Lighting Africa: Private Investment, Reliable Grids, Affordable Power for All

Africa’s energy challenge is no longer simply about generating more electricity. It is about building the systems that can deliver that electricity reliably, affordably and sustainably to the people and businesses that need it.

A new power plant cannot transform an economy if the grid cannot carry its electricity. A transmission line cannot solve the problem if distribution networks remain weak. And private investment will remain limited if utilities cannot pay their suppliers, regulations are uncertain, and currency risks can turn viable projects into financial liabilities.

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Africa’s energy future therefore depends on connecting the entire chain — from generation and transmission to distribution, finance and regional power markets.

The urgency is clear. The United Nations estimates that 655 million people globally still lack access to electricity, with 86 per cent concentrated in sub-Saharan Africa. Afrobarometer’s 2026 survey across 38 African countries similarly points to an enormous access deficit, with roughly 600 million Africans lacking reliable electricity access.

But access is only part of the story.

When Connection Does Not Mean Reliable Power

Being connected to a grid does not necessarily mean having electricity when it is needed.

Afrobarometer found that only 43 per cent of Africans surveyed enjoy electricity that works “most” or “all” of the time, while 41 per cent either have no connection or say their connection never works. In Zambia, fewer than one in ten respondents reported reliable electricity supply.

This reliability gap has profound economic consequences.

A 2026 study describing what it calls a “Reliability Paradox” found that 41 per cent of connected households receive less than four hours of electricity a day, while only 28 per cent meet World Health Organisation minimum energy-service standards.

The numbers reveal why the conversation must move beyond connections.

For a household, unreliable electricity affects lighting, refrigeration, communication and education. For a business, it can mean damaged equipment, interrupted production, higher operating costs and lost sales.

Electricity access creates the possibility of economic participation. Reliable electricity makes that participation productive.

The Grid Is the Missing Link

The scale of Africa’s infrastructure challenge is substantial.

The African Development Bank has estimated the continent’s annual infrastructure financing gap at roughly US$68 billion to US$108 billion across sectors, while its 2026 Annual Meetings context paper puts annual infrastructure financing requirements at US$184 billion–US$221 billion.

Energy is a major part of that requirement, particularly transmission and distribution.

This matters because Africa cannot close its electricity gap by building generation capacity alone. New solar farms, hydropower stations, gas plants and other facilities need transmission networks capable of moving power to where demand exists. Distribution systems must then deliver that electricity to homes, hospitals, farms and factories.

In other words, the grid is not an accessory to power generation. It is the infrastructure that makes generation useful. The challenge becomes even greater when countries attempt to trade electricity across borders.

Building an African Electricity Market

The African Single Electricity Market (AfSEM) seeks to connect national electricity systems through the continent’s five regional power pools: Southern, Western, Eastern, Central and North African.

The idea is economically compelling.

Countries with temporary or structural power surpluses could sell electricity to neighbours facing shortages. Regional markets could allow countries to make better use of existing generation capacity, diversify supply and reduce the need for every country to build sufficient reserve capacity independently.

There are already examples of regional electricity trading. The Southern African Power Pool has operated a competitive regional market, while the West African Power Pool has advanced interconnection projects across the region.

But a continental electricity market cannot exist on agreements alone.

It requires physical interconnectors, compatible grid codes, transparent tariffs, reliable settlement mechanisms and contracts that participants can trust and enforce.

Without those foundations, the vision of a continental electricity market remains larger than the infrastructure supporting it.

Making Power Investable

Perhaps the biggest obstacle to scaling private investment is the financial health of Africa’s electricity utilities.

Nearly 70 per cent of African utilities are estimated to be unable to recover their full operating costs, while more than half cannot cover basic operating expenses without government support. Technical and commercial losses are also high, reaching 20–40 per cent for many utilities and exceeding 50 per cent in some cases.

That means electricity can be generated and delivered through a network without generating enough revenue to sustain the system. Nigeria provides a recent illustration. Distribution companies recorded N201.9 billion in billing losses in the second quarter of 2026, with billing efficiency at 78.67 per cent.

These weaknesses make investors cautious.

Power projects frequently require equipment and financing denominated in dollars or euros, while utilities collect most of their revenue in local currencies. When a local currency depreciates, the cost of servicing foreign-currency obligations rises, even when the amount of electricity sold remains unchanged.

Investors may therefore seek dollar-indexed tariffs, government guarantees or other forms of protection. Such mechanisms can make projects bankable, but they can also shift currency risk towards consumers or public budgets.

The objective should not be to eliminate risk. It should be to allocate it transparently to the parties best positioned to manage it.

Mission 300 and the Access Push

There is nevertheless considerable momentum behind Africa’s electrification drive.

Mission 300, led by the World Bank and African Development Bank, has connected more than 50 million people across 40 countries, with almost US$15 billion committed and another US$4.5 billion in co-financing.

Tanzania and Ethiopia have recorded particularly significant connection gains, with 7.5 million and 4.6 million people respectively connected through the broader push.

Yet the next stage will require more than celebrating connection numbers.

Analysis by the Overseas Development Institute has cautioned that some of the reported acceleration in selected countries reflects programmes that began years before Mission 300, while some electricity sectors continue to face underlying structural difficulties.
That distinction matters because Africa’s remaining electricity challenge is becoming harder.

Reaching the Last Mile

The easiest connections are increasingly being made first.

Afrobarometer’s findings show a sharp urban-rural divide: 83 per cent of urban households are connected to the grid, compared with just 37 per cent of rural households.

Nearly one-quarter of Africans — about 23 per cent — rely on off-grid sources, with solar playing a dominant role.

This creates an important opportunity for distributed renewable energy.

For remote communities where extending conventional grids may be expensive, mini-grids and standalone solar systems can provide a faster route to electricity. But these solutions must be designed around what households and businesses actually need, including affordability, reliability and productive use.

The objective should therefore not be simply to count connections. It should be to ensure that electricity enables people to work, study, manufacture, trade and earn.

From Electricity Access to Economic Power

Reliable electricity is one of the foundations of industrialisation.

Manufacturers across Africa can spend 10–30 per cent of operating costs on backup power, while unreliable electricity can cost firms an estimated 5–20 per cent of annual sales.

Every improvement in reliability therefore has the potential to release productive capacity.

Reducing technical and commercial losses, improving utility finances, strengthening regulation and expanding regional electricity trading could create a virtuous cycle: healthier utilities attract investment; better networks reduce losses; reliable power supports businesses; growing economic activity strengthens demand and the ability to pay.

Private capital can then play a larger role.

But investors will not commit at scale simply because Africa has abundant sunlight, hydropower potential or unmet electricity demand. They invest when projects are bankable — when buyers are credible, regulations are predictable, currency risks are manageable, and transmission and distribution networks can deliver the electricity being sold.

That is why Africa’s energy transition must be understood as both an infrastructure agenda and a reform agenda.

The continent does not merely need more megawatts. It needs more reliable megawatts, stronger grids, financially sustainable utilities and integrated power markets.

The ultimate measure of success will not be the amount of capital announced or the number of power lines constructed. It will be whether electricity consistently reaches the homes, farms, hospitals and businesses that depend on it — and whether the resulting power system can attract investment without placing unsustainable costs on consumers or governments.

Africa has the resources to power its transformation.

The next task is to build the systems that make that power work.