Gulf investors seen likely to keep funding Africa renewable energy despite the Iran war

Middle Eastern sovereign wealth funds are poised to maintain their substantial renewable energy investments in Africa despite regional tensions stemming from the Iran conflict, according to industry analysts tracking cross-continental investment patterns.

Gulf investors have directed more than $101.9 billion into Africa’s renewable energy sector through the end of 2024, with the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, and Bahrain leading these capital flows, according to a recent Clean Air Task Force report. This investment has predominantly concentrated in North Africa, Southern Africa, and parts of East Africa, while West African nations have attracted comparatively less funding.

“Africa remains one of the few regions where demand growth is unequivocal,” explains Matthew Tilleard, chief executive of CrossBoundary Energy, a Nairobi-based developer and operator of renewable energy projects. “Short-term shocks may delay individual transactions, but the biggest infrastructure opportunities require a long-term view of risk and value.”

The strategic rationale behind this continued investment is compelling. Approximately 600 million Africans still lack electricity access, while millions more contend with unreliable power supplies. This persistent energy deficit has prompted African governments to increasingly court private investment for solar, wind, and hybrid power projects to expand generation capacity without further straining public finances.

For Gulf investors, Africa represents an attractive opportunity to diversify beyond traditional oil and gas revenues. “Ultimately, Gulf investments in Africa tend to be driven by pragmatic national interests and strategic returns,” notes Louw Nelson, political analyst at Oxford Economics. “There is currently a significant amount of energy investment underway across Africa, which are long-term projects that have been years in the making, so we don’t anticipate major disruptions.”

These renewable energy investments align with broader economic diversification strategies among Middle Eastern nations as they adapt to global shifts toward cleaner energy sources. Many Gulf countries are actively repositioning their economies for a future less dependent on fossil fuels, with African renewable projects forming a key component of this transition.

Joel Okanda, an energy and development analyst, suggests the recent disruptions to oil and gas shipments due to the Iran conflict might actually strengthen the case for renewable investment, highlighting the vulnerability of traditional energy supply routes.

“These companies, many of them state-owned, hold significant capital but also understand that the world is gradually transitioning away from fossil fuels,” Okanda explains. “Investing in renewable energy allows them to diversify their portfolios and position themselves for the energy systems of the future.”

Africa’s strategic importance extends beyond just energy generation. The continent sits at the nexus of several critical global economic shifts, including the clean energy transition and growing demand for minerals essential to high-technology manufacturing. Countries rich in cobalt, lithium, and other critical minerals have become particularly attractive investment destinations.

“For investors, renewable power projects can provide strategic access to industries beyond electricity generation,” notes Tilleard. “Power plants built to supply mines or large industrial operations can position Arab investors close to supply chains for minerals used in batteries and other technologies.”

Despite the overall positive outlook, investment patterns remain uneven across the continent. Perceived risks, including currency volatility and policy uncertainty, continue to influence investment decisions, particularly regarding West Africa. Several countries in the region have experienced political instability in recent years, creating a more challenging environment for long-term infrastructure investment.

“Generating power is only one part of the equation,” Okanda points out. “You also need transmission systems and a functioning electricity market where the electricity can actually be sold and paid for.”

As Africa’s urbanization accelerates and its manufacturing base grows, the continent’s energy demands will continue expanding, creating ongoing opportunities for Gulf investors seeking long-term returns beyond traditional fossil fuel investments. The strategic rationale for these investments appears sufficiently robust to weather short-term regional tensions, positioning renewable energy as a cornerstone of future economic relations between the Gulf states and Africa.