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The global climate emergency can no longer be ignored, especially not in Africa, where extreme weather events take a deadly toll on some of the world's most vulnerable communities. |
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But as planet Earth seeks to decarbonize its energy, what is the situation in Africa? |
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How is the continent driving the energy transition? |
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Let's find out in the Blue Space. |
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Hello, my name is Joanne Joseph and I'm your host here in the blue space presented by Standard Bank Corporate and Investment Banking. |
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According to United Nations estimates, Africa accounts for less than 4% of global emissions. |
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Yet, our continent suffers the worst effects of rising global temperatures. |
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Africa is also rich in renewable energy potential. |
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The UN estimates that our continent is home to 30% of the mineral reserves that power renewable and low-carbon technologies. |
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How can Africa, so rich in solar, wind and hydroelectric power potential, fuel the energy transition? |
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And what role can or should investors play in making this happen? |
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Joining me to talk about this are Dele Kuti, Global Head of Energy and Infrastructure at Standard Bank, NJ Ayuk, Executive Chairman of the Africa Energy Chamber and author of A Just Transition Making Energy Poverty History with an Energy Mix, and Sarah Collins, founder and owner of Wonderbag, an innovative non-electric slow cooker. |
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Hello to you all. |
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Welcome to the Blue Space. |
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Lovely to be with you today. |
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So I'm going to kick it off with you, NJ. |
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I mean, there's a huge gap between Africa's energy potential and the reality of how long it's taking to get to the point where we can see ourselves exploiting that full potential. |
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What explains that gap at this stage? |
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There is a gap that exists, and that gap is access to finance. |
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Because we're still dealing with an issue where you have 600 million Africans without any access to electricity, 900 million without any access to clean cooking technologies, most of them women. |
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We have to close that gap between energy access and our ability to drive it up. |
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Access to finance is key. |
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And Africa has really been underfunded, underexplored, and a lot of projects without financing. |
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but also a lot of financing without bankable projects. |
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That is the gap that needs to be closed. |
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So let me bring you in here, Dele, because if investment is needed, as NJ tells us, what's the investment case for putting money into renewal energy projects on this continent? |
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No, thank you very much. |
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And I think as NJ kind of mentioned, Africa today has a remarkable opportunity when it comes to Africa energy transition because of the abundance of resources available. |
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And I'm speaking from solar. |
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you know, wind and hydro as you did mention in terms of the abundance of that. |
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You know, interestingly also, I mean, you require about 1.3 |
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trillion dollars of investment to be able to support that in the continent. |
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So, clearly, when you start thinking around energy transition and the demand that is there in the future, Africa is actually the place to be able to do that. |
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Today, why is it this circumspect? |
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03:28
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The issue of energy security is now very important. |
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I mean, we've seen the challenges that kind of come with the Russia and Ukraine crisis, with the fact that you're seeing things like oil and gas have some shift in terms of geopolitical situation that could impact that. |
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So there's massive investment that could go into actually making sure that you can develop the energy where the resources are clearly present. |
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03:54
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As part of your opening also, you did mention about 40% of the mineral required to be able to meet energy transition is clearly there in Africa. |
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So the investment case is there. |
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And we at Standard Bank, we're actually pioneering that, you know, as part of the things that we're doing. |
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We've put a policy in place where we're facilitating, you know, between 250 to 300 billion rand of investment into renewable energy. |
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You know, we supported, you know, this, I mean, the last two years, we've actually facilitated close to 40 billion of investment that is in there, 40 billion rand of investment into renewable energy. |
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So the investment case is there from demand perspective, one opportunity to be able to do that. |
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But I think, as NG mentioned, there's a clear need for reform in most of the continent. |
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What kind of reform are we talking about? |
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The challenge you have today is the fact that most of the sovereign continent today are clearly challenged. |
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Why the success story in South Africa is because most of those early stage of cases were put in place, policy were put in place, transparency were put in place to be able to do that. |
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But when you start going into the sub-Saharan African country, the sovereign is very weak in terms of the fact that, you know, technically most of them are bankrupt, you know, if you kind of think around from investment perspective when you start looking at the case. |
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The cost of infrastructure to be able to get the right return in the continent is clear challenging because you need a lot of infrastructure to be able to do that. |
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The return that, you know, investors would like to see in place in terms of, you know, the required investment return when you try to do those projects is quite important for the continent. |
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As somebody who's been involved in Wonderbag so successfully for so many years, are you feeling that? |
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that investment. |
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on the ground? |
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Jo, that's a really interesting question and you talk about successfully driving Wonderbag. |
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It hasn't been successful for 15 years. |
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We've been around for 15 years but the funding has not been available and the just energy transition, I'm talking about the 900 million women who don't have access to clean cooking solutions, an age-old technology which I developed called the Wonderbag. |
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is changing the lives of millions of women across Africa. |
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That's where we need investment. |
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We need investment into the real people who are feeling climate change right now. |
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The innovations belong in Africa. |
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We have them. |
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We don't need to look to Silicon Valley. |
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We actually have that. |
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What we need to do is re-look at how do we invest. |
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The South African government introduced the carbon tax in 2019. |
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That's the reason I have investment right now, because I have a business model that stacks up. |
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So how, NJ, do we close that gap between Dele, who is providing financing at a very high level, and between the kind of women that Sarah is working with on the ground, who need to be a part of the just energy transition, but cannot necessarily access Dele directly? |
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We need to create an enabling environment. |
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This is an African struggle. |
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This is what you have to really look at it from an African perspective. |
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You're not going to get financing if you're the right regulatory environment. |
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It's not there. |
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I always say sign, baby, sign. |
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It shouldn't take so long to approve a project than the time you need to build that project. |
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You need to be able to drive up projects and you really need government to come in. |
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What if we incentivize growth? |
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What if we provided tax subsidies, tax incentives for entrepreneurs and financing, finance financiers look at that and say, these are shovel ready projects. |
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These are bankable projects. |
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We need to do that. |
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Holding back on approvals, holding back on permits, going away from the ills of the past like mismanagement and corruption, that can really help drive that. |
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But that's what we need to do because banks need that. |
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entrepreneurs need that space for them to grow. |
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And everyday people can just benefit from that because when you do that, you create jobs, you create opportunity, you create new revenue streams for government, more taxpayers, you're expanding your tax base, and you're just breathing hope into communities that felt or have felt shut down as nothing is there for them. |
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Then you start seeing money coming in from... |
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banks like Standard Bank and you start seeing other people bringing innovative solutions to really deal with Africa's problems. |
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You know the issue of hope is an important one, Dele, and people will want to know that you have invested in some worthwhile renewable energy projects. |
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Very briefly, your final thoughts on this and Standard Bank's role in this. |
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I mean, Standard Bank is currently committed to driving energy transition of the continent and we've facilitated real investment into the market. |
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08:48
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In the last few years, we've actually depended deploy between 30 to 40 billion rand to support renewable projects, especially in South Africa, based on some of the big processes that have been put in place. |
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In fact, we just recently closed battery projects and renewable projects in South Africa, where we actually support a client that actually generates renewable energy to be able to support a base-load energy provider into the continent. |
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And we're not only doing that in South Africa, we're also doing that in other African countries. |
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We supported a 300 megawatt project, the Lake Tokona project in Kenya. |
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We're very keen to continue to do that as a bank. |
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In fact, one of the things we've actually assigned ourselves to do that in the next two to three years, we actually want to facilitate between three to five gigawatt of power into the continent, because as NJ mentioned, Energy poverty is real in Africa. |
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I want to make sure that we continue to drive that. |
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And not only driving that at a large scale level, we also want to make sure that at least at a small scale level, we facilitate deployment of solar into various homes in the continent. |
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We're happy to support various initiatives, you know, the likes of things that Wonderbatch is doing in the continent to be able to make sure that we drive energy not only at a high level basis, but also to kind of ensure that the community where this is required. |
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in order to be able to accelerate growth in the continent where they are standing by to be able to support this initiative. |
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What for you are the most promising opportunities for energy infrastructure development, NJ? |
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10:13
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It's about common sense. |
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It's about pragmatism. |
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It's about using whatever it takes for us to get out of an energy crisis that we are. |
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Because actually, we are in an energy crisis. |
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Can you imagine if you had in Europe or the United States where you have... |
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Maybe two-thirds of the people with no electricity, CNN would be on it every day. |
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But right now in Africa, where you have two-thirds of the people with no electricity, it's okay. |
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That's normal. |
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We don't have to normalize it. |
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The arc of a moral universe is long, but it bends towards justice. |
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But it doesn't bend by itself. |
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It's what we do to drive it. |
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Working with financial institutions. |
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entrepreneurs, and then that's how we make it to move towards that just transition that we want to see. |
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I'm going to leave it there. |
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Delia, thank you so much for your insights. |
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Sarah, NJ, lovely having all of you to discuss this. |
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And of course, the conversation will continue here. |
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Energy transition is a big topic. |
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There's so much more we could talk about. |
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We'll leave it there for now, though. |
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And thank you to our guests. |
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Thank you all for your insights. |
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I'm Joanne Joseph. |
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Thank you for watching. |
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And until the next time we meet, take care. |
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visit www.standardbank.com |
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for slash cib to find out more about blue space |
