Sustainable Development Finance in Practice: An Analysis of Swedfund's Renewable Energy Investment Patterns Across African Markets

Abstract

This thesis examines the country-level characteristics associated with Swedfund’s renewable energy investments across Africa between 2019 and 2023. Building on theories of imperfect capital markets, institutional quality, and development finance, the study analyses Swedfund’s geographic investment allocation. The analysis further examines whether there are patterns within this geographic allocation and if these reflect development objectives, financial viability, or a balance between the two. Using panel regression analysis, the study investigates Swedfund’s investments within the “Energy and Climate” sector, in relation to strength of minority investor protection, readiness, vulnerability, GDP per capita, renewable energy share, FDI inflows, and inflation. The findings suggest that stronger institutional and governance conditions, particularly strength of investor protection, are positively associated with investment activity. This highlights the importance of governance quality and implementation capacity for investment feasibility. At the same time, Swedfund appears willing to operate in economically volatile and underserved markets characterised by lower FDI inflows and higher inflation. However, vulnerability and GDP per capita alone do not appear decisive in explaining geographic investment allocation. Overall, the results suggest that Swedfund balances development objectives with financial sustainability and operational feasibility. Given the importance of renewable energy for achieving the sustainable development goals and the 2030 Agenda, the study contributes to the growing literature on development finance institutions, renewable energy and geographic investment allocation in developing economies.