International Trade and Investment Forum: Power for Africa

Catalysing Africa’s Energy Transition / Background

Sub-Saharan Africa needs more stable power. The region’s power sector is significantly underdeveloped, looking at power access, installed capacity, or overall consumption. The fact that sub-Saharan Africa’s residential and industrial sectors suffer power shortages means that countries struggle to sustain GDP growth. The stakes are enormous. Indeed, fulfilling the economic and social promise of the region, and Africa in general, depends on the ability of government and investors to develop the continent’s huge power capacity.

Power access should be a key part of African governments’ economic development agenda. They have a key role in aligning policies to build an enabling regulatory environment in support of the creation of markets for mini-grids; to increase opportunities for interactivity between mini-grids and the national grid; to ensure budgetary allocation to enable this; and to develop expansion programs with committed funding streams.

Africa relies heavily on wood or other biomass for cooking and heating, a cause of outdoor and indoor air pollution, wreaking havoc on our health and the environment. We need to tap into alternative power sources by investing more in solar technologies, clean energy, affordable smart meters, and more efficient battery storage. Off-grid solutions will decrease our high dependence on fossil fuels, which makes it expensive to generate and provide power supply.

As Africa thrives under surging economic and population growth rates, we face the challenge of ensuring that everyone benefits optimally from the gains of development. Utilities are key to growth. Their provision—or the lack of—can make the difference between life and death, between a prosperous society with expanding opportunity, and one where people struggle with poverty and vulnerability.

Power access can increase household per capita income by 39 percent. Businesses operate at higher levels of productivity, farmers can run cleaner irrigation systems and processing machines that improve their yields and thus, their income. In rural communities, the farmer who once lost half of her produce due to inadequate climate controlled storage solutions, suddenly reduces her losses while increasing her income when she gains access to power and refrigeration. She can then have better nutrition from her subsistence farming, invest more in education, health, and the general well-being of her family and community. With eighty percent of Africa’s economy relying on agriculture, imagine the total impact on farmers’ lives if they all had access to electricity, how it would impact their yields and translate into greater economic growth

Power consumption and economic development are closely linked; growth will not happen without a step change in the power sector.

To move ahead on development of the sector, national governments should take the initiative in a number of areas. For one, they could focus on ensuring the financial viability of the power sector. Four points matter here: electricity tariffs should reflect the true cost of power consumption, costs should be transparent, the country should make the most of what it already has in the sector, and officials should pursue least cost options in investments.

It is important for governments to demonstrate political will. To do this, they can prioritize efforts, keep an eye on the long term, and focus on the regulations and capabilities needed for the sector to thrive, not just on the plants and associated infrastructure.