Africa’s ambitious energy transition faces mounting risks as local currency shortages and reliance on foreign-denominated debt threaten the viability of new power projects. At the African Investment Forum (AIF) in Rabat, Morocco, ministers and financiers warned that without sustainable local-currency financing solutions, the continent risks building energy systems that investors cannot support and consumers cannot afford.
The African Development Bank (AfDB) estimates that Africa’s annual energy investment gap lies between $31 billion and $50 billion. Unlocking this scale of capital will require de-risking mechanisms that allow long-term private investment to thrive. Yet the mismatch between revenues collected in local currencies and debt obligations in foreign currencies continues to destabilise tariffs, weaken utilities, and discourage investors.
Wale Shonibare, AfDB Director for Energy Financial Solutions, Policy, and Regulation, stressed that financing African power projects in hard currency is unsustainable. “If consumers pay in local currency, then our financing must be in local currency or hedged accordingly,” he said, warning that unhedged foreign loans place unbearable pressure on governments and utilities.
Hydropower projects, with their long execution timelines, are particularly vulnerable. The proposed Grand Inga Dam in the Democratic Republic of Congo remains in limbo, a stark example of how currency risk can stall flagship projects. Demba Tandia, TCX Fund Regional Vice President for Sub-Saharan Africa, described local-currency risk as “the darkness that still remains.” He revealed that TCX and its shareholders—including the International Finance Corporation and the European Commission—are developing hedging and blended-finance tools, including a $1 billion facility with more than half earmarked for Africa, to shield projects from volatility.
During Mission 300 Day at the forum, ministers from Comoros, Guinea, Gambia, and Lesotho presented roadmaps to achieve universal electricity access by 2030. Gambia’s Minister of Petroleum and Energy, Nani Juwara, underscored the urgency of addressing currency mismatches, calling them the biggest challenge facing utilities across the continent. He highlighted incentives such as tax holidays, import-duty exemptions, and VAT waivers to attract renewable energy investment, while positioning Gambia as a stable and investor-friendly destination.
Panelists agreed that Africa must deepen domestic capital markets, expand hedging instruments, and strengthen regulatory frameworks to integrate both centralised and decentralised energy systems. Damilola Ogunbiyi, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for All, said Mission 300 is advancing an investor-ready energy transition, while William Asiko of the Rockefeller Foundation emphasised the importance of collective partnerships to deliver clean, reliable power to millions.
Kevin Kariuki, AfDB Vice President for Power, Energy, Climate & Green Growth, reinforced that Mission 300 will be underpinned by rapid investments in generation, transmission, distribution, and last-mile connectivity. “At the African Development Bank, we are committed to de-risking investments, mobilising institutional capital, and ensuring that Mission 300 delivers not just electricity, but millions of jobs, vibrant industries, and dignified livelihoods for our people,” he said.
Despite strong political will and emerging investor pipelines, experts cautioned that without viable local-currency solutions, Africa’s energy future remains precarious. The continent’s ability to meet electrification targets and sustain affordable tariffs will depend on whether governments and partners can resolve the currency challenge at the heart of its energy ambitions.