Africa poised for transition-based investment opportunities

Africa’s energy transition presents one of the most significant investment opportunities globally as the continent strives to improve electricity access while prioritising decarbonisation.

Private-equity infrastructure fund manager African Infrastructure Investment Managers (AIIM), a division of Old Mutual Alternative Investments, says that with the need to add substantial clean energy capacity and develop robust infrastructure, the potential for private investment is vast and growing.

“We are witnessing a significant liberalisation of energy markets in South, East, and North Africa, creating substantial opportunities for private energy-generation companies to step in and supply commercial and industrial customers directly,” says AIIM co-CEO Olusola Lawson.

He says South Africa, in particular, exemplifies the urgent need for energy investments as State-owned private utility Eskom’s operational failures and maintenance issues have led to persistent blackouts. In response, South Africa has liberalised the energy sector, allowing private firms to construct new power generation facilities and connect directly with private customers without “cumbersome” licensing processes.

Lawson notes that this regulatory shift has spurred momentum in the private market, with platforms such as AIIM’s Net Zero Africa (NOA) leading the charge. NOA combines wind, solar, and battery storage to meet over 80% of its commercial and industrial customers’ energy needs, backed by a $180-million equity commitment to expand its capacity.

“The opportunity in South Africa is immense,” Lawson adds. “With a highly carbon-intensive market and an urgent requirement to add upwards of 50 GW of clean generation capacity over the next decade, private investment is crucial to achieving these goals.”

Opportunities Across Africa

Other African nations are also opening their energy markets to private investment. He cites Morocco passing laws to liberalise its market and Kenya exploring similar reforms. These changes create significant opportunities for renewable-energy projects.

However, the continent faces a critical bottleneck in transmission infrastructure, which is essential for connecting renewable-energy sources with major consumption centres.

“The underlying problem is that many areas suitable for renewable-electricity generation are situated far from major offtake centres and industrial energy consumers,” Lawson explains. “There is a pressing need for investment in transmission capacity to interconnect countries and stabilise grid networks across the continent.”

In the Democratic Republic of Congo, energy shortages impede mining activities critical for the global energy transition. He says AIIM is exploring opportunities to transfer excess power from neighbouring countries to areas with significant deficits, addressing region-specific challenges and broader transmission issues across Africa.

Investment, Technology Trends

AIIM, one of the largest investors in renewable energy in Africa, has developed over 1.3 GW of wind and solar assets, with more than $1-billion in equity invested across 30 projects.

“Utility-scale wind and solar, alongside renewable baseload technologies such as hydro and geothermal, continue to attract significant investor interest,” says Lawson. “We are also expanding the NOA platform, targeting a portfolio exceeding 2.5 GW.”

While the immediate opportunity around e-mobility – including electric vehicles, charging stations, and related technologies – in Africa remains in its early stages, there are emerging prospects in decarbonising delivery fleets and logistics services.

Lawson notes: “Partnerships will be crucial to generating the capital Africa needs for its energy and digital transition. Private capital, both local and international, will play a key role, and innovative instruments such as blended finance mechanisms will be essential to attract additional investment.”

He emphasises that Africa’s energy and digital transition represents a pivotal moment for the continent. “As countries liberalise their energy markets and private investments flow in, the path to a sustainable and reliable power and digital infrastructure becomes increasingly clear, promising a brighter future for the entire continent.”