Africa – a delicate balancing act

By Devan Pillay, Cluster President: Anglophone Africa at Schneider Electric

Africa continues its quest to achieve balance and growth in a dislocated world. Indeed, it is an honorable project which sees the countries of the continent mobilizing for a transition towards a stronger economic posture, based on access to energy and to exciting market segments.

That said, Africa’s natural growth trajectory contrasts with that of established regions of the world that focus primarily on improvement and maintenance. The continent, meanwhile, is investing in infrastructure driven by population growth and the need for economic transformation.

Establishing the balance

The pursuit of balance is influenced by a number of somewhat opposing factors; some stimulating, others exciting and optimistic.

On the one hand, inflation remains a concern across Africa, affecting products like fuel and basic food items. Here, energy costs contribute significantly to rising food prices, affecting economic stability and growth.

At the opposite end of the spectrum are the continent’s growing segments, such as the mining, minerals and metals sector (particularly copper and battery minerals), which continue to attract private investment. These businesses create jobs and stimulate secondary businesses, thereby boosting economic development.

For example, experts agree with the analysis firm Economist Intelligence Unit (EIU) which states that the African mining industry offers “enormous long-term potential”, even if several challenges still face investors in the sector.

In a research report on the future of the African mining sector, the EIU says: “Africa will play a crucial role in bridging the gap between supply and demand for technologically critical metals and minerals, which will see international mining companies intensify their competition. by expanding existing mines, developing new ones and designing more efficient extraction and production facilities.

Tipping the scales to achieve energy prosperity

Like its counterparts around the world, Africa is also working towards a low-carbon future. This focus has led to increased demand for working capital in African countries, which traditional lenders are often unable to provide.

Fortunately, achieving carbon reduction targets has opened the market to new financing options, such as the increased availability and competitiveness of financing supported by the Export Credit Agency (ECA).

The role of ECAs in facilitating deals in Africa is evolving, with a growing number of programs and products covering projects related to the trade of renewable energy, raw materials and critical minerals in Africa.

Again, highlighting a juxtaposition of sorts, Africa also has an abundance of natural resources as well as hydrocarbons which, overall, have the potential to contribute to a strong Distributed Energy Resources (DER) posture. .

Highlighting the above and with the aim of accelerating the continent’s access to energy, the World Bank Group and the African Development Bank Group announced an ambitious effort to provide access to electricity to at least 300 million people in Africa by 2030.

The World Bank Group will work to connect 250 million people to electricity through DER systems or the distribution grid, while the African Development Bank Group will support an additional 50 million people.

The involvement of the World Bank and various investment banks is a significant development, as they are key players in financing global infrastructure projects. Their demand for good execution aligns well with the capabilities of multinational companies like Schneider Electric, which are key contributors to energy infrastructure.

We are excited about the continent and, through strategic approaches, we will offer the services and solutions needed to meet the future needs of a well-balanced African market.

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