Nigeria and other African countries need nearly $150 billion in cumulative investment, equivalent to about $15 billion annually, to achieve universal electricity access by 2035, the International Energy Agency (IEA) has said.
The agency said almost half of the required annual investment, about $7 billion, would have to go into expanding electricity grids, while another $5 billion would be required annually for mini-grids and $3 billion for solar home systems.
The scale of the requirement contrasts sharply with current financing levels, with the IEA’s tracking showing that less than $2.5 billion was committed to new electricity-access connections in sub-Saharan Africa in 2023, the latest year for which complete data are available.
Although the figure was about a quarter higher than the 2019 level, it remains substantially below what would be required to achieve universal access by 2035, according to the agency.
The IEA said financing was also heavily dependent on public sources, with international public finance providing $1.8 billion in 2023, compared with just $640 million from private finance, representing less than 30 per cent of total commitments.
It said the challenge was particularly acute because electricity-access projects often operate on tight profit margins, while low household incomes constrain the ability of consumers to pay for connections and electricity services.
The agency stated that its ACCESS scenario, designed to achieve universal electricity access by 2035, envisages private investment accounting for roughly 45 per cent of total spending, requiring a major increase from current levels.
It also estimates that concessional finance would need to rise to about $6.2 billion annually, nearly six times the annual average recorded between 2019 and 2023.
The IEA said limited concessional resources would have to be targeted strategically at areas that could not readily attract commercial capital, including low-income and vulnerable communities, early-stage projects and companies, as well as technical assistance and capacity building.
It noted that electricity-access financing was also geographically concentrated, with half of tracked finance flows going to just six countries: Angola, Kenya, Mozambique, Nigeria, Senegal and South Africa.
According to the agency, 80 per cent of the population without electricity access lives in rural areas, while financing continues to favour urban projects.
It also identified the availability of equity capital as a major constraint, noting that equity investment averaged only about $450 million annually between 2019 and 2023, with much of it concentrated in mature companies and established markets.
Under the universal-access pathway, the IEA projected equity financing to increase roughly tenfold to $5 billion annually, while debt financing would rise fivefold to $7 billion a year. Beyond the cost of building connections, the agency said affordability presented another major financing challenge.
It estimated that an additional $2 billion annually would be required to ensure that basic electricity services remain affordable, particularly for low-income households.
The IEA said about 220 million people would be unable to afford its defined basic electricity-service bundle based on current income and subsidy levels, underscoring the need for financing mechanisms that address both infrastructure investment and consumers’ ability to pay.
The agency said Africa could attract more private capital through stronger regulatory frameworks, improved project bankability, risk-mitigation instruments and greater use of domestic capital markets.
It cited Nigeria’s development of mini-grid regulations and the growing use of domestic financing mechanisms as examples of measures that could help mobilise private investment.
The IEA stressed that achieving universal electricity access by 2035 would require governments, development-finance institutions and private investors to substantially increase investment while directing concessional resources towards projects and communities that cannot be adequately served by commercial finance.
Emmanuel Addeh
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