By Zeph Nhleko
The Development Bank of Southern Africa recently published a working paper on the hydrogen economy. As the world turns towards greener energy solutions, hydrogen stands out as a transformative force in our quest for sustainability. Development Finance Institutions (DFIs) are playing an important role in nurturing this growing sector, particularly in emerging markets and developing economies. Their involvement goes far beyond just providing funds, they are shaping the future of hydrogen by managing risks, influencing policies and offering crucial technical support.
Bridging the financial gap
Hydrogen technology holds incredible promise, but it demands substantial investment. In developing countries, where the annual need for funding can reach around $100 billion (R1.8 trillion), traditional financiers often hesitate due to the high risks and costs involved. This is where DFIs step in.
DFIs specialise in funding projects that might seem too risky for conventional investors. They use innovative financial models like blended finance, equity and loans to bridge the funding gap. For example, a DFI might provide initial funding or guarantees that help attract private investors. The approach not only de-risks the projects but also brings in additional investment, making it feasible to push forward with ambitious hydrogen initiatives.
