Renewable energy startups in Africa have cumulatively raised $836.1 million to date and in recent years, the financial sector has shifted towards green investments.

Clean energy spending now surpasses fossil fuel investments at a ratio of 2:1. In 2024, global energy investment is projected to exceed $3 trillion for the first time, with $2 trillion allocated to clean energy technologies and infrastructure. This is a commendable increase from the $1.8 trillion invested in 2023, showing a 17% year-over-year growth. 

In 2023, global investment in renewable energy reached approximately $619 billion, an 8% increase from the previous year. For every dollar spent on fossil fuels, $1.7 was allocated to clean energy, showing a strong global move towards sustainability.

Projections by Bloomberg disclose that Environmental, Social, and Governance (ESG) assets are steadily growing to surpass $53 trillion by 2025, representing more than a third of the anticipated $140.5 trillion in total assets under management.

The green bond market is also well-prepared for strong growth, potentially reaching $2 trillion by 2025, with a compound annual growth rate of 25%.

Added to this, power sector investment in solar photovoltaic (PV) technology is expected to exceed $500 billion in 2024, surpassing all other generation sources combined. This momentum points to a great period in sustainable finance, driven by technological advancements, supportive government policies, and increased environmental awareness.

Green Startups in Nigeria

Nigeria is quickly becoming a top choice in the global green investment sector. Since 2019, Nigerian climate-tech startups have raised over $3.4 billion, with investors having a growing focus on sustainable development.

One good example is Earthbond, a Lagos-based startup founded in 2023 by Chidalu Onyenso. The company addresses Nigeria’s $14 billion off-grid generator market by facilitating access to solar energy through group financing and carbon accounting. 

In October 2024, Earthbond secured $200,000 in pre-seed funding from Madica Ventures, bolstering Nigeria’s green economy.

Other startups include Daystar Power, which has raised $88.5 million to expand its clean energy products and services, Rensource Energy has raised $28.6 million to expand its Power-as-a-Service (PaaS) offerings across Nigeria and West Africa, Arnergy secured $12 million to continue providing reliable solar power solutions for businesses in emerging markets and Beacon Power Services obtained $2.8 million to enhance its energy management software and analytics for utilities.

Again, Ashipa Electric raised $120,000 to develop reliable microgrids in Africa and the Caribbean Islands, Imperium Energy received seed funding of N20 million from the Development Bank of Nigeria (DBN) for its innovative low-cost clean power solutions and SunCulture provides solar-powered water pumps for irrigation, enabling smallholder farmers to access reliable and sustainable energy solutions. In 2024, SunCulture raised $27.5 million to expand its operations.

Challenges and Opportunities

Challenges

Quite alright, we have a commendable view of the green sector, but some challenges could cause limitations:

1. Funding Gaps: Africa requires approximately $277 billion annually to meet its climate goals for 2030.
2. Geopolitical Conflicts: International conflicts and trade disputes disrupt renewable energy supply chains.
3. Regulatory Instability: Inconsistent policies across regions create limitations for investors.
4. Unpredictable Market: Fluctuations in energy prices and financial markets impact the attractiveness of green investments.

Opportunities

On the contrary, the growth of green investments brings lots of opportunities:

1. Innovations in Clean Technology: Innovations in energy storage and efficiency are reducing costs and increasing adoption rates.
2. Supportive Policies: Governments worldwide are implementing fiscal incentives and environmental regulations to promote green investments.
3. Private Capital Flow: Increased private sector involvement is narrowing funding gaps for climate-tech startups.

Economic Impact of Green Investments in Nigeria

Green investments are influencing Nigeria’s economy in the following ways:

1. Economic Growth: The green economy presents an estimated $250 billion in investment opportunities in Nigeria, driving GDP growth.
2. Job Creation: Renewable energy projects can create numerous employment opportunities, from technical roles to research and development positions.
3. Energy Security: Projects like solar farms and microgrids improve electricity access, reducing reliance on diesel generators. For instance, a $750 million World Bank program aims to enhance electricity access for 17.5 million Nigerians.

Again, the Nigerian Green Bond Market Development Programme, launched in 2018, has helped in promoting climate-resilient financial instruments. This initiative laid the foundation for Nigeria’s maiden sovereign green bond in 2017, valued at $26 million.

The Global Context: Investors and Policies

Investors managing over $29 trillion in assets have called for stronger climate policies, emphasizing the necessity of fiscal incentives to support the clean energy transition. 

Nonetheless, there were issues such as a 20% drop in climate tech funding in the first half of 2024, but targets set at the COP28 summit aim to triple renewable capacity and double efficiency by 2030.

Will Green Investments Dominate?

So, the course of green investments appears to be a good one. Global economic growth is projected to increase by 3.3% by 2025 (OECD). Sustainable finance, driven by ESG-linked products and green bonds, is expected to dominate the financial sector.

In Nigeria, the collaboration of government support and private sector innovation will ensure startups in the industry scale beyond the immediate environment.

Green investments are steadily growing and this is bolstered by technological progress, policy support, and environmental consciousness, bringing a unique opportunity for Nigeria to thrive in sustainable development. 

Strategic investments and strong policies will be essential in realising this vision, making green investments a high contributor to economic growth.

Africa has emerged as a frontier for the new online consumer class, representing an estimated 10 million new consumers in 2024 and trailing only Asia as a region, according to the new annual Beyond Borders digital payments and commerce report by EBANX, a global fintech company that connects local payment methods from Africa, Latin America, and India to global digital commerce.

Rising markets in Africa, Asia, and Latin America are driving future consumption and represent 70% of the 109 million people worldwide who are entering the consumer class this year, per the World Data Lab.

This increasingly new face of the global consumer will have major implications for the growth of digital commerce, payments, and the dominance of B2B payments.

Africa’s digital markets are still nascent but expanding swiftly

While digital commerce is growing by 13% per year in developed countries, online sales are expanding more rapidly in Africa at a pace of 25%, according to Payments and Commerce Market Intelligence (PCMI).

By 2026, the digital commerce market is expected to reach US$72 billion in total value in its top five markets: Egypt, Kenya, Morocco, Nigeria, and South Africa. Over the next decade, Africa will add more to consumer spending than Europe.

Digitization is reshaping African markets with access to the internet projected to become nearly universal in some regions by 2028.

The most dramatic rise is anticipated in Egypt, where internet penetration is expected to more than double, reaching 98%.

However, only 44% of African adults make online purchases, per Insider Intelligence and PCMI data, presenting a huge untapped potential for growth.

Online retail dominates Africa’s digital commerce landscape, accounting for 58% of the digital volume in 2023 across key countries such as Egypt, Kenya, Morocco, Nigeria, and South Africa.

Alternative Payment Methods (APMs) reign over card payments in Africa

As most Africans lack access to traditional financial services, alternative payment methods (APMs) – anything other than credit or debit cards – have exploded in popularity to meet untapped demand.

Compared to Latin America and India, Africa has the largest share of APMs in digital commerce, accounting for 69% of the total value, compared to card payments which stand at 31%.

Mobile money holds a 5% share in Africa’s five top economies but with significant usage in countries like Kenya, where its penetration is almost universal, particularly in integrating instant payments.

While cash payment remains the preferred payment method in Africa’s digital commerce with a 30% penetration compared to 9% in Latin America and 11% in India, APMs are poised to take further market share in the coming years.

Commenting on the data from Beyond Borders, Wiza Jalakasi, director of Africa Market Development at EBANX, said, “The future of payments in rising markets is instant. Payments in emerging markets like Africa are mobile-first and increasingly not card-based. It’s these alternative payment methods that are driving not only financial inclusion but digital commerce from Latin America to Africa to India.”

B2B payments surge with the rise of digital marketplaces

An estimated 70% of worldwide B2B transactions remain manual and lack seamless flows. This constitutes a massive opportunity, especially in rising markets like Africa, Latin America, and Asia, where B2B digital payments are growing faster than the global rate of 11% annually.

In these regions, they are developing at a 14% annual rate through 2027. By this year, these regions are expected to constitute 40% of the total value of B2B payments made online worldwide, per Capgemini Research Institute.

B2B transactions are gaining traction in Africa. In Kenya, 42% of businesses make online purchases, according to OECD and UNCTAD.

These payments are also partly on the rise due to the proliferation of B2B marketplaces which have emerged across the region, operating in countries like Egypt, Morocco, Nigeria, Rwanda, Tanzania, and Uganda, as a strategic solution to reduce logistical costs and eliminate intermediaries.

According to a report from GSMA, these marketplaces “can undertake bulk payments and deliveries, reducing effort and cost; churn [aka customer attrition] on B2B platforms is also much lower than B2C e-commerce, at approximately 40% versus 80%, which means B2B platforms are much better able to retain their sellers.”

To read more, access the complete Beyond Borders 2024 study here.

To this end, CACPP invited relevant stakeholders in Nigeria to the inaugural forum of the Coalition Against Counterfeit Pharmaceutical Products to discuss the way forward in the fight against Counterfeit Pharmaceutical Products on the 28^th of November, 2022 at the Protea Hotel by Marriot in Ikeja.

The convener, Yomi Badejo-Okusanya (YBO) while speaking on what informed his decision to form the coalition, said “It is borne out of the desire to take a firmer stand against counterfeit pharmaceutical products in Nigeria through engagement and advocacy, with hope to kick off an intense national advocacy campaign against counterfeit pharmaceutical products.”

Olayinka Subair West Africa Country Manager at Pfizer commented “Counterfeit medicines don’t cure any disease, rather they put patients’ health at risk because of their contents, it ultimately impedes the Nigerian Healthcare System. Lives are lost and medical conditions worsened due to this cankerworm. It is not an individual’s battle; it requires collective effort.”

He emphasized that “Nigerians need to champion the anti-counterfeit cause, especially as regards healthcare. We need to join hands together because there is no shortcut with health. Due process must be followed to get the best results. Unlike commodities, fake drugs are life-threatening. This means patients should only buy prescribed medicines from accredited pharmacies and not quacks or roadside vendors.”

A recent report by Punch Newspaper noted that the prevalence of fake drugs is a menace to over 200 million people in Nigeria ¹.

Femi Soremekun, NIROPHARM President stated “In recent years, the fight against counterfeit pharmaceutical products has taken new dimensions due to the global influx of counterfeiting syndicates, it is like a race against time for pharmaceutical companies – the cost to our collective health and economies is enormous.

Over the years, pharmaceutical companies are perplexed as to how best to nip the challenges in the bud. The challenges are overwhelming owing to the sophistication of the activities of counterfeiters.

Combating counterfeit pharmaceutical products is a herculean task, one that requires strong collaborations between government agencies and key stakeholders because of the impact.”

For most African Nations, combating counterfeit pharmaceutical products is even more challenging due to the lack of synergy between key stakeholders in the pharmaceutical industry and government agencies.

To combat the illicit trade of counterfeit pharmaceutical products, there is a strong need for collaboration. Stakeholders must look beyond the surface which is most times in-ward – they must look at the root cause which in most cases boils down to (Identity) or patent, what marks counterfeit from original pharmaceutical products.

The Organization for Economic Co-operation and Development (OECD) and the European Union Intellectual Property Office (EUIPO) in a recent study titled “Trade in Counterfeit Pharmaceutical Products” opined that “The consequences for the economy and for citizens are serious. Trade in counterfeit goods not only damages economic growth but also undermines good governance, the rule of law and citizens’ trust in government, and can ultimately threaten political stability. In addition, in some cases, such as that of fake pharmaceuticals, counterfeit goods can have serious health and safety implications for citizens.

Both countries are major producers of crucial energy and industrial commodities such as oil, gas, aluminium, palladium, and nickel.

They also produce food-related commodities such as wheat and corn; the war will have a consequent ripple effect on the global markets and supply chain, especially in Africa. The imminent food crisis resulting from the war is the topic du jour. However, there are other sectors to consider; one of them is the Built Environment. 

Urbanisation and the state of the Built Environment in Africa 

According to the Organization for Economic Co-operation and Development (OECD), Africa is one of the world’s least urbanised regions; however, urbanisation is expected to grow exponentially in the coming years.

The OECD also predicts that Africa’s population will double between now and 2050, with urban areas absorbing two-thirds of this increase. 

The rapid urbanisation in Africa, if well managed, can be the essential motor of economic development, rapidly lifting societies out of mass poverty.

Rapid urbanisation, however, should be kept in perspective. Africa faces serious infrastructure gaps, and the inadequate and poor state of existing infrastructure continues to hinder economic growth in the region. 

Within the Built Environment, over 55% of the population on the continent lives in slums. The African Development Bank estimates that the continent’s infrastructure financing needs will be as much as $170 billion a year by 2025, with an estimated gap of around $100 billion a year. 

The Impact of the Russia – Ukraine War on Africa 

The conflict has had clear effects on Africa, primarily due to the two countries’ role in supplying vital essential commodities that support the infrastructural and socio-economic sectors of the region.

The economic disruption caused by the ongoing conflict, in terms of sanctions and physical upheaval of trade routes, has resulted in a steep rise in commodity prices, this is in addition to the existing post-COVID inflation. 

In the Built Environment, the conflict has exacerbated and exposed the dangers of overreliance on importing building materials. Prices of building materials have increased, a burden that the homeowners will ultimately share

Russia is considered the fourth-largest steel exporter globally, serving over 150 countries and territories. The price of steel in Kenya, for instance, has significantly shot up over the past few months.

The prices of steel bars and nails have risen by between 80 per cent to 90 per cent and 13 per cent to 43 per cent, respectively, in the past few months in the country.  

Additionally, the conflict has resulted in a shortage of coal, which is a crucial source of energy in cement production through clinker manufacturing.  

It would be a safe wager that the situation is similar in most African countries, making the argument for affordable housing even more difficult. Considering the more significant socio-economic context, soaring food and energy prices could be a potential trigger for additional instability in the continent.

According to a study by Mo Ibrahim Foundation, Russia and Ukraine account for 40.4 per cent of Africa’s wheat imports and 39 African countries import wheat from Russia to feed their population. 

Coupled with the adverse impact of COVID-19 on food and energy prices, which has already increased inequality, poverty and marginalisation, these price increases can trigger new domestic unrest and instability. Instability threatens the conducive environment that spurs social and economic development. 

Opportunities for Africa Emanating from the Russia – Ukraine Conflict 

On the other hand, the conflict can serve as an opportunity for African countries to step up and fill in the commodities and supply chain gap created by the conflict and the pandemic. 

For instance, African countries with vast gas reserves such as Algeria, Nigeria and Egypt, can leverage on the existing market gap to expand energy access on the African continent and also secure the European Union’s energy supply whilst transitioning to a low-carbon economy. 

However, this can only be achieved by ramping up their production and improving the related infrastructure.  

Additionally, financing is also needed to achieve this ambition, which could be hampered by the recent pledge at COP26 to stop funding overseas gas projects.

This commitment does not consider the dire situation of energy access in Africa, where an estimated 600 million people lack access to energy. 

In the end, the conflict serves as an opportunity for Africa to restrategise and put in place appropriate measures to enhance industrialisation, regional integration and food security in the region.  

African countries need to leverage on the recent progress in the Africa Continental Free Trade Agreement (AfCFTA) and the New Urban Agenda, which will create new market opportunities for the region. 

The AfCFTA will create the world’s largest free trade area by the number of countries involved. The AfCFTA will connect 1.3 billion people in 55 countries with a total GDP of US$3.4 trillion. According to the World Bank, the AfCFTA could improve Africa’s revenue by $450 billion and its exports by $560 billion, mainly in manufacturing.

The imprint of a successful AfCTA will directly affect the Built Environment, as it will dramatically reduce the dependence on the import of building materials and significantly increase capacity and know-how. 

Winston Churchill once quipped ‘Never let a good crisis go to waste and while there is great human suffering, the ongoing Russia – Ukraine conflict can be an opportunity for Africa.

Many posit that the world will be remade after the conflict. Now is the time to create measures to enhance the region’s industrial capacity, consequently resulting in improved regional integration and shared economic prosperity on the continent.