virtually everywhere in Africa. African nations receive a very high number of annual sunshine hours and the average solar irradiation is evenly distributed. Electricity is a major overhead for many business operations. African countries have made progress in expanding electricity access in recent years, the overall state of electrification in Africa is still far from its potential.

Africa with a large coastline offers huge opportunity for Wind power production. Currently, wind makes up one percent of electricity production and by 2030, wind is only expected to account for two percent of Africa’s power mix, according to the International Energy Agency. Although wind is not as popular as other renewable energy solutions it is an important contributor to nations energy mix.

Economic diversification is a top priority for many African nations. There is a direct correlation between economic growth and energy consumption. Implementation of policies and strategies that support economic diversification must feature renewable energy. The integration of a renewable energy strategy will achieve multiple objections from social transformation to economic growth. A combined effort is required from private, public sector and foreign direct investment to translate economic initiatives into tangible results.

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