About a month ago Bloomberg market and finance interviewed Blackrock CEO Larry Fink. He said that the capital markets are moving very rapidly worldwide and in his 44 years in the industry he had never seen anything like the rate at which the narrative and speed of portfolio change like in the last two years. Furthermore he expects that all investments are going to be looked at through a lens of sustainability as a risk factor. What to me was even more surprising was the fact that there is not enough opportunity to invest in the US in sustainable projects.(money is there, projects are not !) He encouraged governments to reach out and offered to help them access funding.
Recently, South African president Cyril Ramaphosa announced that the South African government had increased the threshold for companies to produce their own power from 1MW to 100 MW. The Kenyan government also announced VAT exemptions on equipment used in solar, wind and geothermal developments. In Egypt, the state-run El-Nasr Automotive Manufacturing Company signed two deals with subsidiaries of Chinese carmaker, Dongfeng Motor Corporation. Terms included were revamping the factory and to domestically manufacture an electric sedan E70 which would approximately cost $20,370. This developments are encouraging but there is still a lot of room for improvement. I would suggest an easy one, zero tax on all Electric vehicles (including two and three wheelers) being imported in Africa as proposed by AEMDA and a host of companies in the EV sector in East Africa recently. (Nothing too big)
Regions in the developing and emerging economies remained consistently under-represented, attracting only 15% of the global total of renewable energy investments. Most was concentrated in Latin America and the Caribbean (5%), South Asia (4%) and the Middle East and North Africa (2%) Sub Saharan Africa (Negligible). It is my hope that governments in Africa are positioning themselves to be able to attract this foreign investments from companies like Blackrock. If they are able to attract and that is a big if, what does that mean for the industry on the ground in Africa?
The African Continental Free trade agreement came into effect in January 2021. The aim of the agreement is to aid the movement of goods and services in the African continent. -This would favour African based companies in the whole value chains of the projects. South African wind power generation companies are highly skilled to the point they are taking the lead in projects in Europe. KENGEN is highly adept at geo thermal deployment. This companies could benefit greatly from offering their services to Africa.
Africa’s unemployment level is quite worrying to many governments. With the possible influx of funding in the renewable sector, a lot of new jobs can be created for the youth. This should be incentive enough for African governments to spin into action and ensure they can access this funds.
The road between excess funding of green projects and successful projects is a very long and tedious one. This is the place where I feel African governments need to invest the most in. Capacity building in this sector will be key to African Governments. The whole value chain has to be equipped with well-trained Africans.
African Countries, please utilize this opportunity.
(Original article by Msingo John https://www.linkedin.com/pulse/hidden-opportunity-african-countries-msingo-john/)