Africa’s $777bn Opportunity: Why Local Capital Must Power the Energy Transition

Africa stands at a critical energy crossroads. Countries must collectively come to terms with a historical lack of access to electricity for a significant portion of the continent’s population, impacting every facet of society and stunting progress and economic activity. Africa is the fastest-urbanising region in the world. Its population is projected to reach 2.5 billion by 2050, driving energy demand ever higher (CSIS). Factor in additional mounting pressures such as growing global energy demand for artificial intelligence (AI), impacts of ongoing reliance on fossil fuels and resulting climate change, and growing global geopolitical risks, the continent risks compounding the current deficits.

Standing in the way are a variety of barriers, including:

• Industry research has shown that 80 percent of energy infrastructure projects in Africa never advance beyond feasibility, despite investor interest. Those that advance are often marred by years of delays, be they wind, solar, or hydro power projects.

• Africa’s pension and insurance sectors alone manage roughly $777 billion (AFC, 2025) in assets, yet remain largely absent in funding energy projects.

• Political uncertainty, regulatory gaps, and corruption and mismanagement also combine to create an uncertain, high-risk environment.

Without decisive action, the continent will remain trapped in a cycle of unmet needs and lost opportunities. Reliable, affordable, and scalable power is not optional—it is the prerequisite for Africa’s participation in the global digital revolution. Failure to deliver it risks consigning yet another generation to the margins of economic progress.

Investment Trends Heading the Wrong Way

Africa’s renewable resources are extraordinary. From solar potential in the Sahel to wind corridors in South Africa and the Rift Valley’s geothermal fields, the continent could meet its entire energy demand many times over. For example, 60 percent of the world’s best solar resources lie in Africa, yet just 3 percent of the continent’s power in 2023 came from solar (Global Solar Council). Despite its extraordinary renewable potential, investment flows continue to falter. Between 2000 and 2020, just 2 percent of the USD 2.8 trillion global renewable investment reached Africa (IRENA).

The scale of the challenge is daunting: the International Energy Agency estimates that annual renewable energy investments in Africa must at least triple, and ideally quadruple, over the next decade to meet demand and achieve universal access (IEA). Yet the opposite trend is emerging. Public and development finance for clean energy has declined, while private capital—though rising—remains insufficient and often concentrated in only a handful of markets.

This mismatch risks locking Africa into ongoing dependence on expensive fossil imports, worsening climate vulnerability, and prolonging energy poverty. The clock is ticking.

Africa combines unmatched resource potential with exploding demand, yet remains under-capitalised. Historical challenges, regulatory uncertainty, project bottlenecks, and fragmented expertise, continue to cause fear and apprehension among investors, but these are surmountable with the right local partnerships.

 – Brett Levick, Chief Investment Officer, Ariya Capital Group

Why 80 Percent of Projects Fail

The challenge is not only one of money but of execution, with project viability difficult to prove. The reasons 80 percent of proposed energy projects in Africa never reach financial close are systemic:

• High upfront costs of planning, feasibility studies, and regulatory approvals, often without guaranteed financing.

• Fragmented expertise, with too few developers and advisors able to work seamlessly across engineering, policy, financial structuring, and community engagement.

• Complex regulatory environments that discourage international partners and delay project pipelines.

The result is a bottleneck: Africa is rich in resources and ambition but poor in “bankable” projects that can attract global capital. Unlocking this pipeline is perhaps the single most critical step to scaling renewable deployment at pace.

Africa’s Investors Must Step Off the Sidelines

Paradoxically, the continent is not short of capital. Africa’s pension and insurance sectors collectively manage about $777 billion in assets, yet only a fraction is directed toward infrastructure, with many funds restricted by caps of around 5 percent (African Business; ARM-Harith).

Investment restrictions, focus on short-term, low-risk instruments, and a general lack of technical expertise in energy projects perpetuate this contradiction—vast pools of local capital sitting idle while critical projects languish unfunded. Continuing this business-as-usual approach represents a missed opportunity not only for economic development across the continent but also for portfolio diversification and long-term returns. It underscores the need for bold, local leadership to mobilise even a modest portion of this capital, which could catalyse billions more in international co-investment.

But the spark must come from within. African institutional investors have to step off the sidelines, claim ownership of the continent’s energy future, and work with experienced partners to de-risk and showcase a pipeline of viable projects.

In order to achieve lasting results, all stakeholders, including African asset managers, must decide to focus on new approaches to create instruments that institutional investors can invest in with confidence. Not doing so will continue the current cycle of outsourcing the energy sector to foreign investors.

– Dr Herta von Stiegel, Founder and CEO, Ariya Capital Group

Over the Tipping Point

With institutional investors working with seasoned partners, we can overcome this tipping point.  This is exactly what Ariya ReEnergy (ARI) was built to help achieve. Launched by Ariya Capital Group, ARI is an innovative approach unlike traditional funds as it is structured as a full-capacity investment platform, focused on three core, interrelated sectors: generate, own, and decarbonise. This is a model that reduces costs, lowers regulatory burdens, and allows greater flexibility for investors. More importantly, it is all about speed and scale purpose-built specifically for Africa.

ARI’s mission is to turn Africa’s immense renewable potential into a bankable pipeline of projects. Its approach is deliberately integrative, bringing financiers, governments, developers, and communities together rather than operating in silos. With a team steeped in African markets, policy circles, and regulatory requirements, ARI applies rigorous due diligence and cross-disciplinary expertise, by working with the best developers in a specific sector, to invest in both operating assets and greenfield projects off its own balance sheet.

The result is not just isolated assets, but sustainable ecosystems of an alternative asset class offering very attractive risk-adjusted returns. By doing so, Ariya makes it easier for institutional investors to deploy capital at scale —and for global investors to follow their lead.

Why the Catalyst Must Be Local

There is no shortage of international interest in Africa’s energy transition. But foreign capital alone cannot solve the underlying bottlenecks. Without local investors offering the initial layer of confidence, along with critical expertise, contextual understanding, and political alignment, projects will continue to stall at the planning stage.

Africa’s institutional investors are at the starting line of a once-in-a-generation opportunity – to transform the continent’s energy future from within. By committing even a small share of their assets, they can tip the scales—unlocking the flow of billions in additional financing while securing long-term returns for their members. This is a win-win: once operational, infrastructure projects can provide stable, predictable cash flows over time and are a natural fit for the long-term liabilities of these types of investors while also kickstarting overall economic development in the region which will open more opportunities. With expert partners like ARI, they can do so without taking on disproportionate risk.

The outcome of doing nothing is grim: a continent left in the dark while the rest of the world accelerates toward a digital, low-carbon economy.

Old Ways Are Not Working

Africa’s energy story is no longer just about need—it is about urgency. Demand is rising fast, driven by population and industry growth, and a compounding climate crisis. Historical approaches have proven ineffective, as investment flows are insufficient, projects are stalling, and infrastructure remains fragile. The next 5–10 years will determine whether the continent can build the reliable, affordable, scalable power base it requires to thrive in the 21st century.

The pathway is clear. Africa must triple or quadruple renewable investment, overcome project development bottlenecks, and—critically—mobilise its own institutional capital. By stepping off the sidelines and partnering with integrators like ARI, African investors can unlock the continent’s vast renewable potential, catalyse billions in additional financing from around the world, and steer the continent’s future toward one of prosperity and resilience.

The opportunity is immense. The need is undeniable. And the catalyst must come from within.

For more information visit Ariya Capital