The Energy Sector in Africa
What is the current stratus of the energy sector in Africa? And what is the sector’s future like? Today, I hope to provide insight to these questions and remember, if you work in the Energy Sector in Africa, or anywhere else around the world, feel free to send me your CV which will be added to our database: zoe@caglobalint.com
Yes we know that the African continent is well endowed with fossil fuels and renewable resources, so why the continuous black-outs? In Africa we still see how school children frequently can’t read once nightfall prevails, businesses can’t grow, clinics are unable to refrigerate medicine or vaccines, and industries are idled hindering economic growth, jobs, and livelihoods.
The energy crises and challenges basically boil down to the fact that energy resources are not fairly distributed, creating windfall profits for some countries and worsening the crisis in others. Weaknesses deriving from the Energy Sector in Africa compromise the long term economic growth and competitiveness.
Key Issues that concern the Energy Sector in Africa…
- Low access and insufficient capacity is a major threat to the Energy Sector in Africa as roughly 24% of the sub-Saharan Africa population has access to electricity compared to the 40% in other low income countries. Excluding South Africa, the entire installed generation capacity of sub-Saharan Africa is only 28 Gigawatts (the same as Argentina).
- Poor reliability is another threat and implies that African manufacturing enterprises experience power outages on average 56 days yearly. Consequently, firms lose 6% of sales revenues in the informal sector. Where back-up generation is limited, losses can reach as high as 20%.
- Thirdly, high costs reveal that power tariffs in most parts of the developing world fall in the range of US$0.04 to US$0.08 per kilowatt-hour. However, in Sub-Saharan Africa, the average tariff is US$0.13 per kilowatt-hour. In countries dependent on diesel-based systems, tariffs are higher still. Because of poor reliability, heaps of firms operate their own diesel generators at two to three times the cost with related environmental costs.
How is the World Bank trying to assist in the development of the Energy Sector in Africa?
The World Bank has initiated a few projects concerned with the Energy Sector in Africa and these projects have a range of objectives from increasing people’s access to electricity, to rehabilitation of war-torn, dilapidated power grids, to ensuring international environmental and social safeguard policies are adhered to during the development of energy projects.
The Bank’s strategy to support energy development involves the following:
- Support for scaling-up of generation capacity via transformative regional projects;
- Improving the effectiveness and governance of state-owned utilities, in the context of hybrid electricity markets; and
- A new commitment to rolling out energy access programs via sector-wide engagement.
In the short-term, the challenge is to even out power systems across the continent through interventions that decrease the demand for power and improve system consistency in a cost-effective manner.
In the longer-term, the African power sector faces numerous strategic limitations. The strategic responses supported by the Bank are likely to lead to more power being produced and distributed in a commercially-viable fashion, yet at the same time guarantee that the benefits of energy access are shared more broadly.
#AfricasEnergySector #powerdevelopment
