UK’s government has prioritised the renewable energy sector as key to its Africa push, as it works to strengthen ties with the continent following its exit from the European Union.
Key renewable energy areas of focus will include solar, wind and hydro power. The UK will also halt investments into non-renewable energy generation sources such as coal powered generation plants.
This comes just after the UK announced plans to push about $10.5 billion (£8 billion) into the continent in 2018, with ambitions to be the largest G7 investor into Africa.
“We regularly generate more of our electricity from renewables than from fossil fuels, regularly. And we have almost entirely weaned ourselves off coal.” said Johnson. “But there’s no point in the UK reducing the amount of coal we burn if we then trundle over to Africa and line our pockets by encouraging African states to use more of it.”
At least $1 billion was invested across the renewable energy space in Africa in 2019, across the private equity, venture capital and infrastructure strategies, according to Preqin.
Notable renewable energy deals on the continent in 2019 include Investec Asset Management’s (IAM) investment in Côte d’Ivoire-based energy production company, Azito Power Plant. The investor backed an approximate $274 million (€264 million) debt investment into the company.
African Infrastructure Investment Managers (AIIM) also backed an approximately $26.1 million (R400 million) investment in SOLA Group, a South Africa-based energy developer in 2019.
In the year, Macquarie Infrastructure and Real Assets’ (MIRA) also invested approximately $17 million (£14 million) in H1 Holdings, a South Africa-based energy development company.
Meanwhile, UK government-backed CDC will be injecting over £2 billion in African companies in the next two years to 2022. The allocation is sector agnostic, but the DFI’s priorities include infrastructure, financial services and manufacturing.
CDC’s Africa portfolio stood at £2.4 billion or 52% of the total £4.6 billion global allocation, as of December 2018. The UK government approved additional funding to CDC in 2017, raising the capital ceiling from £1.5 billion to £6 billion. The funds were earmarked for investment across Africa and Asia.
Other G20 countries that have set out Africa strategies in recent times include France, which launched Choose Africa in 2019. The platform is set to invest about $2.8 billion (€2.5 billion) into funds and deals in Africa.
In the same year, Germany revealed plans to set up an Africa-focused development finance fund, sized at €1 billion in 2019.
The vehicle is expected to do direct deals in Africa, and will include companies in Europe, looking to finance their expansion to Africa. The vehicle will be managed under DEG, Germany’s DFI.
Meanwhile, the government of China through the countries’ DFI China Development Bank (CDB) signed a memorandum of understanding (MoU) with Investec Asset Management in 2018.
The scope of the partnership covers co-investing, risks assessments and advisory services and the MoU is open to cover both direct and fund investments.