What is it about?

Africa’s electricity insecurity issues are getting worse. However, there has been significant foreign direct investment (FDI) absorbed by the renewable electricity generation (REG) industry in the last twenty years. To date, the impact of FDI on REG in Africa has yet to be investigated. This study thus empirically examines REG determinants with a special focus on FDI in forty African countries between 2000 and 2019.

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Why is it important?

Importantly, we find compelling evidence that FDI inflows directly and indirectly limit, or even impede, renewable electricity generation development. What’s more, Africa’s population growth undermines the output of green power. However, the encouraging result is that raising awareness in Africa of renewable energy boosts renewable electricity generation.

Perspectives

Based on the obtained results of the paper, we recommend a gradual transition from lax environmental laws towards more stringent measures in Africa. Also, renewable energy investors could be interviewed to understand what would be desirable to improve the green investment environment. We understand that poverty could force many countries to neglect renewable energy development and instead open up to FDI that supports polluting industries. However, if African regimes were serious about fighting corruption, they would expand their national income resources, and poverty—the main source of problems—could be mitigated substantially.

Ahmed Rashed
University of Malaya

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This page is a summary of: Determinants of Renewable Electricity Generation in Africa, Africa Review, September 2022, Brill, DOI: 10.1163/09744061-tat00006.
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