Africa must increase investment in developing its renewable energy, and attract greater support of the private sector and international financial institutions, if it is to achieve the Sustainable Development Goals, experts meeting in Abidjan stressed Wednesday.
The continent should also control, exploit and transform its enormous mineral resources locally in order to generate the financial resources needed for its development, urged the experts, who represented a dozen African countries, during an African Development Bank workshop held on August 23-24, 2023. The meeting’s theme was Financial Modeling for the Extractive Sector (FIMES).
“Renewable energy gives us opportunities to achieve the Sustainable Development Goals. We also need to be major players in the energy field,” said Dr. John David Cooper, Director of Policy and Research at Sierra Leone’s Ministry of Mines and Mineral Resources. He was speaking on the panel on “Financial modeling for a just energy transition for certain critical minerals in transition countries”.
Participants note that Africa has made considerable progress in energy transition despite the challenges. Pointing to the scale of the challenges still ahead, Silas Olang, Energy Transition Advisor for Africa at the Natural Resources Governance Institute in Accra, Ghana, noted that no African country ranks among the world’s top 30 in energy transition. Still, Nigeria, Ghana, Ethiopia, Kenya and South Africa are examples of countries implementing ambitious renewable energy development policies.
Renewable energy have the potential to provide electricity to the 600 million Africans currently deprived of it, create jobs and stimulate industrialization. “Every dollar invested in renewable energies will yield an additional $0.93”, and the deployment of renewable energies will progressively lead to lower costs, unlike fossil fuels, said Mr. Cooper.
In addition to solar energy, Africa’s renewable assets include wind power, biomass, hydroelectricity and minerals such as lithium, graphite and cobalt, which are needed for renewable energy technologies including the production of solar panels and batteries for electric vehicles.
A key theme of the discussions was the need for the continent to take better advantage of its immense mining resources for sustainable development.
Dogari Bassirou, Director General for the Economy in Niger’s Ministry of the Economy and Finance said that his country’s uranium is exploited by France and its oil by China. This results in huge financial losses for African governments, who more often than not have to make do with foreign mining companies’ statements on mineral content.
“The minerals are processed not in Africa but in European countries and China. 80% of African cobalt is refined in China. If we could refine the minerals in Africa we could sell them at a higher rate, because raw exports limit our financial gains. We are losing out enormously in the current system,” said Mr. Cooper of Sierra Leone.
” We say, for example, that the grade is 45%, but how can we verify and determine this? We need to help countries better master the processes of setting costs and determining impurities in ores”, urged Boubacar Lounceny Camara, representing Guinea. He added, “The price of raw gold is determined according to the amount of gold refined. But it’s the companies that give us the quantity of refined gold. This leads to huge losses. The metals leaving our countries contain other mineral resources.” Camara called on the African Development Bank to assist African countries in setting up mineral processing plants prior to export.
Camara also commented that Guinea has been able to define a bauxite reference price with the support of its international partners, and is ready to share its experience with other African countries.
To boost the development of renewable energy resources, each African country must have a clear vision and draw up laws distinct from those applied to fossil fuels. As for financing the sector, governments need to create a stable political environment, adopt laws that are attractive to the private sector, set up transparent budgetary systems and fight corruption. The private sector, with its financial power and expertise, can play a crucial role, as can international financial institutions. The latter must help countries to set up regional projects, and act as a catalyst in mobilizing additional investment.
Yannick Bouterige, Research Assistant at the Foundation for Development Studies and Research(link is external) (FERDI) explained how the African Development Bank, through its Extractive Sector Financial Modeling Project, is assisting African countries to mobilize more tax revenue, build institutional capacity and strengthen resilience. Guinea, Mali, Liberia, Madagascar, Niger, Sierra Leone, South Sudan and Zimbabwe have already benefited from this two-year program, which launched in 2020.
The Bank also has several financing instruments, investment projects and departments dedicated to the sector that benefit all African countries.
“The Bank’s new Climate Action Window of about $429 million could provide a great opportunity for financing low carbon projects from renewable natural resources in Africa,” said Innocent Onah, Chief Natural Resources Officer at the African Centre for Natural Resources Management and Investment (ECNR) Centre at the African Development Bank.