Private capital investors in Africa are successfully navigating a turbulent investment environment – shaped by global economic challenges and rapidly evolving regulations – and in the process, seizing exciting opportunities in the continent’s energy and infrastructure space.
According to a recent AVCA report, Understanding the Context – Africa’s Infrastructure Financing Gap (Report), Africa receives only 5% of global infrastructure investment, despite hosting 18% of the world’s population.
The report notes that between 2012 and 2023, private capital investors demonstrated a growing confidence in African infrastructure, deploying US$47,3 billion across 847 reported deals, and establishing new models for sustainable development across the continent.
The sector leading the way is Energy, which has attracted significant private sector investment to date, particularly in South Africa, with open access energy regimes evolving across the continent. The aim of such regimes is to open up private investment opportunities, increase grid reliability, and offer energy consumers greater value and more choice.
Other sectors necessary for economic growth, and in which there has historically been underinvestment, such as transport and logistics, and water infrastructure, are also beginning to attract private sector solutions to encourage the pace of development.
Energy
South Africa stands out for the rapid growth in private sector involvement in the energy space since the introduction of the Renewable Energy Independent Power Producer Programme in 2012. Growing investor confidence, market deregulation and a demand that exceeds available supply have led to the emergence of a competitive private power and trading market which has reshaped the way investors and heavy industry users participate in these sectors.
The South African government’s commitment to private sector participation and the liberalisation of the energy market has unlocked substantial foreign direct investment in the renewable energy sector. The UN Conference on Trade and Development noted in 2024 that South Africa’s renewable energy sector attracted US$16 billion in investments between 2020 and 2023 alone.
Over and above the rapidly growing bilateral power market – which was unlocked in recent years through the changes in licensing legislation – the Draft Market Code (Code), issued by the National Transmission Company South Africa (a subsidiary of Eskom) in April 2024, will assist in establishing a transparent, non-discriminatory trading platform based on a multi-market structure under the Electricity Regulation Amendment Act, which became effective in January 2025. The target commencement date of the Code is April 2026, with an open and competitive electricity market expected to be operational by 2031.
The increasing integration of renewable energy into the grid has led to substantial constraints, creating further opportunities for private sector involvement in electricity transmission. The recently announced invitation by the South African government – seeking private sector investment in electricity infrastructure – is expected to result in further private sector participation at the same time as reforms are being introduced.
Across Africa, governments are following suit and launching initiatives to harness private sector participation in the energy sector. This has resulted in private sector-driven, business-to-business power solutions that assist businesses to meet their decarbonisation goals and ensure a stable energy supply.
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​In Kenya, the country’s National Energy Policy 2025-2034, published in February 2025, focuses on developing the country’s ability to produce sustainable energy, and on improving energy access, affordability and security. A big part of this plan is the implementation of an open energy regime.
The Energy (Electricity Market, Bulk Supply and Open Access) Regulations 2024 were published last year to facilitate the opening of the electricity market, and to enable private sector investors to participate in the generation, transmission and distribution of electricity.
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The emergence of private transmission opportunities has resulted in the first transaction of its kind on the continent, a public-private partnership involving the development of two power transmission lines: the 400 kV Loosuk-Lessos line and the 220 kV Kisumu-Musaga line.
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Zambia also recently adopted an open access regime, which enables IPPs and large power consumers to engage in electricity trading by connecting to and utilising the electricity transmission and distribution networks, irrespective of the network’s ownership or operation. This new regime is anchored by the Electricity Act of 2019 and the Electricity (Open Access) Regulations 2024.
Transport and logistics infrastructure
Historic underinvestment in the maintenance of South Africa’s ports and rail has led to increased use of road transport for bulk logistics, which in turn has led to increased transportation costs and roads that are buckling under the strain. According to reports, as of 2024, these challenges are estimated to cost the South African economy approximately R1 billion per day in lost economic activity.
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The South African government is turning to the private sector to fund the infrastructure development, which is desperately needed.
For example, South Africa’s state-owned freight logistics company, Transnet’s PSP programme represents a significant opportunity for private participation in the country’s rail, port and logistics sectors. Opportunities for investment include those in port modernisation and efficiency. For example, the Durban Port Master Plan aims to attract R100 billion in private investments over the next ten years. Further opportunities exist in the rail network and rolling stock, large container development, and supply chain management.
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Private sector participation is also being sought for the development of logistics corridors to enhance regional connectivity across Africa.
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In both Kenya and Zambia, private participation in the public sectors is being pursued through legislative frameworks such as the Public
Private Partnerships (PPP) Act 2021, in Kenya and the Public-Private Partnership Act, 2023 in Zambia, to progress and develop complex infrastructure projects by addressing the enforcement of legal compliance and swifter project implementation.
There are growing numbers of infrastructure funds that are playing a significant role in driving the growth and development of infrastructure across Africa. These funds include African Infrastructure Investment Managers (AIIM), Helios Investment Partners, and Afri Fund Capital.
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Water infrastructure
In South Africa, government-procured water projects, as well as private sector solutions to water infrastructure needs, are emerging. At the forefront are new bulk water projects, including the construction of infrastructure such as pipelines, and privately procured water treatment facilities. The potential for private investment in this space is significant, offering investors the chance to contribute to the development and management of critical infrastructure.
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Across Africa, governments are implementing measures to facilitate private investment in the water sector through the PPPs model. For example, Kenya recently introduced the Water (Amendment) Bill, 2023, and Zambia published the National Water Policy in 2024, with both outlining plans to harness private investment to finance water sector projects.
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Bridging the gap
Amid challenging market conditions, private investors are stepping up to bridge critical funding gaps, channelling much-needed capital into initiatives that fuel growth and deliver significant social and economic benefits for the continent.
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Simpson and Clüver are Partners | Bowmans
