Staff Climate Notes

Harnessing Renewables in Sub-Saharan Africa: Barriers, Reforms, and Economic Prospects

By Kaihao Cai, Thibault Lemaire, Andrea Medici, Giovanni Melina, Gregor Schwerhoff, Sneha D Thube

October 9, 2024

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Kaihao Cai, Thibault Lemaire, Andrea Medici, Giovanni Melina, Gregor Schwerhoff, and Sneha D Thube. "Harnessing Renewables in Sub-Saharan Africa: Barriers, Reforms, and Economic Prospects", Staff Climate Notes 2024, 005 (2024), accessed December 21, 2024, https://doi.org/10.5089/9798400290107.066

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Summary

Sub-Saharan Africa needs to significantly accelerate its electricity generation. While hydropower is prominent in some countries, solar and wind power generation has lagged other world regions, even though sub-Saharan Africa has some of the most favorable conditions. A mix of domestic and external financing can increase both renewable electricity generation and GDP. In a scenario where about $25 bn in climate finance flows are allocated annually to renewable energy, renewable electricity production could be up to 24 percent higher than in a scenario excluding this financing, and annual GDP growth would be boosted by 0.8 percentage point on average over the next decade, accompanied by stronger labor demand in the electricity sector. Policies can help catalyze climate finance. An ambitious package of governance, business regulations, and external sector reforms is associated with a 20 percent increase in climate finance flows and a 7 percent increase in electricity generation over five years. In addition, implementing climate policies is linked to increases in green foreign direct investment announcements and green electricity production.

Subject: Climate finance, Climate policy, Commodities, Electricity, Environment, Renewable energy

Keywords: Africa, Climate finance, Climate policies, Climate policy, East Africa, Economic development, Electricity, Electricity generation, Global, Harnessing renewable, IMF analysis, IMF staff Climate, IMF staff Climate note, Market reforms, Part of the International Monetary Fund, Renewable energy, Sub-Saharan Africa

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