With the current state of many energy sectors in Africa, it is a fact that they have not reached the maturity to incorporate private investment parameters in their financial model. For example, the Liberia national power utility has not experienced any form of prosperity (profit) since its post-civil war recovery. With this, there is no way a private investor will put his/her finance into business with high technical and commercial losses.

Factors considered by financiers may include risks to implementation, delivery and technology performance, risks of cost escalation, market/demand and credit/payment risks, regulatory and macro-economic risks, and external risks such as policy framework and weather. Any financier will require clear information on forecast revenues and potential risks before providing funding. It may be challenging for private energy investors working in new markets, and for users without a strong purchasing record, to give private funders the confidence they require.

A firm, a particular project, or end users may get financing for electrification in the form of equity investment, capital assets, working capital loans, or any combination of these. Any equity investment entails a portion of the firm being owned by the investor, who assumes the risk of losing money if the electricity venture fails while also anticipating receiving further returns if forecasted goals are fulfilled. But for the forms of electrification like grid and mini-grid systems, which have high up-front capital costs and long investment recovery period, this may be an insurmountable barrier because private financer requires crystal-clear evidence that revenues will generate returns on investment. Even in cases when the macroeconomic environment is stable, pricing and tariffs are transparent, investors may be hesitant to offer funding in the absence of well-established business with a proven track record of success. With that been said and the current state of many energy sectors in Africa, it may take a lot of time and effort to secure enough private funding to achieve the SDG7 if we rely on private funding.