Despite its vast renewables potential, Africa’s clean-energy transition is being impeded by deepening economic and debt pressures. Any credible climate strategy must combine coordinated debt relief with growth-oriented, low-carbon investment that strengthens resilience and advances long-term national goals.
CAPE TOWN – With the world barreling toward increasingly urgent climate deadlines, African policymakers must move beyond the comforting illusion that simply producing more renewable electricity will satisfy global emissions-reduction targets. In reality, a climate strategy that focuses on green energy but neglects development risks delivering climate gains without yielding development dividends.
While Africa’s greenhouse-gas emissions remain low on average, the continent faces profound economic and debt pressures that could impede its ability to decarbonize and build resilience. Any credible climate strategy must therefore combine debt relief with growth-oriented, low-carbon development.
These ideas are central to the latest report from the Africa Expert Panel, which was established under South Africa’s G20 presidency to examine how to channel investment in ways that support durable, broad-based development. The report calls for coordinated debt relief and urges G20 leaders to mobilize public and private capital to jumpstart African innovation.
Despite Africa’s vast renewable-energy potential, the pace and scale of its green transition will ultimately depend on the underlying realities of its national economies. The continent already has nearly 34 gigawatts of installed hydropower, even before major projects like the 6.5 GW Grand Ethiopian Renaissance Dam come online. Its solar potential, at 7,900 GW, is extraordinary, with installed capacity growing by 54% annually between 2011 and 2020. Wind resources amount to an estimated 461 GW of technical potential. And the East African Rift alone holds roughly 15 GW of untapped geothermal resources.
But the real challenge is not counting how many green electrons Africa could produce; it is ensuring that clean-energy investments help African countries achieve their development goals. For this, policymakers must focus on several key issues.
Understanding the roots of the continent’s development problems must come first. Most Sub-Saharan countries remain heavily reliant on commodities and raw-material exports, a development path that has entrenched structural imbalances and constrained the growth of other sectors.
Nigeria offers a stark example. Before the discovery of oil, the country had a vibrant agriculture sector. But as oil revenues surged, agriculture rapidly lost ground, with exports falling by 17% at the height of the 1970s oil boom. This overdependence on a single commodity – a classic case of “Dutch disease” – has made the Nigerian economy acutely vulnerable to price shocks and market volatility.
Second, scaling climate-aligned investment requires a far clearer picture of the continent’s debt landscape: its scale, makeup, and how to stabilize it. While additional financing will be essential, any new borrowing must be linked to productivity improvements and economic resilience.
In the near term, this requires strengthening sectors like agriculture and tourism while laying the groundwork for a shift toward higher-value goods and services. Ghana and Côte d’Ivoire, for example, produce roughly half of the world’s cocoa, yet limited investment in R&D and processing means that most of the value is still captured elsewhere, leaving both economies exposed to market swings and limiting opportunities to diversify.
Third, economies such as South Africa will need to bolster their competitiveness as policies like the European Union’s Carbon Border Adjustment Mechanism come into force. These measures will hit carbon-intensive sectors hard, underscoring the need to move away from Africa’s current “grow now, clean up later” model. For the energy transition to translate into durable economic growth, decarbonization must be paired with industrialization and genuine diversification.
Fourth, misallocating capital would be especially costly for highly indebted countries at a time when borrowing costs are soaring across much of Africa. This makes it critical to focus on green-growth initiatives that deliver meaningful productivity gains and economic opportunities.
At the same time, affordable and reliable electricity remains crucial to realizing Africa’s productive potential and integrating its young, rapidly urbanizing population into the global economy. Firms operating in Senegal’s Diamniadio special economic zone, for example, have pointed to high electricity costs as a major factor undermining their competitiveness.
Lastly, African policymakers need a long-term vision for how their economies should look in two or three decades. Climate solutions must not only reduce emissions; they must also create pathways for countries to move up the value chain and participate in the development of tomorrow’s technologies.
The 21st-century economy is an ideas economy, in which countries compete to develop solutions to national, regional, and global challenges. Done right, climate investment can help nurture dynamic, innovation-driven African economies. But this demands a coherent long-term vision of the economic trajectory the continent seeks.
This commentary features in Project Syndicate’s coverage of South Africa’s G20 Presidency, with support in part from the African Climate Foundation.
