INTERVIEW
Crowdfunding Renewable Energy solutions in Africa Crowdfunding is a financing method that uses the power of digital and mobile technology and the internet to pool resources from a large number of people, in varying amounts to fund projects. The routine thought that follows the mention of crowdfunding is a Gofundme or Kickstarter account entreating people to fund a charity project or a humanitarian cause. Caleb Adebayo is an Associate with the law firm of S.P.A Ajibade & Co.
T
he statistics of energy access and
has driven the move for cleaner energy forms
availability on the African continent is
like gas and renewable energy in recent times.
worrying, perhaps even alarming, and
Unlike fossil energy projects however, which
definitely a cause for continent-wide concern.
(while having their own peculiar challenges)
Only seven countries in Africa have energy
are a familiar terrain for investors, renewable
access rates of up to 50% (the lowest among
energy (RE) projects do not spell certainty
emerging markets across the world), and Nigeria,
of any kind. Apart from the fact that they are
the much peddled big brother of the continent
expensive to undertake and there are very few
is not one of them. The rest of the region has an
bankable RE projects on the continent, the
average grid access rate of about 20%, and even
immediate metrics and mathematics for investing
when there is access, there is never enough to go
in fossils look better than that of an RE project.
round.
Thus, accessing bank loans, project financing, syndicated loans, and equity for RE projects have
This means that on the average, about 625
proved a tad difficult. Yet seven of the ten most
million people in Africa do not have access
suitable countries for renewable energy potential
to energy. There is an increase in investments
are in Africa, so it is only a no-brainer that the
coming into Africa, and the infrastructure deficit,
continent should drive investment in that sector.
especially in the area of energy, is crippling these investment opportunities. Certainly, the continent
With the rising challenge of financing RE
is in a dire energy crisis that it needs to fix, and it
projects, there has been a foray into innovative
does have the energy resources it needs to fix it.
and alternative means of financing for which
While the quest for an energy-rich Africa is at
Private Equity (PE), Venture Capital (VC)
the front-burner of the discourse on economic
funding, Pension funds, Sovereign Wealth
development, there is side-by-side the global
funds, and Green Bonds have been explored. An
conversation on climate change, sustainability
alternative financing method that has not been
and clean energy; a constant reminder of the
explored as much though, is crowdfunding.
continent’s commitments to international
The global call to combat climate change is an enabling factor for tapping into the need for social good in crowdfunding RE projects.
10
treaties and various regional, and sub-regional
Crowdfunding is a financing method that uses the
agreements on environmental protection.
power of digital and mobile technology and the internet to pool resources from a large number
This means that Africa has to grapple with
of people, in varying amounts to fund projects.
development while putting sustainability into
The routine thought that follows the mention
consideration for every step of the journey. This
of crowdfunding is a Gofundme or Kickstarter
CR | September 2018
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