How to attract private sector capital in Africa’s energy sector

In a continent where energy access is crucial for economic growth and development, attracting private sector investment into the energy sector has been a challenge. However, there is a growing recognition that the local private sector can play a significant role in this space. CNBC Africa recently interviewed Nicholas Kiiza, Head of Power & Infrastructure at Stanbic Bank Uganda, to discuss how the private sector can be incentivized to invest in the energy sector. Kiiza highlighted the importance of building capacity within the private sector to enable them to participate in energy projects. He emphasized the need for developing corporate governance structures and providing knowledge and expertise to SMEs to help them access financing for their projects. By strengthening these foundational elements, the private sector can be better positioned to engage in the energy sector. One key aspect discussed in the interview was the role of financial institutions beyond traditional banking. Kiiza pointed out that private equity firms are increasingly showing interest in investing in the energy space, providing patient capital in the form of equity to support businesses in attaining sustainability. Banks like Stanbic can complement this investment by offering debt financing, creating a holistic financial ecosystem that supports energy projects. The conversation also delved into Stanbic Bank's early involvement in Uganda's oil and gas sector and its subsequent foray into the energy sector. Kiiza highlighted the bank's commitment to driving growth in Africa and supporting the country's energy aspirations. By engaging in the entire value chain of the energy sector, from major corporations to smaller suppliers, Stanbic aims to catalyze transformation and foster private sector participation. Looking ahead, Kiiza shared insights into the current energy market landscape, noting that there is a growing interest in renewable energy and independent power production. While specific deals were not disclosed, he mentioned that there are several expressions of interest and innovative initiatives taking place in the sector. Overall, the interview emphasized the need for collaboration between public and private entities to unlock the full potential of the energy sector in Africa. By building capacity, fostering financial innovation, and engaging in strategic partnerships, the private sector can become a driving force in addressing the continent's energy challenges and fueling sustainable development.