Africa needs annual investment of $40bn on energy for electricity – AfDB

.Says Nigeria’s economy to decelerate, average 3.2% by 2023

The African Development Bank (AfDB) says Africa needs an annual investment of $32 billion to $40 billion along the energy value chain to achieve universal access for electricity by 2030.

The AfDB’s African Economic Outlook 2022 unveiled at the Bank’s Annual Meetings on Thursday in Accra, Ghana, said the findings were done under the Bank’s New Deal on Energy for Africa.

The outlook revealed that a total annual climate financing gap for energy under the New Deal stood at $17 billion to $25 billion.

It said the continent’s large economies like Egypt, Nigeria and South Africa accounted for about 33 per cent of the gap.

The outlook said about $15.5 billion, which represented 26 per cent of the total climate finance inflows to Africa, were channeled to the energy sector between 2019 and 2020.

It said despite energy being the most funded sector on the continent, resources mobilised so far were dwarfed by Africa’s energy investment needs.

The outlook said developed countries should demonstrate political will to address climate adaptation and mitigation challenges in developing countries.

It noted that the developed countries would achieve this by honouring their commitment to provide 100 billion dollars annually to developing countries to support climate action.

It said the Special Drawing Rights (SDRs) amounts allocated to developed countries should be channelled to African countries through the AfDB or African Development Fund (ADF).

The outlook said this would ensure greater leveraging to support climate resilience and just energy transition on the continent.

The AfDB Report also revealed that the Nigerian economy will grow by an average of 3.2 per cent between 2022 and 2023 amid low oil production and rising insecurity, DailyTimes gathered.

AfBD said this in its African Economic Outlook 2022 report released on Wednesday at its ongoing Annual General Meeting (AGM) in Accra, Ghana.

In the report, AfDB said growth in the West African region was driven by Nigeria, the region’s largest economy.

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“Average growth in the region stood at 4.3 per cent in 2021 and is projected to remain strong at 4.1 per cent in 2022,” the report reads.

It said Nigeria’s GDP would grow by 3.4 per cent in 2022 and 3 per cent in 2023, representing an average of 3.2 per cent in two years, despite the rising food, diesel and gas prices and persistent supply disruptions amplified by the Russia–Ukraine conflict.

The report further showed that the Nigerian economy would benefit from the high oil prices, recovery in the service and manufacturing sector, and government policy support for agriculture.

“Nigeria’s growth was led largely by services, partly offsetting the contraction in oil output,” it adds.

“Growth will decelerate, averaging 3.2% during 2022–23, due to persistently low oil production and rising insecurity. Inflation is projected to remain elevated at 16.9% in 2022 and stay above pre-pandemic levels in 2023, fueled mainly by rising food, diesel, and gas prices and persistent supply disruptions amplified by the Russia–Ukraine conflict.

“Capital inflows are projected to recover, while oil exports are projected to increase slightly. The benefit of a forecast positive oil price shock on exports may, however, be partly offset by a weak output effect due to lower oil production, stoked by infrastructure deficiencies and rising insecurity.

“The projected marginal current account surplus of 0.1% of GDP in 2022 could turn into a deficit of 0.2% in 2023. Improved revenue collection will help narrow the fiscal deficit to an average of 4.5% of GDP. Public debt is targeted to reach 40% of GDP by 2024 on fresh borrowing.

“The headwinds to the outlook may be exacerbated by rising insecurity and policy uncertainty underpinned by reversal of initially planned removal of subsidies on premium motor spirit a year before the 2023 elections.”

The report urged Africa to apply the policy of boosting vaccination rates, cautious monetary policy, and increase investment in the healthcare system.