‘How to address Africa’s electricity deficit’
Africa’s energy deficit continues to stifle economic growth, job creation, agricultural transformation and improvements in health and education. The Africa Progress Panel chaired by former UN Secretary General and Nobel Laureate Kofi Annan launched a new report that captures progress and shortcomings in the drive to address the continent’s electricity crisis. The report was launched at the Africa Development Bank this week. CNBC Africa’s Wole Famurewa caught up with Mr Annan on the sidelines.
I think energy is extremely important for the continent and everywhere. Without access to electricity and energy our growth and development would be slowed down or has been slowed down considerably. We need to really provide access to energy to create jobs; for education, for health. In fact, the World Bank did a study some time ago which indicated that the two main blocks on African development are infrastructure and energy and that if we were able to fix or remove these two blocks, intra-African trade alone, south of the Sahara, could be increased by $250 to $300 billion in a decade. So you can see how this holds us back. And if you do have electricity, you are also protecting the environment. In fact I used to tease some friends that if we could find a scientist who could come up with a cheap energy source that the poor can afford and don’t have to go cutting down trees for charcoal and all that, which also has health issues, we would not only be able to offer electricity, we would be able to help the environment and resist climate change, which is impacting on Africa to an extent which we haven’t seen on other continents and yet, we contribute very little to the global emissions.
The report highlights interestingly, several countries that seem to be making good progress, like Ethiopia, Kenya, Morocco and South Africa are mentioned as those that are continuously making commendable progress with respect to renewable energy. Now, that is still a small part of the entire energy value chain but I want you to speak to how we can get other countries to make further progress and more specifically to the African citizen; the role of the African citizen in pushing the agenda of energy.
I think what is important here is that we need to reimagine how energy distribution in Africa can be. We cannot simply rely on the grids. Particularly given the way our societies are structured. Villages are dispersed. It is not an easy proposition to say they should wait till the grid gets to them. They will wait forever. SO we need to get into off grid systems and standalone systems using renewables or many dams that offer electricity to offer electricity to our citizens. It will be faster. It is flexible and you can also link it back if enough electricity is produced. If a grid system produces more electricity than it needs, it can be sold back to the national grid, but they have to have rules which allow that.
Rules that allow the individual selling the electricity to get some money back. So there are lots of things that can be done. We started with people using solar energy to light two bulbs, now the systems have developed and they are developing very fast. When you look at communication, how we’ve used cellphone systems to leapfrog the communication system, today hardly anyone relies on landlines, everybody gives you their cell number. I hope we can do a similar leapfrogging in the electricity generation system and access to electricity. But here the citizens have an important role to play because the governments not only have to create the right environment to encourage and incentivise people who want to go into this sector, governments alone can’t do it.
The private sector has money, management, innovation and research that can be helpful in this area and all that we need to do is to have the right regulatory environment and create a stable social and economic environment that would would convince the investor that the situation under which they’re investing will prevail for the next 5 or 10 years for them to get their money back. Because, otherwise, nobody or very few people would invest, locally or internationally. The private sector has a role to play but the individual and civil society also have roles to play, because governments are supposed to work in the interests of the people and for the welfare of the people. Sometimes we the people, we as individuals need to put the pressure on them to do what is right. Issues that concern us have to be pushed up the political agenda so that they cannot be ignored. I often say that when the leaders fail to lead, the people will lead and make them follow. It’s extremely important, and a good leader is also a good follower.
The report also states the obvious in terms of what the policy and regulatory environment in Africa needs to be. It states that it needs to improve considerably. the report also speaks to some very interesting examples as to where the right policy and regulatory environment has made significant impact on how even the individual can make money from the growth of electricity in Africa. I just want you to speak to that point on the importance of the regulatory environment.
Several African countries have shown leadership in this area. Countries like Rwanda, Kenya, Ethiopia, Morocco. Even here in Ivory Coast where they are encouraging the use of renewables and I have a friend who uses solar energy to power his entire house. but he generated more than he needed and wanted to sell the excess to the government to put it back on the national grid only to discover that there were no rules for that.
He gave it back to the government. Three months later he went to them and said, you owe me money, for the electricity I gave you on the grid, they said we don’t have money, can you make a donation? It doesn’t work like that. You have to have rules, which allow people who sell electricity to the grid to be paid. Then you can encourage creativity innovation and entrepreneurship but some of the governments that have really made progress focused. The thing is electricity, is so crucial for the development of our countries and societies and we’re going to move forward, and by using renewables they were able to introduce a flexibility that is needed. Until then we were all relying on the National grid, and if some villages were to wait for the national grid to get electricity, it would take them a lifetime in some situations. So the use of renewables and the flexibility it offers is extremely important.
Final question I’d like to put to you is the role of DFIs such as the Africa Development Bank which is hosting the unveiling of this report today, your thoughts about the new deal on energy for Africa and how that programme itself can really catalyse change.
I think it can play an important role. It can not only work with governments but attract private investors to play a role. It should also encourage cross border co-operation in energy on projects. It should encourage cross border pulling of electrical energy and I think if we do that, we will be able to move much faster. The Africa Development bank is playing and is going to play quite an important role both with the private sector and with governments. I think the other one area that I would urge that they play an important role is in co-operation among countries and cross borders. Often companies don’t know how to package cross border projects which bring in several countries. The AFDB can do that. It should be a no brainer for Ghana and Ivory Coast for example to cooperate on energy. There’s real potential there.