Strategic trade reforms can unlock Africa’s renewable energy potential, experts say.
Africa’s renewable energy sector is brimming with potential, yet it remains largely untapped due to existing trade barriers. A recent discussion at the 2nd Africa Renewable Energy Manufacturing Initiative (Africa REMI), hosted by Sustainable Energy for All (SEforALL), highlighted the critical need for policy reforms to foster renewable energy manufacturing across the continent. Experts emphasized that strategic adjustments in trade policies could significantly accelerate Africa’s renewable energy transition, opening new avenues for trade and investment.
The Role of Trade Policies in Renewable Energy
Trade policies play a crucial role in the development of renewable energy manufacturing. Clovis Freire, Chief, Commodity Research and Analysis Section, Commodities branch, UN Trade and Development, underscored the importance of coherent trade strategies that address issues beyond the obvious, “Trade agreements should go beyond extraction and access to the critical energy transition minerals. At the core of these agreements should be structural transformation and economic diversification to ensure mineral-rich countries are also able to produce the technologies,” he said.
Current Challenges Facing Africa
Despite the promising outlook, Africa faces several challenges in scaling up its renewable energy manufacturing. Expertspointed out that existing trade barriers, including tariffs and non-tariff measures, limit the competitiveness of African manufacturers. Remedies could include exemptions and reduced rates. Matthew Cullinan- CEO, Atlantis Greentech Special Economic Zone, South Africa, said, “The South African Renewable Energy Masterplan takes a value chain approach for technologies, including solar and wind, to assess what capacities exist and what can be developed in South Africa through a range of interventions. It sees a compelling role for Special Economic Zones.”
Fenwicks Musonye, Deputy Director, Energy Efficiency, Energy Efficiency, Energy and Petroleum Regulatory Authority, Kenya, echoed these concerns, noting that Africa’s limited participation in global supply chains hinders the continent’s ability to compete on a global scale. “To improve local manufacturing, we need to look at three aspects. First, improving trade with neighbors. Second, facilitating movement and access to capital and third, technical capacity and harmonization of regional standardization to enable trade and catalyze demand,” Musonye said, emphasizing the need for policy coherence and regional cooperation.
Strategic Solutions for Growth
To overcome these challenges, experts recommend several strategic solutions. Teniola T. Tayo, a Trade Policy Fellow, AfCFTA, highlighted the need for capacity building and technological transfer. These investments would not only bolster the local economy but also position Africa as a key player in the global renewable energy market.
Sylviah Mwaura, Senior Associate, GreenMax Capital Advisors, emphasized the importance of regional integration and the need to open up avenues to capital. “E-mobility enterprises are at a nascent stage and face significant working capital requirements given the terms of payment with trade partners. Dedicated financing facilities can help to manage cash-flows, as well as offer third-party guarantee facilities to unlock local capital,” she explained. Mwaura also called for the removal of unnecessary trade barriers to facilitate the flow of goods and services within the continent. “Africa Policy Research Institute (AfCFTA) addresses the market size issue by promoting Africa as a single market with production being able to access different markets with gradually reduced tariffs,” said Tayo.
Fostering South-South Cooperation
One casestudy highlighted during the dialogue showed the potential of regional cooperation. The cross-border Special Economic Zone (SEZ) between the Democratic Republic of the Congo (DRC) and Zambia aims to capitalize on the two countries’ complementary reserves of critical minerals to localize segments of the battery and electric vehicle value chain. A grassroots approach may be necessary to evaluate existing capacities, investment climates, and trade policy frameworks to identify synergies across sectors like automotive and renewable energy, starting at the sub-regional level and expanding continent-wide. Talking on the topic, Loving Asibey Koranteng, Chief Investment Officer, SolarTaxi, Ghana, said, “The high cost of trade of products and components across borders within Africa needs to be addressed to facilitate the development of regional manufacturing supply chains and make electric mobility solutions more affordable for end-consumers.”
The Path Forward: Collaboration and Investment
The path to unlocking Africa’s renewable energy potential lies in collaboration and investment. Africa stands at a pivotal moment in its renewable energy journey. By implementing strategic trade reforms and fostering regional cooperation, the continent can overcome existing barriers and unlock its vast potential in renewable energy manufacturing. This, in turn, could pave the way for enhanced trade and investment opportunities, benefiting both Africa and its global partners.
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