Several global pension funds have been increasingly looking to diversify their portfolios by investing in emerging markets, including the African energy sector. Typically invested through direct equity or private equity funds, these investments are part of a broader strategy to seek higher returns, promote sustainable development and participate in infrastructure projects. For Africa – which faces a $100-billion infrastructure finance gap – pension funds remain a large and untapped source of capital that can help realize large asset-class energy infrastructure, which offer long-term investment horizons, competitive returns and reduced sensitivity to market fluctuations.
Norway Targets Clean Energy
Norway’s Government Pension Fund Global is one of the largest sovereign wealth funds globally and is increasingly focusing on sustainable investments, including renewable energy projects in Africa. The fund is a shareholder in Norwegian renewable energy solutions provider Scatec, which has a portfolio across the continent. In Egypt, the company operates 380 MW of installed solar capacity and secured land earlier this year for two wind power projects totaling 8 GW in the western Sohag Governorate, representing a total investment of $9 billion.
In South Africa, Scatec recently began operations at three solar power and energy storage projects in Northern Cape Province, delivering 150 MW of power to the national grid and representing a nearly one-billion-dollar investment. The project – Scatec’s largest commitment to date – also secured a $102-million financial risk reduction package from the Norwegian government. In neighboring Botswana, Scatec is leading the construction of the 120 MW Mmadinare Solar Complex, with works starting in April and commercial operations due to begin the first half of 2025.
South Africa Diversifies Investments
South Africa’s Government Employees Pension Fund is the largest in Africa and the country’s largest institutional investor, investing roughly $7.4 billion in oil, gas and coal mining companies. The fund owns an 18% stake in energy and chemical company Sasol, which leads diversified and integrated energy projects across southern Africa. In South Africa, Sasol is developing the Boegoebaai green hydrogen program in Northern Cape Province, which is currently undergoing feasibility studies and involves the construction of 10 GW of electrolyzer capacity and a green hydrogen pipeline for global hydrogen and ammonia exports. Meanwhile, the company is currently appraising the onshore gas discovery it made last year in Mozambique’s PT5-C Onshore Area, reflecting a diversified energy development strategy.
The Netherlands Mobilizes European Funds
The Netherlands is also increasing its global investment appetite, with its pension funds allocating more of their assets to foreign investment funds. The country’s largest pension provider APG – along with Achmea Investment Management – signed an agreement with the African Development Bank in 2023 to facilitate loans from institutional investors for sustainability projects in African countries. The partnership aims to mobilize financing by Dutch and other European pension funds across Africa in strategic sectors – including energy access and clean energy – and will provide a more than $1-billion private credit fund to be deployed across emerging markets. This trend toward sustainable and impact investing has led to a growing focus on projects at the intersection – namely, renewable energy, gas-fired power and associated infrastructure. Given Africa’s financing needs, increased participation from African and international pension funds and other institutional investors will be critical to meeting long-term energy demand.
IAE 2025 is an exclusive forum designed to facilitate investment between African energy markets and global investors. Taking place May 13-14, 2025 in Paris, the event offers delegates two days of intensive engagement with industry experts, project developers, investors and policymakers. For more information, please visit www.invest-africa-energy.com. To sponsor or participate as a delegate, please contact [email protected].
