$15bn a year needed to reach universal electricity access in Africa

Access rates in SSA have seen little improvement, with half of the region’s population in need of an electricity connection as of 2024. 

Investment in electricity access across Africa is increasing but remains well below the levels required to close the continent’s energy gap.

This fact underpins a new report from the International Energy Agency (IEA), Financing Electricity Access in Africa, which reiterates that around 600 million people on the continent, mostly in Sub-Saharan Africa (SSA), are still living without electricity. 

The report highlights that for the first time, the Agency has used new tracking to gauge electricity access financing commitments.

“As of 2024, 730 million people worldwide still had no electricity access, over 80% of whom lived in rural areas. This represents a decline of only 11 million people from 2023, demonstrating a slower pace than annual progress before the pandemic.”

Funding gaps for electricity access in Sub-Saharan Africa persist

Access rates in SSA have seen little improvement, with half of the region’s population – around 600 million people – still in need of an electricity connection as of 2024. 

“The lingering effects of the pandemic years, combined with political crises and macroeconomic imbalances such as rising debt burdens, inflationary pressures and reliance on foreign currency borrowing, have hindered efforts to accelerate the pace of electrification. 

“Moreover, in Sub-Saharan Africa, these challenges are exacerbated by a rapid rate of population growth – averaging around 2.5% per year. This demographic trend means that the absolute number of people without access has stalled in recent years, with only 16 million people on average per year gaining electricity access between 2019 and 2024. 

“At this rate, by 2035, around 520 million people in Sub-Saharan Africa would still be without access to electricity, when the region’s population is projected to reach 1.5 billion. 

“Without a significant acceleration in grid expansion and decentralised solutions, the region risks falling further behind its energy access targets, undermining socio-economic transformation and climate resilience efforts.”

Investment needed to breach electricity access gap in Africa

The report estimates that $150 billion in total investment – or about $15 billion per year – is required over the next decade to deliver universal access in Africa.

“According to new IEA tracking, less than $2.5 billion was committed for new electricity access connections in Sub-Saharan Africa in 2023, the most recent year for which full data are available. While that is a quarter more than was committed in 2019, it still lags far behind what would be required to provide universal access by 2035.”

Despite a challenging macroeconomic environment, mounting fiscal pressures faced by African countries, and reductions in development aid, the report says that achieving universal access by 2035 is possible with strong action from governments, the private sector, and development finance institutions.

“Electricity access projects face tight profit margins, with limited household budgets preventing many from being commercially viable. As a result, public finance remains the cornerstone of the sector. Around $1 billion per year, on average, of this public finance (around 55%) is provided at concessional rates, although there has been a shift away from grants – the most concessional finance option – towards low-cost loans. 

“This poses a challenge to the least-developed countries that struggle to take on more debt. While overall private finance levels remain low, impact investors’ interest in mature solar home systems and mini-grid companies contributed to an annual average growth of 16% in private finance flows between 2019 and 2023. However, most capital still comes from international sources, which can put smaller, African-owned companies at a disadvantage,” says the report.

It highlights that in 2023, more than 70% of committed investment came from international public finance, while private investors accounted for less than 30%. 

What steps to take for universal energy access in Africa by 2035

The IEA further notes that in a scenario achieving universal access by 2035, 45% of total investment will need to come from private sources.

To mobilise this, the report recommends: 

• targeted regulatory changes 
• integrating electrification strategies into national development plans 
• boosting rural energy demand through productive use initiatives

 

According to the report, these steps would help attract more private capital by improving the commercial viability of projects.

The IEA has called for a tenfold increase in equity financing for access projects as a key driver of scale.  It also emphasises the continuing role of grants but urges improvements to results-based financing to enhance impact.

Under the universal access pathway, concessional finance would account for around 40% of total investment over the next decade. 

The report advises focusing these resources on areas that the private sector cannot serve, such as low-income and vulnerable communities, early-stage ventures and technical assistance programmes.

Rural areas left in the dark

Current financing is heavily skewed toward urban centres, even though 80% of those without electricity live in rural areas. Additionally, half of all finance flows go to just six countries: Angola, Kenya, Mozambique, Nigeria, Senegal and South Africa. 

To address these imbalances, the report recommends developing innovative financing mechanisms that prioritise decentralised energy solutions such as mini-grids and solar home systems. 

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It also highlights the need for tailored approaches in informal settlements, fragile states and humanitarian contexts, which together account for a significant portion of the un-electrified population.

Beyond expanding connections, the IEA estimates that an additional $2bn per year is required to ensure electricity remains affordable for low-income households.

Affordability remains a key barrier

The Agency’s analysis shows that roughly 220 million people in Africa (or about 40% of those without access) are unlikely to be able to afford a “basic bundle” of services, based on today’s income and subsidy levels, while 400 million people would not be able to afford an “essential bundle”.  

“In many of the areas without electricity today, income levels are low, presenting a challenge to both households’ ability to benefit from new connection and the commercial viability of access projects. Electricity services are considered affordable if they account for less than 5% of household incomes.” 

The report suggests that to tackle this issue, concessional capital can be deployed to reduce financing costs and open the door for more private sector financing, while governments could consider deploying time-bound subsidies to consumers or developers.

Accelerating energy access remains a balancing act

It further underscores the critical role of national governments in financing electricity access, with earmarked funds in 23 SSA countries accounting for 35% of their energy budgets in 2025. 

It cautions, however, that public utilities are “among the most indebted state-owned enterprises in Sub-Saharan Africa, with low profit margins limiting their ability to deliver and sustain loss-making rural electrification programmes.”

The report says that achieving universal electricity access will require a dramatic increase in investment flows, better-targeted public funding and greater mobilisation of private capital. 

“While the grid provides the largest share of new connections, off-grid solutions are necessary to deliver affordable energy to rural areas and to more complex settings where grid extensions may not be possible. Scaling up access must go hand in hand with affordability measures, to ensure that communities can take advantage of electricity services once connections are made.”

Cover photo:  yotrak©123rf