Energy
Africa needs early-stage risk capital for energy projects
While major private-market transactions surge across Africa, fundraising for investment funds hits a multi-year low, leaving critical early-stage energy projects starved of risk capital.
Key points
- Africa's private-market transactions reached $19 billion in the third quarter of 2026, according to Stears Intelligence.
- Fundraising commitments to African-focused investment funds fell to $366.5 million, the weakest third-quarter figure since 2020.
- Energy and utilities accounted for $8.3 billion in disclosed transaction value, dominated by large oil-and-gas deals and refinancing.
What happened
Africa’s private-capital market recorded significant transaction values in the third quarter of 2026, driven largely by large-scale deals and corporate refinancing. According to Stears Intelligence, tracked transactions reached $19 billion, marking a 57 percent increase compared to the preceding quarter. However, data compiled by Stears shows that fundraising for investment funds dropped sharply during the same period, with investors making only 52 commitments worth a disclosed $366.5 million. This represents the lowest third-quarter fundraising figure since 2020, with just 21 funds receiving commitments.
Energy and utilities made up $8.3 billion of the total recorded transaction value. Six oil-and-gas transactions contributed $7.3 billion, heavily influenced by large corporate actions such as NNPC’s $4.5 billion refinancing, which constituted nearly a quarter of the quarter's total disclosed transaction value. In contrast, renewable generation recorded 18 transactions but a modest $310 million in disclosed value, reflecting smaller and more fragmented project sizes compared to established hydrocarbons.
The early-stage funding gap
While capital remains available for mature assets with hard-currency revenues and proven reserves, early-stage energy projects face severe financing constraints. Before a power plant, transmission line or gas-processing facility can secure construction debt, developers must fund feasibility studies, engineering designs, and regulatory approvals. Conventional lenders typically enter only after these risks are mitigated.
Private credit grew during the quarter, accounting for 30 percent of recorded transactions and appearing in 97 deals. While longer-term loans support growing companies, debt instruments cannot assist projects that have not yet reached bankability. Without equity willing to absorb initial uncertainty, many viable projects fail to progress from concept to construction.
Why it matters
For Nigeria and the wider African continent, the scarcity of early-stage risk capital constrains development across gas processing, mini-grids, and embedded power. International bodies have underscored the scale of the challenge; a 2023 International Energy Agency study estimated that Africa's annual energy investment must exceed $200 billion by 2030, requiring $28 billion in concessional finance to mobilise $90 billion in private clean energy investment.
Furthermore, structural financing costs compound the difficulty. According to an IRENA analysis, high costs of capital driven by perceived risks place a heavier financing burden on African renewable projects compared to other regions. For policymakers and investors, bridging this gap requires targeted risk-sharing mechanisms, technical preparation grants, and local-currency financing rather than relying solely on high-value transactions for mature assets.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
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Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
