Africa can become a powerhouse of renewable energy manufacturing

Damilola Ogunbiyi is the CEO and Special Representative of the UN Secretary-General (UN SRSG) for Sustainable Energy for All, a partner organisation to the UN, and Co-Chair of UN-Energy.

Africa remains the world’s least industrialised region - and energy poverty continues to limit the continent’s manufacturing capability. In the face of this, African economies are heavily reliant on imports, with most of the products they sell originating from China, India and the United States. 

Africa needs to industrialise to meet the development aspirations of its people, and to create high-quality jobs and prosperity for all. Being the most commodity-dependent region in the world, more needs to be done.

It is therefore noteworthy that the African Union’s Agenda 2063 aims to see intra-African trade grow from less than 12% in 2013 to 50% by 2045 – in line with other regions including Europe and Asia - and for Africa’s share of global trade to rise from 2% to 12%. This, coupled with the African Continental Free Trade Area (AfCFTA) agreement which aims to create a single market for goods and services, would see exports for all African countries increase by $40 billion-$56 billion a year by 2040. 

Renewable energy is expected to play a leading role in Africa’s development, with capacity forecast to grow to 180 gigawatts (GW) by 2030 and 1.2 terawatts (TW) by 2050. We are already seeing many countries on the continent emerging as renewable energy leaders.

For example, Kenya’s power mix is almost 80% renewables, while South Africa, Egypt and Algeria have some of the biggest solar capacities worldwide. This growth in renewables presents a significant opportunity for the continent to accelerate its overall economic growth, develop new local value chains, and reduce energy dependence, while creating between 8 million and 14 million good-quality jobs by 2030.  

Furthermore, if African countries can build their manufacturing capabilities, they could also export renewable energy components to other countries, creating further positive trade flows while meeting the clean energy demand of a rapidly industrializing Africa. For example, Reuters recently reported that in the first five months of 2022 alone, South Africa imported solar photovoltaics (PV) panels worth nearly 2.2 billion rand ($135 million), which amounts to over 500 megawatts (MW) of peak generating capacity. 

Renewable Energy Manufacturing Potential

Africa has almost unlimited potential for solar capacity, at approximately 10 TW of energy. For context, the annual energy consumption of all humans on Earth is 17.7 TW. Africa could take advantage of its abundant solar resources by turning itself into a global renewable energy manufacturing hub. That would enable it to retain more of the benefits of the energy transition on the continent, especially with the growth in solar PV in Africa expected to reach 650 GW by 2050.  

As African nations make progress on energy development and transition, it is increasingly critical to establish local supply chains and talent to ensure the socio-economic benefits of renewable energy and sustainable development accrue locally, while circumventing the risk of delays and price fluctuations caused by potential global supply chain disruptions. 

African countries also have reserves of the critical rare earth minerals used in battery production which are in high global demand. For example, the Democratic Republic of Congo has 50 percent of global reserves of cobalt, and South Africa and Gabon jointly have nearly 40 percent of global manganese reserves. These minerals are mined in Africa, but the value-addition work, such as smelting, refining, and cell assembly, takes place largely outside the continent.  

A recent study by Sustainable Energy for All (SEforALL), Bloomberg Philanthropies, ClimateWorks Foundation, and the African Climate Foundation shows that 14 out of Africa’s 54 countries have medium or high feasibility for renewable energy manufacturing capacity, with solar PV manufacturing immediately feasible in Egypt, Tunisia, South Africa, Morocco, Algeria, Nigeria, Namibia, Kenya, Ghana, Côte d’Ivoire and Rwanda. Critical elements for success include the level of renewables demand, manufacturing maturity, political stability, enabling policies and regulations, trade relations with existing manufacturing countries, infrastructure and the ability to export. 

For battery manufacturing, the same study shows that mineral refining is immediately feasible in Ghana, Morocco, Namibia, South Africa and Tanzania, which have reserves of minerals such as lithium, cobalt, nickel, and manganese. Analysis of battery-material refining shows African countries can be cost-competitive with global leader China for various minerals. For example, Tanzania can deliver nickel sulphate to the European Union (EU) at almost half the cost. 

While African countries already have many tools and mechanisms to encourage renewables manufacturing, there are barriers to further growth. Africa’s complex business environment means high initial costs for setting up renewable energy production plants. Some African countries have insufficient power and limited grid development, which could hinder the scale-up of renewable energy solutions. In addition, securing sustainable demand at a local scale is holding back market investment.  

However, these hurdles can be overcome if enabling policies, technical assistance, transaction facilitation and financing are provided. 

South-to-South Cooperation is Key 

China, India and ASEAN countries that are already major manufacturing players and investors can offer valuable lessons and collaboration opportunities for Africa, as they have similar development needs and policy pathways. 

South-to-South cooperation can be facilitated by programmes such as the new Africa Renewable Energy Manufacturing Initiative, led by SEforALL, the African Climate Foundation, Bloomberg Philanthropies, ClimateWorks Foundation and the Chinese Renewable Energy Industries Association.

Through partnerships, African government officials can accelerate and bolster policy-making for renewable energy manufacturing. Africa’s manufacturing workforce can benefit from skills transfer, training, employment and career development opportunities. By attracting renewables manufacturers to Africa, countries can also identify optimal operating models and scale capacity investment and best-practice partnerships. 

African nations are poised to ramp up energy capacity and production, which will shrink the energy access deficit and improve overall economic performance. To realise their potential as energy manufacturing giants, governments and their partners must work together to drive the financial, technical and socioeconomic investments required to advance clean energy development and transition in Africa.