Reflections on the Mission 300 Africa Energy Summit

AVCA data shows that the Energy sector captured 41% of infrastructure deal volume between 2012–2023, and sustainable infrastructure deals have doubled from 66 deals (2012-2015) to 129 deals (2020–2023). How do you see these trends evolving in 2025, particularly regarding:

• The shift toward smaller, renewable-focused investments
• New financing models and partnerships
• Regional collaboration opportunities 

Rachel

The data you shared really confirms what we're seeing on the ground—that energy is really the backbone of infrastructure investments at the moment. And I think it's always been, and for very good reasons. The sector has captured about 40% of the deal volume in the past decade, and sustainable infrastructure investments have more than doubled.

As we look to 2025, some of the key trends that would shape the investment landscape, in my view, include the shift towards smaller renewable-focused investments. This is growing really fast. Just in Nigeria alone, I think we have estimated about $5 billion annually of potential investments going into smaller distributed solutions like mini-grids or embedded generation that we can have in partnership with the distribution companies.

These projects are easier to deploy, require less capital upfront, and can quickly bring power to the communities they aim to serve. They need to be augmented by energy storage and battery technologies, which are becoming more critical as renewables scale and grid needs balancing solutions. Also, with the rise of the carbon market, clean energy projects will attract climate-focused capital, further accelerating this quest for renewables.

However, what I would mention is that at the end of the day, you spend the same amount of resources in terms of human capital to deploy these projects. And scale is really key. So in how we do this, we're very particular about the location of where we set up those projects to ensure that there's a virtuous circle and that those projects not only catalyse micro-SMEs but also allow a community to grow in terms of trade, in terms of goods and services that they produce and really become an active participant in the national economy.

By doing that, as they grow and as the demand for more energy grows, then you have a scalable model that can ensure long-term sustainability. One thing also to note is that when the grid ever gets to those areas, there will be the question of being able to integrate those technologies with the grid. This is one point that as we continue to push in terms of decentralised solutions, we need to be mindful of and really looking long-term as to what our power landscape with all these mini-grids could look like being integrated at the grid level.

Regarding new financing models and partnerships, I did mention blended finance. This is also something we've heard a lot about that wasn't necessarily part of our mix a decade ago. It became crucial because of this decentralisation of projects, moving away from the grid where you can have the 400-500 megawatt type projects to much smaller projects where the economics would not work unless you are able to provide junior, concessional funding or philanthropic funds. And we know a lot of these decentralised projects have been relying on grants, etc.

Again, because of the scale of those projects and also because of the kinds of communities where those projects are built, the ability to pay is not necessarily there from the get-go. And as I mentioned, there's definitely a virtuous circle, but from the beginning, to ensure that the projects are financially sustainable, you often need to have that blended capital, that more risk-prone and patient capital to support the build-up of these projects and reduce the risk for investors overall.

I did mention the importance of having local pension funds and institutional investors to participate in this asset class and starting to really recognise infrastructure as a friendly asset class for them. Globally, this is what we see. A lot of the infrastructure sector has been built thanks to capital coming from local pension funds, given the tenor of those assets that are long-dated, and given the stability and almost annuity-like revenue model that we get from infrastructure projects. Generally speaking, it is a good match for pension funds to partake.

What was not appealing is the risk attached to it, and the risk, again, goes back to the regulatory framework and the overall macro framework. But at ARM-Harith, for example, we've been able to structure projects in a manner that de-risks them just from the experience that we've built over the years going through changes in regulation, changes in government, several devaluations, etc. So there are lessons that we've learned which enable us to structure, as I mentioned earlier, tailor-made solutions for those projects to sustain the volatility that we often see in our markets.

Lastly, when it comes to partnerships, the sovereign wealth funds are also expected to play a larger role. When we look at countries like Nigeria, Ghana, Kenya, they're currently exploring ways to deploy sovereign wealth fund capital into more infrastructure projects, recognising that sector as key to driving economic growth. Even in what we do on a daily basis, we're also really focusing on strengthening our partnership with sovereign wealth funds in addition to the local pension funds to ensure that we can unlock that capital to go into projects that we do.

And then regarding regional collaboration, there's a lot of talk about this and I often say that the ideas are great. The challenge really is in the execution of it. There are a lot of cross-border energy projects that we've seen. One of the first ones I came across decades ago was the West African Power Pool, for example. You also have the Southern African Power Pool, and they face many challenges. They could become more viable for large-scale renewable energy trade, but there's still a lot of work that needs to be done. Conversations are taking place, but I think with what's happening in every country, being able to sort it out nationally first and then have a regional strategy seems to be the way that most countries and regulators have approached this.

And it takes me to the second point, which is the African Continental Free Trade Area. Again, there was a lot of buzz when that came to be, but in tangible terms, it is still very difficult for capital, for people, for goods to flow across borders. Again, many people are working on how to make it easier, freer, and I believe it's the way for a continent-wide transformation, this sort of collaboration opportunities on projects. But the reality is there are different languages, there are different currencies, there are just a lot of differences that would need to be addressed, just like it was when you look at the European Union—they had to agree on a lot of those criteria. It requires a lot of work, but I don't think we can have a fundamental African transformation without having a free trade area, intra-African investment opportunities for all.

The collaboration with multilateral institutions continues to be critical. They've been there from the beginning. I think they have moved from a sort of senior lender position into a more de-risking type project partner, really understanding that their capital could be better utilised de-risking projects and attracting other institutional investors, particularly local investors, into projects to ensure the viability of those projects. So, again, I think they're doing a good job in understanding the power of junior capital to then attract more local investors into a project, having essentially a multiplication effect of their capital, which is really their value-add and additionality in that sector.

AVCA

Based on the summit discussions and your experience, what do you think will be the biggest opportunities and challenges for infrastructure investors in 2025? What should fund managers be preparing for? 

Rachel

Yes, there are a lot of opportunities. And I think one thing that would take us forward is true collaboration. And I think that's what I haven't seen as much as I would like to—collaboration between the private sector, collaboration between private sector and public sector, collaboration between local investors and international investors, because at the end of the day, we all want the same thing. However, we do not have the same expertise, nor the same risk appetite.

And by coming all together into projects, where everyone brings either capital or expertise at the right point in time in the project development phase and financing phase and operational phase—only this is the way we will be able to do more projects and do them at scale.

I was mentioning earlier that there's a lot of effort that comes into bringing those projects to life. And when we look at the larger projects, if we do one every five years, we've done great. This is not the way we will be able to continue to grow. We have to accelerate the pace of project delivery, and we have to accelerate them by having every single stakeholder within the value chain coming and supporting that building of projects by recognising when they need to step in or when they need to let somebody else step in.

The role of the private sector cannot be underestimated. The private sector must have a track record. It's funds like us that must have a track record to continue to have investors investing in us. So there is a certain rigour, there's a certain discipline, transparency, governance that comes into how we manage the funds that we are given, and we can see the impact and the delivery of those projects thanks to the expertise that fund managers like us have.

And I think we need more of those, not less. However, it continues to be a challenge for us to be able to attract the financing and funds that we need, especially as we play at the onset of projects. We bring equity into projects, meaning that we bring the capital that is needed to move from an idea or concept into business, a proper investment, and we call that bankability.

So at ARM-Harith, it's not just the capital that we bring. We bring all the expertise, as I was mentioning, in terms of structuring, in terms of de-risking projects, in terms of leveraging from our network globally and locally of partners that would come into projects alongside us to ensure that those projects are not only financially successful, but also sustainable and bringing the impact that they are meant to bring.

It's only because of the work that we do that you can now have a pipeline of projects that commercial banks, other debt funds, and other stakeholders who have a lesser risk appetite (because their capital is not meant for that) can now come and invest in. So we can recycle the capital and go back and work more effectively into the development and bringing those projects to bankability and so forth.

I would like to really see more capital going into equity, which is the riskiest part. And you know, there's always this risk and reward—the riskier, the higher the reward, and it goes hand in hand. And it works when you have people who know what they're doing. And so I hope that the industry comes together as one and has a collaborative approach among all the different players and stakeholders so that we can have more projects coming online that will be successful for the long haul, as opposed to doing it in the manner we've done, which is very sequential, with a long lead time in between.

AVCA

We like to end on a forward-looking note. What excites you most about African infrastructure in 2025, and conversely, what potential hurdles should the industry be ready to address? 

Rachel

So that's the beauty of what we do—everything needs to be done pretty much, right? So you have a blank page that will allow you to solve for energy access, to solve for transport and industrialisation, to solve for new markets emerging. And I'm talking about the carbon market, for example.

Africa has everything, honestly, to thrive. And for me, what excites me is that in the little part that we play, this is not just hope. We're actually delivering projects that are changing our communities and transforming the industry. The resources are not lacking. And of course, I mentioned the challenges before, they do exist. But again, when you have the know-how and the resources to still be able to build those projects in spite of the challenges, there's a learning that comes from that, there's a growth that comes from that, that fuels innovation because your focus is really to solve your problems.

And when you have everything to build, innovation is really what's going to enable the African continent to go farther and further than you would have otherwise been able to.

But for that, we need to—for me, energy access remains number one. There's no industry that can be built without reliable access to energy and affordable access to it. There's no mass transport programme that can be delivered without proper access to electricity. We talk a lot about electric mobility—we haven't seen that happen at scale. Why? Because we don't have electricity. So the focus really has to be on ensuring energy access.

And that's why the M300 is critical, so that we can start building those industries, leveraging from technology in order to bring not only energy, transport and industrialisation, but also create new markets—financial markets in terms of carbon credits, in terms of sustainability-focused funds, etc. Really leading—and we could be leading the way if we do it properly.

So that's what excites me, that potential that every day at ARM-Harith, we try to ensure is not just a hope, but that we deliver on the promises and the mission that we have.

I want to encourage people to, when we talk about Africa—and I know there has been fatigue, especially looking at a country like Nigeria, where we still have a majority of electricity being delivered via diesel generators, etc.—that can be changed very quickly. And I think the programme, Mission 300, is trying to address that. So there's hope for the future. And what could be, what has taken maybe two decades of hope, can be pretty much accelerated going forward and leveraging, as I mentioned, from technologies that are making this not only sustainable and good for the environment, but also very financially sustainable, rewarding, and positioning the continent to reap the benefit of this global climate transition and potentially lead it.

And so let's continue pushing the envelope. I encourage everyone in the sector to reach out to us. We love collaboration, as I mentioned, both with private companies and at the public level, to be able to continue to deliver those projects at scale.