Africa’s power crisis has persisted over time occasioning high cost of doing business while banjaxing the continent’s efforts to manufacture, industrialize, run social services, create more jobs, be economically competitive and attract foreign direct investment. Small and medium-sized enterprises (SMEs) have a great share in this exasperation and many of such enterprises have packed up. Considering the significance of the private sector to the development of every economy, continental economic productivity has been affected by this harrowing phenomenon. The continent has remained the preponderant dumping space for all fashion of generating sets, and has suffered a great cost from the attendant noise and air pollution. In many African countries, basic infrastructure for electricity generation has remained lacking. Accordingly, in 2011, the World Bank declared 32 countries on the continent to be in an energy crisis. On the same note, the African Development Bank in 2016 estimated that Africa’s total installed power generation capacity was 168 Gigawatts (GW) almost same with Brazil’s capacity alone, and the equivalence of what China installs every 12 to 24 months.
In addition, out of the 1.2 billion population on the continent, it’s estimated that more than 500 million Africans live without electricity. However, there is a possibility that circumventing the challenges in the power sector could mirror the fashion of prosperity experienced from the telecommunications’ mainstreaming on the continent which was driven by privatization. In comparative terms, most of the continent’s former economic comparators have far more improved electricity supply. As of 2016/2017, average energy per capita (Kwh per person per year) in China, India, Indonesia, Brazil, South Korea and Malaysia were 4,475, 1,122, 754, 2,516, 9,720 and 4,232 respectively. As against Nigeria, Ghana, Kenya, Ethiopia, Senegal and Uganda, with, 128, 341, 162, 65, 209 and 70, respectively. While Brazil boasts of installed capacity of 150,338 MW for her 207 million population, Nigeria on the other hand with a 180 million population struggles to generate around 5,000 MW and a peak of 7,000 MW in 2017. While the sources of power generation vary across these countries, what these Africa’s former economic comparators did was to clinically deregulate and decentralize their power sectors to encourage competition and attract private capital, as well as diversify electricity sources, with sufficient government regulation and political will.
Amongst the challenges faced by the continent in realizing its power potentials include lack of adequate finance. In fact, estimates show that the continent needs $450 billion within the next 20-30 years, averaging $20 billion per year, to meet its electricity needs. At this time, total investment hovers between $1–2 billion. Secondly, the power sector is infrastructurally dependent, from generation, to transmission and distribution – it’s a network industry. Such could make it difficult for the continent to replicate the sort of prosperity unleashed by the telecoms industry, which was less infrastructurally dependent. Other challenges facing the sector include poor political will by African governments; political and economic elite sabotage who have outlets for generating-set importation; corruption; lack of technical capacity to innovate solutions in the sector or even expand existing ones; centralization of the electricity value-chain; and the expensive nature of off grid installations, consumer-side wise.
However, these challenges must have to be addressed for the continent to meet its economic growth potentials. In furtherance, there are immense opportunities in the power sector. A thriving power sector on the continent would create hundreds of thousands of jobs; agricultural produces could be stored appropriately; foreign direct investments would increase significantly; businesses will thrive; ideas can turn into businesses; there would be better quality of life; costs of doing business will significantly reduce; and Africa can plug into the global economy. Also, the continent has inexhaustible potentials in power generation. The climate in large parts provides ideal circumstances for solar and wind power generation. Only a fragment of the continent’s hydroelectric and geothermal potential has yet been utilized. It is estimated that the section of the Congo River alone that plunges down the Inga falls between the Congolese capital Kinshasha and the Atlantic Ocean has a potential of generating 40 GW of electricity, a third of Africa’s current power production.
To realize its potentials in the power sector and unlock the wide range of opportunities therein, African governments must have to deregulate and decentralize the sector. The government cannot finance the sector, must privatize and create an enabling environment to attract investors. The power sector is still on the exclusive list of many African national governments such as Nigeria, thereby creating little incentives and avenues for sub-national governments to get into the sector and provide solutions. This has to be addressed. State governments in Brazil own over 20% of the country’s total generation capacity. According to recent statistics, over 60% of Sub-Saharan Africans will lack access to electricity by 2020. To this, exploring the wide range of power sources that the continent can leverage on has become of extreme importance. Brazil and China, for instance, have diversified sources from hydroelectricity, gas, oil, and biomass to nuclear, coal, solar and wind sources. Even by the geographical configurations of how African societies are structured, with communities dispersed, Africa cannot simply rely on the grids. As such, off-grid and standalone installations using renewables will be part of the solution to explore.
The private sector has the financial resources, efficiency, management, innovation and research that can be utilitarian in this area. All these demands is the right regulatory climate to create incentives for them which should encompass predictable government policies and creation of stable social, political and economic environment that would convince investors of returns on their investments. In addition, higher tariffs that could result from off-grid installations could be reduced by careful implementation of a subsidy programme by the government. Furthermore, the Power Africa project as well as several bilateral and multilateral interventions in the sector have to be scaled up and sustained to bridge the enormous deficit in the sector. Ultimately, institutional reform is essential to improve the operational efficiency of the power sector as a whole. In many African countries, existing public/private models lack clarity or are not being implemented efficiently.
Author: Chambers Umezulike is a Development Governance Expert, Researcher and Writer