Africa: a continent full of colours and great potential, yet suffering from being poorly developed. One way to see it is to have a look on the state of the electricity market in Sub-Saharan Africa. While 87% of the world population have access to electricity in 2016, only 42% of Africans have this privilege, thus ranking the continent at the lowest rate in the world, according to the World Bank. Sub-Saharan Africa is particularly affected. This translates into reduced business hours, or ineffective health systems that hardly meet the needs of the population.
Notwithstanding these problems, Africa has great potential in the energy sector because it is abounding with natural resources. The continent may become a leader in sustainable energies in a near future, with the potential to drive tremendous change in Africa’s growth trend, and lead it on a wide development path.
How has Africa’s energy sector come to be in such a crisis? Are sustainable energies a pragmatic strategy or a nourished temporary utopia? What are the challenges Africa needs to face in order to get out of its energy trap? We explore a few ideas in this article.
The Dark Continent has assets that many could be jealous of. Northern, Western and Eastern African countries possess huge reserves of oil. Some of the biggest reserves of coal are to be found in South Africa. Morocco and Algeria have natural gaz. These resources are precious: fossil fuel-based power is the main source of electricity in Africa. Nevertheless, electricity needs are currently not covered. Indeed, most Sub-Saharan countries export those resources. In the case of Nigeria, the biggest African oil producer and Africa’s leading economy, black gold represents 95% of its export revenues, with Asia and Europe as the main recipients. As a consequence, a lack of infrastructure hinders the processing of oil, and the country even has to import its fuel from Europe. In 2016, 40% of Nigerians did not have an access to electricity at all. The rest of the population sometimes had a limited access to it, only for small time slots.
Nigeria is not the only country to struggle to provide an efficient electricity grid. The lack of refineries, as well as corruption, and bad business schemes for managing those resources explain the actual state of the energy sector. Fossil-fuel energy is the costliest source energy to produce. Moreover, lack of investments in the energy sector prevents firms from efficiently exploiting and transporting electricity in the territory. Since 2007, a global average of US$ 12 billion investment has been made in the sector, which represents only 36% of the estimated need to have an optimal electricity system. Today, governments still remain the main investors in the energy sector. Unfortunately, massive corruption in some countries has led to a reduction of effective allocated funds. In the 1990s, many countries privatised the energy sector in order to attract private investments. It worked for some countries like Namibia, which was able to lower energy tariffs and to improve efficiency. But for others, high costs of production and transformation led to high prices, creating a gap between the rich and the poor. The latter are not able to afford the installation cost of a basic phase circuit in their home. This ascertainment made by the Forum of Energy Ministers of Africa in 2000 still remains true for most people in rural areas today, who made up 60% of Sub-Saharan Africa’s population in 2016. Moreover, providing electricity in isolated areas is seldom profitable, offering firms little incentive to expand their production networks towards people who will not be able to pay.
Should we encourage investments for a better exploitation of coal, natural gas, and oil, which, in many cases, seem to be more profitable if exported? There is a double problem. First, those ressources are infamous for their gas emissions. Second, there are in finite supply. In addition, some catastrophes like the Probo Koala case in 2006, when a Greek-owned petroleum ship offloaded toxic waste in the port of Abidjan and intoxicated thousands of people, have shown the limits of poorly managed resources.
Sustainable energies are becoming an increasingly important part of the conversation. For some, the idea represents an utopia. For others, a fleeting trend. In spite of diverging opinions, it seems to be a reasonable hope for many, and the only possible escape from the energy crisis. Do we have reasons to believe them?
One could say oil and coal are being dethroned by sun and water.
Sometimes called the sun continent, Africa has the highest solar irradiance on earth, with the Sahara desert breaking records in daily sunshine periods. Countries like Morocco have already begun to exploit this major asset. Near the city of Ouarzazate, a giant solar farm has emerged, covering 1.4 million square metres of yellow sand in 2016. The aim of the Northern kingdom is to fulfil 52% of its electricity needs through solar power by 2030.
Africa is also home to the most powerful rivers in the world. One of them, the Congo River, is the second largest river in the world by its volume discharge after the Amazon. Its Inga Falls, situated in the Democratic Republic of Congo, currently hosts several projects that are all part of the Grand Inga project. The dam aims at providing cheaper energy to a large part of Africa, allowing industries to take off. For instance, a significant part of the produced energy is destined to be sent to South Africa. Initiated in the early 2010s, the project has received a joint bid from a Chinese and a Spanish company in 2018 to cover the estimated cost of US$13 billion for the recent project expansion.
Less covered by the media, the wind power market is also expanding. Mainly produced in South Africa thanks to the REIPPPP project launched in 2011, this source of energy promises to be increasingly exploited in the future, as there are important costal winds in Eastern Africa.
There are many other examples of this kind, such as the geothermal energy in the East African Rift. According to the World Bank, renewable energies represent 70% of total final energy consumption in Sub-Saharan Africa in 2015, mainly because of improvised mini-grids in rural areas, which is still not sufficient to cover a 24-hours-a-day access to electricity.
Potential is not enough. Business schemes have to be improved for Africa to get out of poverty. Public-private partnerships, as recommended by a World Bank report in 2017, have to be implemented to better regulate the sector, incentivise firms, serve the public interest, and encourage private investments. If oil-producing countries need oil for their trade balance to avoid sinking into deficit, governments have to favour alternative energies to provide electricity to their population. Regional cooperation can also be a viable option: an example is the West African Power Pool (WAPP), which was founded in 2000 and gathers 14 countries with the common goal of building a common market for electricity. This creates a bigger and thus more attractive market for investors. The Central Africa Power Pool, Eastern Africa Power Pool, Southern Africa Power Pool and COMELEC – in Northern Africa – have also been implemented, thus dividing Africa into five main markets.
Investments in both non-renewable and renewable energies are already increasing, in particular because of the recent Chinese foreign policy concerning Africa. Electrification is on an upward trend since public policies are more directed towards the common good. Having said that, there remain many efforts to be made. The Dark Continent could become greener, more active, and healthier – the “Sun Continent” could one day be a more fitting name.
by Rose Mba
The TSEconomist 