Bridging the gap: Advancing African energy infrastructure projects

This is a thought leadership report issued by S&P Global. This report does not constitute a rating action, neither was it discussed by a rating committee.

Africa’s demographic boom is colliding with an energy infrastructure system already under strain. As energy demand accelerates and investment along energy supply chains fails to keep pace, the continent faces a stark challenge: It must transform abundant investment appetite into bankable, financeable projects, or risk deepening energy poverty and lost economic potential.

Congested, fragile and inefficient supply chains and a lack of critical infrastructure are constraining economic growth and development in Africa, creating energy security risks.

Governments and investors must expand and upgrade energy infrastructure across the continent as rapid population growth and rising energy demand intensify pressure in the coming decades.

Five trends underpin the case for investment:

1. Energy demand growth

Africa’s energy demand will double by 2050, according to S&P Global Energy, driven by rapid demographic growth, urbanization and economic development. Consumers and businesses will require more energy and more infrastructure to deliver it reliably.

Africa’s refined products demand has more than doubled since 1990, while refining capacity has increased by less than 10%. If the Dangote refinery in Nigeria had not been commissioned, capacity would have contracted by more than 20% over this period. As refinery closures and underinvestment persist, countries across the continent increasingly rely on imported fuels. This shift places growing pressure on ports, storage and import infrastructure, a trend that will continue unless investment accelerates. Gas import infrastructure faces similar constraints as demand rises faster than domestic supply.

Approximately 900 million Africans lack access to clean cooking fuels, according to research from the World Liquid Gas Association and S&P Global Energy, exposing households to health risks and environmental damage. Policymakers are increasingly positioning LPG as a key solution. However, LPG demand outpaces supply, requiring imports that existing infrastructure struggles to support. Expanding urban storage and distribution networks, as well as rural road connectivity, will determine how quickly access to clean cooking can increase.

Energy master planning can overcome this constraint by promoting regional integration and ensuring infrastructure is developed to serve regional, rather than purely national, markets. Aggregating projects across borders creates scale, diversifies risk and supports more efficient capital allocation.

Project clustering also facilitates the development of energy hubs. This can be enhanced further by bringing greater transparency to energy trade. Platts, a part of S&P Global Energy, is supporting the development of a West African trading hub by launching refined products benchmarks that facilitate transparent pricing for buying, selling and trading, around which spot market liquidity can grow and risk management tools can be developed. Benchmarks also help integrate regional markets into global trade flows. Transparency attracts trading activity, which supports more infrastructure investment to attract more trading activity.

Despite strong investor appetite, many African sovereigns face constrained fiscal capacity and high debt servicing costs that limit public infrastructure investment. While lower global interest rates may ease near-term pressures, a complex set of financial, regulatory and execution barriers continue to amplify economic vulnerabilities. Addressing these constraints is essential to unlocking the continent’s growth potential.

Developing deeper capital markets is central to this effort. Outside South Africa, markets remain fragmented and shallow. Countries such as Nigeria, Egypt, Côte d’Ivoire, Kenya and Morocco have meaningful domestic funding sources, but financing costs are often high. Regulatory frameworks that encourage listings and capital formation without overburdening issuers would help unlock domestic savings and improve liquidity through greater debt and equity issuance.

Well-functioning capital markets channel savings into productive investment, reinforcing a virtuous cycle of growth and job creation. Building this depth requires sustained commitment. Multilateral lending institutions play a critical role by expanding market access through local-currency lending, guarantees and risk mitigation tools, alongside regulatory reform and capacity building. Bond issuance and risk mitigation tools provided by market-linked investments enhance market liquidity and funding opportunities for the private sector. However, achieving long-term success depends on a comprehensive, ongoing strategy that includes a variety of initiatives. The issuances by the African Development Bank and the African Export-Import Bank in Ghana, Egypt and South Africa offer scalable solutions for financial asset creation. Additionally, the Islamic Corp. for the Development of the Private Sector, a subsidiary of the Islamic Development Bank, has played a key role in establishing a sharia-compliant market in the West African Economic and Monetary Union.

Blended finance can further mobilize private capital by improving scale and risk-sharing as concessional funding declines. However, persistent barriers — including weak institutions, limited first-loss capital, foreign exchange risk, insufficient project scale and poor project preparation — delay financial close and raise execution risk. Overcoming these constraints will require scalable blended finance structures and targeted risk mitigation tools such as credit guarantees and currency hedging.

Ultimately, stronger capital markets are a critical enabler of infrastructure investment, expanding the pool of available capital and supporting a larger, more resilient project pipeline.

Expanding access to capital alone is insufficient. Making infrastructure projects investable requires a shift in how projects are structured and presented. Bankability in Africa depends not just on project economics, but on a credible end‑to‑end framework for managing risk over the full life of an asset. The constraint is rarely the need for infrastructure. Rather, it lies in demonstrating how to mitigate political, regulatory and financial risks in environments where uncertainty remains elevated.

A critical requirement is resilience across political cycles. Investors prioritize business cases that support long‑term value creation over early cash flows that undermine full life-cycle returns. Projects able to demonstrate durability across changing policy regimes are better positioned to attract patient capital and a broader lender base.

Strong governance and regulatory stability are equally central to bankability. Predictable, transparent and durable regulatory frameworks reduce perceived risk and underpin investor confidence. In practice, long‑term capital is difficult to mobilize without a stable policy environment that allows returns to be assessed with confidence over multidecade horizons.

Currency risk remains a defining challenge. Many projects are financed in US dollars but generate revenue in local currency, exposing cash flows to exchange‑rate volatility. Addressing this mismatch through hedging, local‑currency financing or risk‑sharing structures is essential, particularly given investors’ need for certainty around dividend repatriation.

Ultimately, improving project bankability hinges on stronger alignment between stakeholders. Accelerating delivery will require deeper collaboration between governments and the private sector, including regionally coordinated policy frameworks that enable scale, early regulatory engagement to support projects across their full life cycle and greater openness to private participation. At the same time, public sector stakeholders must mobilize a wider pool of capital — including pension funds, development finance institutions and multilateral banks — while encouraging structures that balance financial returns with broader economic and social outcomes.

Africa’s infrastructure challenge is no longer about identifying needs or mobilizing interest; it is about execution, credibility and alignment. In the years ahead, capital will increasingly flow to markets that demonstrate policy stability and regional coordination, and to projects designed to withstand political and financial risks. Governments that act decisively to deepen capital markets, strengthen regulatory frameworks and unlock scale will attract investment. Investors, in turn, will reward transparency, bankability and long‑term value creation. The trajectory is clear: Africa’s infrastructure gap will close fastest where stakeholders move beyond diagnosis, align incentives and focus relentlessly on delivery.