At the recent African Utility Week and Power Africa conference, UN Secretary-General António Guterres emphasises the need for Africa to embrace renewable energy as a foundation for its economic and environmental transformation.
According to UN Secretary General António Guterres, renewable energy has the potential to fuel industrial growth, generate employment, and provide power to underserved regions.
“African nations need to rethink their economic strategies, moving away from reliance on raw material exports. Instead, the future should be shaped by diversified economies that leverage sustainable energy sources,” says Guterres.
He also highlights the importance of aligning with global climate goals, particularly the target of limiting temperature increases to 1.5 degrees Celsius, as outlined in the Paris Agreement.
Guterres calls for action, urging nations to prepare climate action plans by 2025 and prioritise renewable energy to reduce dependency on fossil fuels.
“The need for governments, private enterprises, and stakeholders to work toward achieving the renewable energy goals set during COP28 is urgent, including expanding energy infrastructure and securing financing for green projects,” says Guterres.
Absa Relationship Banking Head of Manufacturing, Renewable Energy, Transport, and Logistics, Justin Schmidt, shared his insights on South Africa’s progress in renewable energy and its economic implications. In his role, Schmidt oversees strategy development, customer value propositions, and growth targets across sectors vital to South Africa’s advancement.
Schmidt pointed to the alignment of recent discussions with commitments from policymakers and industry leaders toward energy solutions.
“Historically, banks offered short-term funding, typically over three to five years. However, a growing understanding of renewable projects as long-term, revenue-generating assets has shifted financing strategies to five to ten years,” says Schmidt.
The Q2 Absa Manufacturing Survey reflects South Africa’s changing business environment, revealing a seven-point rise in business confidence to 28.
Conducted by the Bureau for Economic Research at Stellenbosch University, the survey covered 700 business leaders and highlighted the impact of the suspension of load shedding on sentiment.
“Over the last few years, manufacturers’ confidence levels have been correlated to the intensity of load shedding. Although business conditions remain tough, the suspension of load shedding has been the main factor supporting improved sentiment this quarter,” says Schmidt.
Capacity utilisation increased by 11 points, reaching its best level since late 2021, with both raw material and finished goods stocks improving to levels last seen in 2022 and 2020.
Seasonally adjusted production rose by nine points, indicating a recovery from Q1’s contraction.
Manufacturers also expressed more optimism about fixed investment, with a 12-point rise in intentions to invest in machinery and equipment over the next 12 months.
According to Schmidt due to energy constraints, manufacturers have focused on staying operational by investing in renewable energy or generators.
“Perhaps now we will start seeing investment into capacity building,” says Schmidt.
Looking forward, 20% more manufacturers expect business conditions to improve over the next year, with import and export volumes anticipated to grow by 7% and 6%, respectively.
However, challenges persist. Schmidt notes that competition from imports, rand volatility, consumer demand, and port inefficiencies remain hurdles. Additionally, recent storms in KwaZulu-Natal could pose risks.
The strides in South Africa’s manufacturing and renewable energy sectors reflect the potential of collaboration and innovation.
Renewable energy is not only an environmental obligation but also an economic opportunity. With partnerships and continued investment, Africa is positioned to lead the global transition toward a sustainable energy future.
