- Michael Akampa
Financing sustainable, clean, and affordable access to energy for all
The 17 United Nations Sustainable Development Goals (SDGs) are defining steps to take in order to achieve a better and more sustainable future for all. SDG 7 aims to achieve access to affordable, reliable, sustainable and modern energy for all. Energy is a driving force of the modern world and central to every major challenge and opportunity alike.
Sub-Saharan Africa has the biggest deficits in access to electricity
Great progress has been made towards SDG 7, as 90% of the global population has access to electricity. The number of people without access to electricity dropped from almost 860 million in 2018 to 770 million in 2019, a record low in recent years. Despite this, access in developing countries is still very low with Sub-Saharan Africa having the biggest deficits.
Around 580 million people in sub-Saharan Africa lacked access to electricity in 2019, three-quarters of the global total. In 2020, only 48% of the people in Africa had access to electricity which is far below the global average of 90%. The most severe need to achieve SDG7 is situated in Africa and that’s why Investure is prioritizing renewable energy projects in Africa as part of its initial project portfolio.
Covid-19 is reversing electricity access progress, Africa heavily affected
Past progress made towards SDG 7 is being reversed due to the Covid-19 pandemic. In sub-Saharan Africa, while the number of people without access to electricity has steadily declined since 2013, it is now set to increase in 2020, pushing many countries farther away from achieving the goal of universal access by 2030. The pandemic has put this progress into reverse, with the number of those lacking electricity in Africa rising to more than 590 million people in 2020, 2% increase, from 2019.
The current COVID-19 pandemic has demonstrated to us, more than ever, an urgent need of a sustainable and reachable access to energy. During this public health crisis, damages to equipment because of poor connections and voltage fluctuations happened within almost 30% of the health centers. Hospitals and health facilities needed a stable situation to heal their patients and provide them clean water. To protect children, it is also necessary to enable them to learn from home, which is difficult without access to electricity. These simple things we’re used to, can actually change a lot of lives and must be a priority.
COVID-19 crisis is increasing the daily uncertainties and some households in developing countries won't be able to pay for energy services anymore and the governmental institutions as much as the energy companies will also be damaged. We have to act quickly, and respond with innovative financing solutions that can mobilize capital globally and support critical projects to happen. That Is why Investure has launched its innovative financing platform that supports blended finance structures.
Huge financing gap to achieve SGD 7, greatest funding need in Africa
The total investment needed to meet SDG 7 is estimated at US$ 1.3 to 1.4 trillion per year until 2030. Whereas there has been progress to increase the level of investment, current annual financing is still significantly below target, standing at approximately US$ 514 billion. Furthermore, this investment is skewed towards developed and middle income countries, with huge financing gaps still existing in developing countries. In 2017 for instance, energy investments in China and the United States were above US$ 100 billion, while investments in Sub-Saharan Africa, Southeast Asia, and the MENA region were well-below US$ 50 billion.
Africa alone has a total annual funding requirement of US$ 52 billion in order to achieve SDG 7. As of 2019, the annual investment stood at US$ 32 billion leaving a gap of US$ 20 billion that needs to be bridged. Unfortunately, the FDI (Foreign Direct Investment) to Africa have been dropping since 2020 because of the pandemic and butterfly effects, such as the low price of oil.
Agenda 2030 is about shared prosperity, which means that achieving SDG 7, as well as the other goals requires a global effort to support developing countries. Everybody has to understand that we must progress together, and should not accept huge inequalities as they still exist today to continue. We are on the right track, but more efforts need to be done. By financing SDGs at the last frontier of global growth, only can we achieve this shared global prosperity.
Investure’s mission is precisely to enable financing in developing markets like Sub-Saharan Africa, where we are focusing at first. We want to make an impact where the need is most severe. We make it easier to raise funding and invest in developing markets in order to participate in the achievement of the 2030 SDG. Join Investure today, to make a difference!