Solar installations across Africa hit a record last year, but international lenders are charging African countries far more for capital than borrowers elsewhere—a gap that could stifle the continent’s clean energy growth.

“In Africa, the solar panel is no longer the expensive part. The money is,” Mugwe Manga, founder of geothermal development firm Olsuswa Energy, told The Telegraph, referring to the higher costs that some African countries pay to borrow on international markets.

“Our cost of capital runs two to three times higher than Europe’s, not because our projects are riskier to build, but because of how country risk is priced. The next frontier is not a cheaper panel, it is cheaper capital,” Manga said.

Solar power installations have spiked in Africa in recent years with an increase of both utility-scale projects and rooftop solar systems. A Global Solar Council report released this past winter concludes that roughly around 4.5 gigawatts of new solar photovoltaic capacity was installed over the continent in 2025, Africa’s “fastest year of solar growth on record.”

Of that new capacity, 56% was utility-scale. Distributed solar—estimated to make up the remaining 44%—is “clearly underestimated, as it is harder to track.”

The Council’s medium-term outlook suggests Africa could install over 31.5 gigawatts of solar capacity by 2029.

But a financing gap could limit the continent’s potential to meet solar capacity targets, writes Corporate Knights. That gap has widened since United States President Donald Trump ended the Obama-era Power Africa program in February 2025.

Smaller scale and community projects also struggle for funding, as roughly four-fifths of Africa’s clean energy finance comes from public and development sources that prioritize large, government-led projects, Climate Home News writes.

A more pernicious and longer-standing barrier is what some have called the “Africa Premium.” Because of the significant capital needed to carry out large energy projects, African countries lean on financing from other countries—but international financing institutions tend to layer on higher interest rates and risk penalties when lending to African countries, reports The Telegraph. Some African countries pay up to eight times more for international lending as a result, estimates the United Nations.

Amid the financing gap, African solar development has relied on China for funding, labour, and raw materials. An Ember report published last year found that Africa’s solar panel imports spiked from the summer of 2024 to the summer of 2025, including a 60% rise in imports from China.

Ember co-founder and chief analyst Dave Jones told The Telegraph the higher numbers had initially seemed to suggest Chinese producers “were just dumping solar panels,” but data now indicates “this is part of a broader, structural trend.”

Reuters recently reported that solar exports to Africa have continued to rise, even after China rolled back an export tax rebate. Experts citing Chinese export data claim Africa imported more than 18 gigawatts of panels—way more than the official tally for 2025.

“Those missing gigawatts are on factory roofs, mines, community mini-grids, telecom towers, and homes,” investment executive Matt Tilleard wrote on LinkedIn.

Some organizations suggest the continent would benefit by moving beyond solar panel imports to manufacturing them in Africa. But that shift would come with its own challenges, including access to funding and the need to be cost-competitive against China.