Policy dialogue: Renewable energy loans to Africa 700% above other continents worries stakeholders

…As experts want renewable energy included in funding along with gas

Energy stakeholders have expressed worry that Nigeria and other Africa countries are offered renewable energy funding by international lenders at 700% above rates for other continents.

Even locally (in Nigeria), renewable energy is said to be suffering funding neglect whereas gas seems to be getting all the funding attention as if gas was the last bus stop to renewable energy programme.

These concerns were revealed at a policy dialogue last week in Abuja to review sustainable transition strategies.

The policy dialogue looked at how to balance gas and renewables pathways in Nigeria’s transition strategy’. It was organized by the Natural Resource Governance Institute (NRGI) in collaboration with the African Initiative for Transparency, Accountability, and Responsible Leadership (AFRITAL).

The marginalization of Africa was revealed in a presentation by Aaron Sayne who said it was very worrisome that lenders charge African countries/companies up to 700% of what they charge Europe or North America.

The expert said: “Investors are willing to support renewable finance, yet Africa only has 3% of the total expended the world over, with South Africa, Morocco, Kenya, Ethiopia, and Senegal dominating the market.

“The result is that Africa has at least 40% of the world’s solar potential but with less than 2% of all solar panels.”

In his welcome address, Louis Ogbeifun, Executive Director, AFRITAL, who set the context, highlighted expectations, articulated aspirations, and exhorted all stakeholders to take critical action. Ogbeifun highlighted the government’s ambitious plans to achieve carbon neutrality and energy transition, driven by initiatives like the Nigeria Gas Commercialization Programme (NGCFP) and the Energy Transition Plan (ETP).

Read also: Why Nigeria’s renewable energy future hangs in ‘the balance’

He pointed out that Africa has enjoyed only 3% of investments that can drive the energy transition. He added that despite having 40% of global solar energy potential, Africa generates only 1% of global power, signifying a dearth of investments.

He stated: “Nigeria has great renewable energy potential but needs to prioritize and right-size its energy frameworks.” He feared conflict of investment funding between gas and renewable energy projects.

He pointed at areas of disadvantage for Nigeria and called for focus between now and 2060, and urged all players to prioritise synergy to achieve the objectives of the energy mix. He commended NRGI for driving efforts toward deepening synergies.

The policy dialogue recommended that Nigeria’s energy policy strategy must make gas a mere bus stop with renewable energy as the real station.

Part of the eight-point recommendations is that renewable and gas policies should be framed under a unified energy strategy that transitions gas as a “bridge fuel” while accelerating renewable energy deployment.

The analysis said the focus on gas funding was said to create the risk overshadowing renewable energy initiatives, especially in resource-constrained scenarios.

The experts recommended that the policies aimed at market liberalization, energy access, and emissions reduction should exhibit strategic alignment. It also recommended what it called ‘environmental trade-offs, saying, “While gas policies reduce flaring and emissions, their long-term reliance risks conflict with renewable-specific environmental objectives. Integrating life-cycle emissions assessments into planning could resolve such disputes.”

The group also recommended investment synergies by creating hybrid energy programmes that integrate gas and renewables such as solar-powered gas processing facilities or gas-grid-supported mini-grids which can enhance complementarity.

Energy policy makers were also advised to focus on demand-driven policy frameworks by conducting comprehensive energy demand assessments and integrate findings into policy formulation. They were advised to strengthen stakeholder engagement to ensure data-driven policy development reflective of actual needs.

They were further advised to: “Develop workforce transition plans incorporating skills mapping and training programs; to establish partnerships with industries and educational institutions to prepare workers for renewable energy roles;

“To design new modular gas infrastructure to accommodate future renewable energy integration, and to implement policies incentivizing retrofitting existing facilities for renewable applications;

“To establish renewable energy training hubs to build local technical capacity, and to partner with international agencies for knowledge transfer and promote innovation in project structuring to meet international financing standards;

“To delineate responsibilities between regulatory and operational bodies, and to create a centralized coordinating agency for harmonizing energy transition efforts across sectors;

“To conduct a holistic energy policy review towards establishing a policy integration task force to align goals across institutions and promote complementary strategies.”

The policy dialogue participants recalled that Nigeria committed to achieving net zero emissions by 2060 by leveraging gas as a transition fuel to cleaner energy sources. The team also recalled that in May 2024, the government published details of its Decade of Gas (DoG) initiative, four years after Nigeria’s Energy Transition Plan (ETP) was launched.

Before this, they also named previous renewable energy policies such as Vision 30:30:30, which all demonstrate the government’s commitment to scaling up renewable energy within Nigeria’s energy mix.

It was on this basis that the NRGI and the AfriTAL organized a Policy Dialogue to allow critical policymakers and implementers to reflect on the articulated gas and renewable pathways and how these pathways could be streamlined to achieve Nigeria’s ambitions for its energy transition.

Tengi George-Ikoli, Senior Officer NRGI, and the Nigeria Programme Lead, delivered the opening remarks. Also, George-Ikoli and Sayne highlighted the pitfalls of non-complementarity and how the government can address them. Doris Agbevivi shared experiences from Ghana, emphasizing what can be learned from the Ghanaian e-mobility initiative.

The policy dialogue initiative attracted top stakeholders in the energy sector such as the Nigeria Liquefied Natural Gas Company Limited (NLNG), the Nigeria Infrastructure Advisory Facility (NIAF), and the Nigeria Extractive Industries Transparency Initiative (NEITI), who also shared goodwill messages.