Introduction
Africa is a continent of immense natural wealth, yet it remains the most energy-poor region in the world. Despite possessing vast reserves of solar, hydro, wind, and geothermal energy, over 600 million Africans—nearly half the continent’s population—lack access to electricity. Even in urban centres like Lagos and Johannesburg, businesses and households rely heavily on expensive, polluting diesel generators due to unreliable grid power.
A recent report by the Africa Finance Corporation (AFC), State of Africa’s Infrastructure Report 2025, reveals a troubling trend: off-grid and self-generated electricity in Lagos State alone has surpassed Nigeria’s entire grid-connected capacity. This phenomenon is not unique to Nigeria—South Africa and other major economies are experiencing similar shifts. While off-grid solutions provide temporary relief, they highlight a deeper crisis: Africa’s centralized power systems are failing to meet demand, stifling economic growth and industrial competitiveness.
This article explores the root causes of Africa’s energy crisis, the implications of the growing off-grid economy, and the urgent reforms needed to unlock the continent’s vast energy potential.
The state of Africa’s energy access: A continent in the dark
Despite global commitments to universal electricity access by 2030, progress in Africa has been painfully slow. The AFC report warns that if current trends persist, the number of Africans without electricity may remain unchanged by 2030, contradicting the African Development Bank (AfDB) and World Bank’s goal of connecting 300 million people through grid expansion and off-grid solutions.
Key Statistics on Africa’s Energy Deficit:
- Per capita electricity consumption in Africa is declining for the first time in two decades.
- Between 2013 and 2023, electricity generation grew at less than 2% annually, far below population growth (2.42%) and GDP growth (3%).
- In 2024, Africa added only 6.5GW of utility-scale power, compared to 18GW in India and 48.6GW in the U.S.
- Lagos State’s off-grid capacity (19GW) exceeds Nigeria’s entire grid output (4-5GW).
These figures underscore a harsh reality: Africa is losing ground in the global energy race. While other regions rapidly expand generation capacity, Africa remains stuck in a “low-energy equilibrium”, where even those connected to the grid suffer frequent blackouts and inadequate supply.
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The rise of off-grid and captive power: A symptom of systemic failure
The AFC report highlights a paradox: while off-grid and captive power systems demonstrate private-sector innovation, they are ultimately a last resort—not a sustainable solution.
- Nigeria: A nation powered by generators with over 40% of Nigerian businesses relying on diesel generators, spending $14 billion annually on fuel. Industrial users invest in captive gas and diesel plants (20MW–200MW) due to unreliable grid supply. Also, self-generated power costs 2–4 times more than grid electricity, eroding business competitiveness.
- South Africa: The embedded generation boom is a challenge. After removing licensing requirements for embedded generation in 2022, private solar capacity surged from 23MW in 2019 to 4.5GW by 2023. In 2024 alone, over 1GW of private solar was added, driven by crippling Eskom blackouts.
The hidden cost of off-grid reliance
While solar rooftops attract global attention, thermal (diesel/gas) self-generation dominates industrial use but is rarely tracked in official statistics. This fragmented energy landscape increases costs for businesses and households, deepens carbon emissions (diesel generators are highly polluting), and widens inequality, as only wealthier firms and individuals can afford alternatives.
As the AFC notes, “Going off-grid is not a low-cost solution—it’s a last resort.”
Why Africa’s grids are failing
The continent’s energy crisis stems from decades of underinvestment, poor policy, and inefficiencies:
- Chronic Underfunding in Transmission & Distribution remains a key challenge as most investments focus on generation (power plants), while transmission and distribution networks remain dilapidated. Nigeria, for instance loses over 40% of generated power due to technical and commercial losses (theft, unmetered users).
- Over-Reliance on Centralized Systems as many African utilities operate vertically integrated monopolies, stifling competition and innovation, whilst Independent Power Producers (IPPs) face bureaucratic hurdles, delaying projects for years.
- Weak Regulatory Frameworks as tariffs are often below cost-recovery levels, making utilities financially unviable (e.g., Nigeria’s electricity subsidies). Also, policy inconsistency scares off investors (e.g., sudden removal of solar incentives in some countries).
- Stranded Energy Resources because Africa that has the world’s largest untapped hydropower potential (only 10% utilized), enough solar potential to power the planet and vast geothermal reserves in East Africa’s Rift Valley, still operates with weak infrastructure and financing gaps that leave these resources unexploited.
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The way forward: How Africa can fix its energy crisis
To escape the “low-energy equilibrium”, Africa must pursue urgent, bold reforms:
- Massive grid modernization and expansion is needful through Public-private partnerships, and this (PPPs) should upgrade transmission networks to reduce losses. Also, regional power pools (like the West African Power Pool) must be strengthened to enable cross-border electricity trade.
- Accelerate renewable energy investments by scaling up solar, wind, and hydro: Morocco’s Noor Ouarzazate Solar Plant (580MW) and Kenya’s Lake Turkana Wind Farm (310MW) show what’s possible. Also, explore Mini-grids for rural electrification where companies like M-KOPA and Zola Electric are proving off-grid models work—but need policy support.
- Energy market liberalization through the unbundling state-owned utilities to allow private sector participation (as seen in South Africa’s embedded generation boom). In Nigeria, the electricity Act 2023 liberalises the sector and promotes renewables. This Act now allow States to manage their own electricity market. Only about 12 States have concluded plans to take advantage of this new Act. Then, there is need to implement cost-reflective tariffs to attract investors while protecting low-income consumers via targeted subsidies.
- Leverage gas as a transition fuel with over 620 trillion cubic feet of gas reserves, Africa should use gas-to-power plants to stabilize grids before full renewable transition.
- Strengthen policy and governance with clear, stable regulations are needed to attract long-term investments, while strict anti-corruption measures must be enforced in utility management.
Conclusion
Africa’s energy future hangs in the balance. The continent has all the resources needed to achieve energy independence, yet systemic failures keep millions in darkness. The off-grid boom is not a solution—it’s a distress signal. Without urgent grid investments, policy reforms, and private-sector mobilization, Africa risks perpetuating energy poverty, stifling industrialization, and falling further behind in global competitiveness.
The AFC’s warning is clear: If current trends persist, Africa’s electricity access will stagnate until 2030 and beyond. The time for action is now. African governments, investors, and development partners must prioritize energy infrastructure as the backbone of economic transformation. The lights may be flickering today, but with the right reforms, Africa’s energy future can still shine bright.
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Prof. Sarumi is the Chief Strategic Officer, LMS DT Consulting, Faculty, Prowess University, US, and ICLED Business School, and writes from Lagos, Nigeria. He is also a consultant in TVET and indigenous education systems, affiliated with the Global Adaptive Apprenticeship Model (GAAM) research consortium. Tel: +234 803 304 1421, Email: leadershipmgtservice@gmail.com.
