Tackling the energy challenge in Africa
The energy crisis in Africa has been going from bad to worse, Zimbabwe is not the only country facing massive power cuts and shortages in the region. The energy challenge is a regional matter that needs to be addressed if Africa wants to progress economically.
Energy is one of the most important drivers for economic success if there is poor power supply there is likely to be low productivity and hence low economic growth and also poor energy supply deters investors.
According to recent reports, the energy gap between Africa and the rest of the world is widening. Fifteen years ago, per capita energy use in Sub-Saharan Africa was 30 percent of the level in South Asia, now it is just 24 percent and still falling. The region is dreadfully short of electricity. The region’s grid has a power generation capacity of just 90 gigawatts (GW) and half of it is located in one country – South Africa.
The energy-sector hold-ups and power shortages have cost the region job losses and investments. According to the African Progress Report companies in Tanzania and Ghana are losing 15 percent of the value of sales as a result of power outages. Most of Africa’s school children attend classes without access to electricity. In Burkina Faso, Cameroon, Malawi and Niger, over 80 percent of primary schools lack access to electricity. The African Development Bank, seeing that this matter is hampering African economic growth, last week unveiled a landmark initiative to solve Africa’s huge energy deficit by 2025.
The initiative titled the “New Deal for Energy in Africa,” is anchored on scaling up finances going towards the energy sector with partners.
This approach is as a result of the large financing need in this sector. Although the financing gap is large, it has to be placed in context. Energy financing is an investment with the potential to generate high social and economic returns by increasing productivity, job creation and economic growth but it should be aimed and used wisely.
The major problem is that too much public finance is wasted on inefficient and inequitable energy subsidies. The usual non-renewable energy sources are becoming inefficient and there has been little investment in efficient energy sources such as renewable energy. With the growth in population it is imperative to think that the same energy source and structure that was used under a smaller population will sustain the growing numbers and to add on Africa is not recognising the influence climate change has on the level of energy the region can provide. African Governments spend billions a year covering utility losses and subsidising oil-based products, diverting resources from more productive energy investments. Hence one can conclude that finances towards energy has been directed in the wrong way. An approach that can facilitate in closing the energy financing gap is the reduction in spending money on inefficient subsidies.
Africa has massive energy potential when it comes to energy, but the continent is failing to utilise the resources it has especially in terms of renewable energy sources. African governments need to set a higher level of ambition when it comes to energy. Policies should aim at a 10-fold increase in power generation and universal access to energy by 2030.
The other important initiative is the critical role of renewable energy.
According to the African Progress report, renewable energy has two major advantages for Africa, which are speed and decentralization. Renewable energy can be deployed far more rapidly than coal-fired power plants and can operate both on-grid and off-grid.
Africa’s days of neglect should end, governments need to recognise that underpowered and unequal energy systems are a barrier to developing dynamic economies and more inclusive societies. Renewable energy should be at the forefront of the changes in African energy sources. Hydropower continues to dominate the investment landscape. Countries as diverse as Ethiopia, Ghana, Kenya, Nigeria and South Africa are developing very large power-generation plants that use renewable energy.
Governments can partner with energy companies to extend the reach of renewable energy. This is why Private Public Partnerships are so important. In as much as energy is a public good partnering with the private sector will encourage resource mobilisation and efficient energy mechanisms. As a result of strained international financing the challenge is to scale up domestic resource mobilisation and to secure access to long-term financing for energy provision. African governments can look at how other countries improved their energy supply and learn from their experiences but they need to seriously consider new effective policies for the implementation of the wide use of renewable energy.