Junaid Belo-Osagie, Executive Director, Investment Banking, Europe, Middle East and Africa at Mizuho International, emphasises that affordable finance is key to Africa’s hydrogen future. He advocates for blended capital, phased projects, targeted offtake agreements, and Contracts for Difference (CfD) schemes underpinned by carbon revenues.
What financial strategies are most effective for scaling hydrogen projects in Africa?
Africa’s most significant gap in the hydrogen value chain is not infrastructure or talent – it is the cost of finance. One clear, albeit limited, solution is blended finance. This involves the strategic use of concessional capital to mobilise commercial funding at scale. It helps bridge the viability gap in early-stage projects by de-risking private sector participation.
Another promising strategy is the use of sponsor/offtaker partnerships supported by international risk underwriters and export credit agencies (ECAs). These can help reduce overall project costs while improving access to global capital.
Moreover, clean hydrogen projects across US, China, India, Australia, Europe and the Middle East benefit from significant supply-side subsidies. African governments, by contrast, do not have access to such extensive fiscal support, which undermines the price competitiveness of their hydrogen projects, especially given that demand centres often incentivise blue hydrogen over green alternatives.
African stakeholders must push for African clusters under various CfD schemes to ensure their projects are subsidised at various supply venues. Such subsidy programmes should be financed through carbon revenues generated from high-emitting jurisdictions that have historically contributed more to the climate crisis – far more than Africa countries.
How can African countries attract international investment for hydrogen development?
Hydrogen projects in Africa are more likely to succeed if they adopt a modular, phased approach to development.
Scaling from small pilot projects to mid-sized Phase 1 and 2 installations, and eventually to full-scale production, is capital intensive, but the benefits in terms of enhanced bankability and investor confidence outweigh the upfront cost. Early success in smaller phases can demonstrate technical viability and economic potential, encouraging further investment.
Phased development also facilitates offtake agreements, which are essential to securing financing. Without confirmed offtake, large-scale hydrogen projects remain difficult to underwrite.
Furthermore, African projects should move beyond simply producing hydrogen or ammonia. They will be more attractive to investors if they align with demand from hard-to-abate sectors, such as steel manufacturing and heavy-duty transport, which are more likely to absorb the greenium over high-carbon alternatives.
Targeting regional or industrial-scale use cases within Africa adds further value, creating integrated demand centres that reduce export dependency and support local economic development.
What role does the Africa Hydrogen Partnership play in facilitating project financing?
The Africa Hydrogen Partnership (AHP) provides a valuable platform for knowledge sharing between participants; bringing together stakeholders across the hydrogen value chain; and presenting a unified voice on barriers and enablers of hydrogen deployment in Africa. This aligns with Mizuho’s objectives in supporting strategic, long-term investment across the region.
What are you looking forward to at this year’s Global African Hydrogen Summit?
Two outcomes would define a successful summit for me. Firstly, a strong advocacy push for the establishment of CfD mechanisms tailored specifically to African hydrogen projects.
Secondly, I hope to see discussions on hydrogen financing strategies that consider today’s evolving geopolitical landscape. This includes shift in global trade, supply chain security, and the reconfiguration of energy alliances I am also particularly interested in the Japanese spotlight at this year’s summit, which will be relevant to both my organisation and out client network.
