IAE 2025 highlights innovative financing solutions to unlock Africa's energy potential

The Invest in African Energy (IAE) 2025 forum, held on 13 and 14 May in Paris, brought together energy leaders, policy makers and financial experts to explore innovative financing mechanisms to harness Africa's vast energy potential. While the continent has considerable energy resources - over 125 billion barrels of proven oil reserves, 620 trillion cubic feet of natural gas and 60% of the world's best solar resources - it continues to face major challenges in attracting the capital needed to develop them.

Africa faces a paradox: despite its wealth of natural resources, the continent is struggling to mobilise the investment needed to turn these assets into drivers of sustainable development. At the forum, panellists stressed that regulatory reforms, cost-reflective tariffs and innovative financing solutions are essential to bridge this investment gap. Taiwo Okwor, Vice President of the Invest and Natural Resources Division of the Africa Finance Corporation, said: "It is clear that there is not enough capital available. We need to think about innovative ways of mobilising funds. With the right tax regimes, regulatory frameworks and policies, investors will come into the African energy sector."

One of the major issues raised at the forum concerned electricity tariffs. Liz Williamson, Head of Energy Corporate Finance at Rand Merchant Bank, stressed the importance of tariffs reflecting real costs: "There needs to be the political will to bear the pain of the transition to sustainable tariffs. This could make a significant difference in terms of fiscal responsibility." Artificially low tariffs in many countries discourage private investment and undermine state-owned utilities, which are often insolvent.

Ibra Ndiémé Ndiaye, partner at Forvis Mazars, pointed to regulatory uncertainty as a major obstacle: "Investors thrive on predictability. According to the African Energy Chamber, 45% of investors cite uncertain legal frameworks as a major concern before entering new markets." This ambiguity leads to delays in project implementation.

The discussions also highlighted the need to reform Africa's public services, 85% of which are technically insolvent, according to Reginald Max, Senior Infrastructure Adviser at the Trade and Development Bank. "What have we done to improve the quality of public services? Until inefficiencies in delivery and cost recovery are resolved, investor confidence will remain low."

To overcome these obstacles, the panellists called for a combined approach incorporating innovative financing tools, such as blended financing and multilateral partnerships, as well as enhanced regional cooperation. These strategies would not only make it possible to mobilise capital, but also to improve access to energy on a continental scale.

Despite the challenges, speakers were optimistic about Africa's prospects. The combination of its resource wealth and growing investor interest offers a unique opportunity, provided that governments and stakeholders align on bold reforms and innovative approaches. The IAE 2025 forum laid the foundations for strategic discussions and partnerships aimed at accelerating the continent's energy development.