Philanthropic investors can drive Africa’s clean energy switch

Georgia Levenson Keohane is the CEO of the Soros Economic Development Fund, the impact investing arm of the Open Society Foundations.

There may be opportunity in crisis. While the upended global development system – curtailed foreign aid, diminished multilateral assistance – has exacerbated already severe financing gaps for emerging markets’ climate, economic and inclusion goals, a new paradigm of local leadership is gaining momentum.

This is the moment for investors, philanthropies and other private-sector actors to lend their support.

Take the case of Africa.

By conventional measures, the $2.8 trillion financing gap to advance the continent’s – and our shared – climate goals has worsened.

At the same time, with its abundant natural resources and rapidly growing workforce, Africa has the potential to achieve a clean-energy transition that powers sustainable, inclusive and equitable growth.

The loss of traditional development finance makes it more urgent than ever for non-governmental private capital to get behind the region’s green revolution.

The Soros Economic Development Fund (SEDF), the impact investment arm of the Open Society Foundations, is doubling down on African-led climate solutions as drivers of inclusive growth and continental prosperity.

This means support for local entrepreneurs, innovators, fund managers, public and private institutional investors and political reformers building a green economy that works for all Africans.

Averting a carbon catastrophe

Clean energy is at the heart of these efforts.

Today, roughly 600 million people across Africa still lack access to electricity, a major obstacle to propelling resilient economies capable of creating opportunities – jobs and mobility – for the millions of young Africans entering the workforce every year. This is a climate, economic and social justice issue.

Fortunately, we know that scaling proven interventions, such as off-grid solar or climate-resilient infrastructure, can catalyse “climate-positive growth”.

But large-scale deployment of these and other renewable energy technologies remains slow and undercapitalised, largely because investors are deterred by the region's risks – which are real and perceived.

At SEDF, we believe the greatest risk is inaction.

Surging economic demand

Although Africa contributes only 2-3% of global carbon dioxide emissions, it is the continent most vulnerable to climate change.

By 2030, as many as 118 million of its poorest people could be exposed to the devastation of extreme weather, including drought, floods and extreme heat.

With Africa’s population expected to double to 2.5 billion by 2050 energy demand will surge.

Without clean power and climate-resilient infrastructure, this demographic boom could become a carbon catastrophe. Yet, as we have seen in countries around the world, governments that fail to deliver resilience and shared economic prosperity are vulnerable to instability, migration pressures and political upheaval – all systemic risks for democracy and open society.

That is precisely why we invest – not in spite of the risks but because of them.

To date, SEDF has committed $55 million to initiatives led primarily by African investors and entrepreneurs, with additional commitments to follow.

With each investment, we seek to strengthen local capital-market infrastructure through innovative and enduring partnerships, like the recently announced Alliance for Green Infrastructure in Africa and the Hardest-to-Reach Initiative from Acumen, a global force of entrepreneurs, investors, philanthropists, and social innovators.

It is essential to get this model right, particularly in light of the growing global demand for the continent’s critical and rare earth minerals, and the opportunity to ensure Africa’s mineral wealth translates into broad-based prosperity.

In short, we are betting on a future in which African-led, inclusive, and pro-climate growth benefits us all.