African economies need to spend one-third of their GDPs by 2030 to meet renewable-energy SDGs, analyst says
Frontier economies, mostly located in Africa, would need to spend one-third of their GDP by 2030 to achieve renewable power generation goals under the Sustainable Development Goal (SDG) scenario, compared with about 11% of GDP for other emerging markets and 4% for G7 economies, credit rating agency S&P Global president Yann Le Pallec has pointed out.
“We need to address the transition and adaptation financing gap in low-income countries, which, in our view, is a major issue. Absent a strong global mobilisation from all stakeholders, the financing gap will continue to grow,” he said on June 4 at the 2025 S&P Global Ratings' South Africa Conference, in Johannesburg.
He noted that Africa remained hugely exposed to the climate finance gap.
“African countries are the most exposed to physical risks, and no successful global energy transition can happen without them. Failure to address transition and adaptation – as well as the broader SDGs – could, over time, undermine global financial stability,” he said.
Pallec pointed out that private-sector mobilisation was a key cornerstone to accelerate the move towards SDGs and net-zero emission goals, but that African countries were already falling significantly behind targets.
“The presidency of the G20 allows South Africa to showcase their push for innovative solutions to debt and climate challenges. South African banks have actively engaged in local currency green issuances over the past two years, with FirstRand, Standard Bank, and Absa being the most frequent issuers,” he noted.
Pallec noted the Rwanda Development Bank’s issuance of its inaugural bond in the form of a sustainability-linked transaction with credit enhancement features in collaboration with the World Bank.
“In September 2023, our second-party opinion concluded that its performance indicators are aligned to sustainability-linked bond principles, as the bank strives to improve [environmental, social and governance] practices and increase lending to women-led small and mid-sized enterprises and affordable housing,” he said.
Pallec noted that, amid all the noted challenges and opportunities, success for South Africa and the continent at large could only be achieved through strong leadership, multilateralism and cooperation.
“This is where we believe multilateral lending institutions – and the continent has a wealth of those – will play an increasingly important role and will probably act as catalysts for more intra-African trade and the build-up of stronger African capital markets,” he said.
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