- SB Morgen said the continent’s energy transformation must begin from within following Power Africa’s shutdown
- It said Africa faces electrification risks with Power Africa exit
- SBM said African governments must reduce dependence on foreign aid
SB Morgen (SBM) Intelligence says the shutdown of Power Africa, a United States’ initiative launched in 2013 by former US President Obama to improve electricity access across Africa, underscores the need for Africa to begin its energy transformation journey from within.
In its latest report, titled, ‘Power Africa’s Demise: A Wake-Up Call for African Energy Independence,’ seen by TheRadar, SBM noted that the announcement of the shutdown of the programme by President Donald Trump in February 2025 sent shockwaves through the energy and development sectors.
It noted that though some remaining externally-funded projects may survive under different government agencies, the programme’s termination signals a departure from previous commitments to long-term energy infrastructure development.
The research and strategic communications consulting firm stated that with the development, Africa must rethink its energy future and leverage regional cooperation, diversified financing, and homegrown solutions.
“It underscores the fragility of donor-driven initiatives and the pressing need for African countries to proactively shape their energy future, leveraging regional cooperation, diversified financing, and homegrown solutions to bridge the continent’s persistent electricity gap,” it stated.
Africa faces electrification risks with Power Africa exit
The report further highlighted the impact of the initiative on electrification efforts in many African countries.
It said the initiative’s model aided its expansion from six initial countries—Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania— to over 30 countries.
SBM said with the exit of Power Africa, many African countries face electrification risks, saying the initiative was more than just an aid programme, but catalysed transformative change in Africa’s electricity landscape.
“For millions of Africans who are still living without reliable electricity, Power Africa represented a bridge to modernity.
“The sudden withdrawal of US funding threatens to slow electrification efforts, particularly in countries where Power Africa-backed initiatives were deeply embedded in national energy policies.
“Many African governments leveraged the programme to negotiate power purchase agreements, attract investors, and implement off-grid solar solutions.
“The absence of continued technical support and financing leaves an urgent void that must be filled to avoid setbacks,” it noted.
Private sector will also feel the pinch
The report added that power sector will also feel the heat following Power Africa’s exit, as it was critical to de-risking investments in Africa’s power sector through a combination of financial instruments, technical assistance, and policy support, helping investors navigate regulatory hurdles, currency risks, and infrastructure deficits, among others.
It stated that the exit may affect investor confidence in Africa’s energy sector, requiring the continent to strengthen local investment environments, develop alternative financing solutions, and build stronger regional energy markets to maintain investor interest and ensure continued progress in closing the electricity access gap.
The report noted, “Without this backing, the risk-reward equation changes significantly.
“Many investors—particularly those from the US—may hesitate to commit capital to African energy projects due to heightened concerns over regulatory inconsistencies, currency volatility, and infrastructure deficits.
“This loss of confidence could have cascading effects across the sector, affecting independent power producers, clean energy startups, and large-scale infrastructure ventures.”
Need to reduce dependence on foreign aid
SBM stated that Power Africa’s exit offers African governments the opportunity to rethink project funding and to reduce dependence on foreign aid by strengthening local investment mechanisms and enhancing regional power cooperation.
It warned that replacing the US with another foreign power to fund electrification in the continent is not a sustainable solution.
It said, “…relying on external actors to fill the void left by Power Africa is not a sustainable solution. It risks perpetuating the very cycle of dependency that has historically hindered Africa’s energy development.
“The continent must resist the temptation to replace one set of foreign backers with another and instead focus on building internal capacity and self-sufficiency in energy production and financing.
“Yet, while disruptive, the end of Power Africa is also an opportunity for the continent to rethink its energy financing and governance approach.
“African governments must move beyond dependency on external funding and prioritise homegrown solutions by developing robust policy frameworks, enhancing regional cooperation, and leveraging alternative financing mechanisms.”
It recommended expanding regional power pools like the West African Power Pool (WAPP) and Southern African Power Pool (SAPP), while exploring alternative financing through green bonds, sovereign wealth funds, and diaspora investments.
It also called on African governments to partner with development finance institutions like the African Development Bank (AfDB) and regional blocs such as ECOWAS and the African Union to facilitate coordinated energy initiatives tailored to Africa’s unique challenges.
AfDB approves $500m loan to boost electricity access in Nigeria
Meanwhile, TheRadar earlier reported that the Board of Directors of the African Development Bank (AfDB) Group approved a $500 million loan to Nigeria to finance the first phase of the Economic Governance and Energy Transition Support Programme (EGET-SP).
According to a statement by the group on Wednesday, July 31, the new programme aims to accelerate the transformation of the country’s electricity infrastructure and improve access to cleaner sources of energy.
