Africa energy sectors to receive SWF investment
Gulf region SWFs to convey broad flow of capital to Africa, including much for energy.
Image for illustration purposes.
Egypt, Cairo: Gulf region SWFs to convey broad flow of capital to Africa, including much for energy.
Africa is set to receive increased investment from sovereign wealth funds (SWFs), particularly from wealthy Gulf nations, thus increasing levels of sub-Saharan investment in Angola, Uganda, Zambia, Tanzania and elsewhere.
The SWFs of the Gulf region countries have historically invested greatly in North Africa. According to the cross-border investments tracking service, FDI Markets, foreign direct investment (FDI) flows to Africa from the GCC totalled $101.9 B from 2012 to 2022. The top five destinations for these inflows include Egypt, Morocco, Algeria, Nigeria, and South Africa. Egypt alone received about 68 % of the total FDI.
Now Gulf SWFs are looking to expand their investment activities to other parts of the continent, in many ways leading financing for the continent’s green energy transition.
The Saudi Public Invest Fund (PIF) will provide about $1 B for the development projects in Africa. PIF-backed ACWA Power is the lead shareholder in the 100 MW Redstone concentrated solar power (CSP) plant in South Africa which is expected to start operations in 2024.
Renewable energy company Masdar, which is partly owned by the UAE’s SWF, Mubadala, signed agreements with the governments of Angola, Uganda, and Zambia for the development of a combined 5 GW of clean energy projects.
According to Masdar, the agreements will see the company develop renewable energy projects with a total capacity of 2 GW in Angola, 1 GW in Uganda, and the joint development of solar, wind, and hydroelectricity projects with a total capacity of 2 GW in Zambia. The agreements were signed as part of the ‘Etihad 7’ – a UAE-backed global development fund that aims to provide 100 million people across Africa with clean energy by 2035.
Last year, the Qatar Investment Authority (QIA) entered into a joint venture with Enel Green Power (EGP) to finance, develop, and operate renewable projects across Sub-Saharan Africa. Under the agreement, QIA will acquire a 50 % stake in EGP’s South Africa and Zambia projects with a combined capacity of about 800 MW.
Source: Energy&Utilities