Financing a sustainable future: How clean energy investments can boost local economies

Nigeria, Africa’s most populous country and largest economy, stands at a critical juncture. With one of the largest diaspora populations globally, Nigeria has the unique opportunity to leverage its diaspora’s influence to drive domestic change. However, the country faces challenges such as inadequate infrastructure, currency devaluation, and rising unemployment. These obstacles hinder Nigeria’s development, but the global shift towards clean energy offers a pathway to address both climate change and economic challenges, such as youth unemployment and brain drain. Clean energy can empower local youth, create jobs, and keep skilled talent within the country.

Overview of the Problem

Despite the global demand for clean energy, many emerging markets remain trapped in a cycle of underinvestment, outdated infrastructure, and a lack of access to affordable capital. This, combined with escalating youth unemployment rates, contributes to a widespread brain drain—talented young people leaving their home countries in search of better opportunities abroad. In regions such as sub-Saharan Africa, which has one of the youngest populations globally, this talent migration is particularly pronounced. Highly skilled individuals often feel compelled to leave in search of better job prospects in more developed economies.

At the same time, energy demand in emerging markets is growing rapidly due to urbanization, industrialization, and rising populations. Energy systems in many of these regions are struggling to keep pace with the demand. This is both a challenge and an opportunity: as these countries modernize their energy systems, they can leapfrog outdated technologies and invest in renewable, clean energy solutions that offer long-term environmental and economic benefits. By embracing these opportunities, they can create local jobs, stimulate entrepreneurship, and build industries that will help to retain talent and stem the flow of skilled workers to other parts of the world.

What Financial Solutions Should Exist

To unlock the potential of clean energy investments and combat brain drain, financial solutions must go beyond traditional funding models. Innovative, collaborative financing mechanisms are essential to de-risk clean energy projects, attract investment, and empower local communities to take part in the transition.

Blended Finance is one such solution. This model combines public funds, concessional capital, and private investments, making clean energy projects more attractive to investors. Blended finance reduces the perceived risk for private investors by providing lower-risk public sector funding to encourage more significant investments. For example, the African Development Bank’s Desert to Power initiative is utilizing blended finance to bring solar power to the Sahel region, with the aim of providing electricity to 250 million people. The initiative leverages concessional capital to reduce the financial risk for private investors, unlocking the funding needed to scale solar energy across one of the world’s least electrified regions.

Another innovative financing tool is carbon markets, which create a pricing mechanism for carbon emissions reductions. Clean energy projects that reduce greenhouse gas emissions can earn carbon credits, which can be sold to generate revenue. This mechanism allows countries to create additional revenue streams while also incentivizing the implementation of clean energy technologies. Kenya’s biogas programs, for instance, not only reduce waste but also earn carbon credits that are sold on international markets. The revenue generated can be reinvested into further clean energy initiatives, helping create a self-sustaining model that boosts local economies while addressing environmental issues.

Crowdfunding is another avenue that democratizes access to finance. Through platforms such as Trine, individuals can directly invest in renewable energy projects in emerging markets, supporting community-based projects that may otherwise struggle to secure funding through traditional financing methods. This form of retail investment allows investors to participate in small-scale renewable energy projects, ensuring that financing is directed to local communities and energy projects.

Governments in emerging markets can further support the clean energy transition by offering subsidies and tax incentives for renewable energy projects. Financial incentives can encourage both foreign and local entrepreneurs to invest in clean energy solutions that create local employment opportunities. For instance, India’s solar irrigation loans, which offer low-interest financing for farmers transitioning to solar energy, are a prime example of how targeted subsidies and tax incentives can stimulate entrepreneurship and clean energy adoption.

Linking Clean Energy to Brain Drain

The connection between clean energy investments and the fight against brain drain is increasingly clear. By creating skilled, well-compensated jobs in the clean energy sector, emerging markets can give young professionals the opportunity to build meaningful careers within their own borders.

In South Africa, for example, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has been instrumental in generating jobs in the renewable energy sector, particularly in rural areas. By offering guaranteed power purchase agreements (PPAs) and long-term contracts to independent producers, REIPPPP reduces risk for investors and ensures a steady stream of returns, making the sector more attractive. These projects have not only provided the country with a reliable source of clean energy, but they’ve also created local employment opportunities for youth who might otherwise have left in search of work.

Entrepreneurship in clean energy also plays a key role in reversing brain drain. Young entrepreneurs can capitalize on emerging markets’ renewable energy needs, particularly in areas such as energy storage, waste-to-energy technologies, and solar product distribution. In countries like Nigeria, returnees are playing a significant role in leading and establishing clean energy ventures, using their global expertise to contribute to local development and help reverse brain drain.

As these clean energy industries expand in emerging markets, they create not only jobs but also a thriving ecosystem of innovation, local expertise, and entrepreneurship, further contributing to economic development. This, in turn, reduces the incentive for skilled professionals to seek opportunities abroad.

Clean Energy in Emerging Markets: Lessons and Opportunities

Emerging markets have already demonstrated how clean energy can be used to address both environmental and economic challenges. In sub-Saharan Africa, the pay-as-you-go (PAYG) solar model has been a game changer for energy access. Through mobile money platforms, companies like M-KOPA and d.light allow consumers to pay incrementally for solar energy systems, reducing dependence on polluting energy sources like kerosene. The PAYG model has spurred job creation in sales, distribution, installation, and customer service, demonstrating how clean energy can simultaneously address environmental and employment challenges.

Large-scale projects such as Bhadla Solar Park in India illustrate the power of public-private partnerships in driving down the cost of solar energy. With an installed capacity of over 2,245 MW, the project provides low-cost energy to millions and creates jobs across construction, operations, and maintenance. The sector’s growth provides long-term opportunities for engineers, technicians, and skilled laborers.

Decentralized energy systems, such as mini-grids and off-grid solutions, have shown their efficacy in reaching underserved areas. These systems are particularly suited to remote regions that are geographically isolated or lack the infrastructure to support a centralized grid. By tapping into local demand, these decentralized systems provide sustainable energy access and offer opportunities for job creation in rural areas.

Furthermore, community ownership models—such as Nepal’s micro-hydropower projects—empower local populations to manage and benefit from their energy systems. These projects not only improve energy access but also stimulate local economic activity, ensuring that young people remain engaged in their communities and are incentivized to build their careers locally.

A Call for Action

Emerging markets have shown that clean energy can overcome barriers to growth by offering environmental and economic rewards. It’s time for the global community to follow their lead. By adopting innovative financing mechanisms, prioritizing youth employment, and promoting inclusive partnerships, governments can accelerate the clean energy transition while creating resilient, knowledge-based economies.

The clean energy revolution is not just a response to climate change; it’s a strategy for economic empowerment, job creation, and reversing the trend of brain drain. As more emerging markets invest in clean energy, they will not only contribute to a global transition to sustainable energy but will also create local economies that attract, retain, and empower young talent.