Ever increasing energy demand in Africa – the reasons to invest now

Ever increasing energy demand in Africa – the reasons to invest now Uhuru Park, Nairobi/ Kenya (source: flickr/DEMOSH, creative commons)
Alexander Richter 22 May 2016

The World Economic Forum provides its 6 reasons why to invest in Africa now, indicating the energy sector and related infrastructure as key elements that are both needed to fuel economic growth but also provides a fantastic investment opportunity.

In a recent article the World Economic Forum (WEF) provides its “6 reasons to invest in Africa”. The article is quite interesting as it highlights the fact how big of a role energy will play on the continent.

With geothermal energy a natural resource in most of the East African countries, development of the resource for power generation has been a hot topic now for many years. Kenya is pushing development with the support of the international community and other countries in the region are following suit.

Today, so WEF, Africa represents a concrete investment opportunity and a conversation “shifting from one of “deficits” and “gaps” to one about opportunities, prospects, ventures and creativity. That’s not news to companies that have paid close attention to the continent and invested there. The fast growing youth population, the urbanization expected to drive over 50% of Africans to cities by 2050, and Africa’s formalizing economy are all well known. These trends and other developments have driven a half century or more of growth in Africa, and will continue to do so.”

The six reasons given are:

  • Africa needs ‘connectors’: infrastructure, grid connections and more are given as key points
  • African trade barriers are falling and intra-African trade holds enormous potential: countries are connecting through power transmission, railway and more creating a much stronger inner-African market
  • Customers are changing: urbanisation will lead to a changing customer profile towards service oriented sectors
  • Digital transformation: jumping ahead of a cable based communication structure of the western world, straight to mobile technology
  • Africa is diversifying: moving away from commodities, one will see more manufacturing and related activities
  • Africa can lead in sustainable development: particularly renewable energy adaptation and development are of interest as it will help the continent to be self-sufficient and provide some energy security

What this implies is an incredible surge in demand for electricity to fuel not only the economic development but also the attractiveness of the continent as investment haven.  Only with an increasing electrification will we see the economic development and investment that the continent needs.

Geothermal energy therefore will play a major role as it provides a much needed baseload power source that can help fuel the ever increasing energy demand and the economic development.

Source: World Economic Forum