W
hen befuddled investors,
bankers or economists seek
more clarity on China’s often
opaque growth statistics, they usually
turn to electricity consumption, which
is a good proxy. This is because of the
close link between economic activity,
income growth, wealth creation and
electricity consumption.
Simply put, economic and popula-
tion growth should translate into more
electricity consumption as there are
more activity and transactions taking
place throughout the economy.
In the case of Africa however this rela-
tionship is true, but mostly in reverse
as a lack of access to electricity for
most people often acts as a drag
on growth. The reality today is that in
Africa, power is inaccessible, unafford-
able, and unreliable for most people.
“This traps people in poverty – students
find it difficult to read after dark, clinics
cannot refrigerate vaccines and busi-
nesses have shorter operating hours,”
the World Bank said in a recent energy
in Africa report.
Twenty – five African countries face an
energy crisis today, according to the
World Bank. However this needs not
be the case.
The African continent is well endowed
with energy resources but most remain
untapped. Solutions to this problem
include: boosting cross-border power
trade, improving existing utility com-
panies, improving access to electricity
on a large scale, while helping coun-
tries chart low-carbon or renewable
energy growth paths.
Nigeria, which has a growing popula-
tion of more than 179 million people,
generates only 4,600 megawatts (MW)
annually. That’s about eight times less
than in South Africa, which has a third
The reality
today is that in
Africa, power
is inaccessible,
unaffordable, and
unreliable for
most people.”
Tackling energy
poverty in Africa
By Patrick Atuanya*
of Nigeria’s population.
Analysts estimate that 2 to 3 percent
GDP growth upside is lost in Nigeria
annually as a result of its inability to
satisfy its huge energy demand.
The African continent needs investment
of $93 billion each year until 2020 to help
fix power shortages and other infra-
structure bottlenecks, according to the
African Development Bank (AfDB).
The World Bank meanwhile estimates
that the 48 countries in sub-Saharan
Africa, which have a combined popu-
lation of about 800 million, generate
almost the same amount of electricity
as Spain, a nation of 47 million people.
Tackling the African energy poverty
problem will take stakeholders engag-
ing in outside the box thinking.
One such innovative solution is the
power Africa initiative led by the U.S.
Government, and partners in Nigeria
include Heirs Holding, UBA Capital,
General Electric, Africa Finance
Corporation and the AfDB.
It was launched by President Barack
Obama in 2013, and aims to increase
electricity access in Africa by add-
ing more than 30,000 megawatts of
cleaner, more efficient electricity
generation capacity and 60 million
new home and business connections
across sub-Saharan Africa.
To date, Power Africa has leveraged
more than $20 billion in commitments
from the private sector for new on-
and off-grid projects in sub-Saharan
Africa.
Other solutions would be for African
nations to embrace renewable ener-
gy and innovative financing assis-
tance for domestic Generating and
Distribution companies.
Financial institutions in Africa also
need technical assistance to help
them appraise credit requests from
solar and other renewable compa-
nies, which they currently lack.
The share of non-fossil fuels as a per-
centage of global energy consump-
tion reached an all-time high of almost
14 percent, according to data from
the most recent BP Statistical Review
of World Energy report released in
June, 2015.
*
Patrick Atuanya
is an economist with
BusinessDay Media, Nigeria.
12 •
The Lion King
• July - September 2015
Business
|
Investment
