Africa’s power generation gains 52GWs in five years, says AfDB

• Access to electricity pegged at 54 per cent as Nigeria lags in regulatory improvement
• Egypt, Morocco, Nigeria, South Africa control 70% of regional manufacturing

Africa’s installed capacity generation gained 52 gigawatts (GWs) in five years, the 2020 Annual Development Effectiveness Report of the African Development Bank (AfDB) has disclosed.

According to the report, obtained by The Guardian yesterday, the installed capacity stood at 168GWs in 2015, the baseline year of the study, but closed 2020 at 220GWs, showing an improvement of 31 per cent in the period.

The document, which covers several aspects of the regional economy and the Bank’s contributions to growth trajectory last year, also estimates the percentage of Africans with access to electricity at 54 per cent—a 12 percentage point improvement on 42 per cent recorded five years earlier.

Unfortunately, electricity losses through transmission, distribution and collection increased from 15 per cent to 17.1 per cent in the five years just as the share of population with access to clean cooking solutions worsened in the period, dipping from 32 to 27 per cent.

The indicators are worse for countries classified under African Development Fund (ADF) and transition states.

The report says many of the regional countries’ electricity regulatory frameworks “are at a low level of development”.

Under the level of regulatory development, where Uganda is rated most improved with 0.8 points, Nigeria’s performance is classified among medium countries. The score lines are low, medium, substantial and high.

“Under its New Deal on Energy for Africa, launched in 2016, the Bank made expanding access to energy a central priority. The New Deal aims to unify initiatives to expand energy access and to mobilise more financing for energy infrastructure by stimulating public-private partnerships. Its overarching goal is universal access to energy across Africa by 2025. The Bank has also launched landmark transformative initiatives, such as the Desert to Power initiative, to seize the Sahel’s potential to produce solar energy,” the report says.

In 2020, according to the report, the Bank’s power projects delivered 175 km of new or rehabilitated power transmission lines, compared to 69 km in 2015. They also enabled an additional 260, 000 people to be connected to power systems compared to 73,000 it assisted in 2015.

Also, the manufacturing capacity of the region remains concentrated in a small number of countries, with Egypt, Morocco, Nigeria and South Africa accounting for about 70 per cent of Africa’s manufacturing value-added. It emphasized the role of access to finance in boosting Africa’s competitiveness.

Regrettably, according to the report, Africa’s global competitiveness has dipped from 3.64 to 3.44 points between 2015 and 2020. The report suggests the continent has huge potential and could compete with other regions with adequate infrastructure support and finance.

“An example of our work to facilitate access to finance for enterprises is the $300 million package of trade finance we provided to the First Bank of Nigeria (FBN). This package enabled the FBN to provide finance to 165 SMEs operating in health, hospitality, manufacturing, agribusiness, construction and food processing. The FBN worked to make investments gender-inclusive, with over 5000 female entrepreneurs receiving funding or capacity-building support,” the report discloses.

Industry analyses, it states, suggest that a range of policy measures are needed to help firms break into global value chains. It lists the measures to include more openness to foreign direct investment, greater trade liberalisation to allow inputs to enter more cheaply and streamlining of customs and border procedures.

Others are reinforcement of transport infrastructure and logistics as well as improvements to the legal environment so that firms are able to conclude agreements.

“It is also important for countries to identify the products that they are best equipped to integrate into global value chains. The African Continental Free Trade Agreement (AfCFTA) gives African countries a structure for developing effective value chains both regionally and globally,” it notes.

According to the Bank, almost 16.5 million people benefited from improvements in agriculture last year while more than nine million gained access to better transport services through its support programmes.

It added that more than eight million people were given new or improved access to water and sanitation. On COVID-19, it says AfDB’s response provided emergency assistance to 31 countries, benefiting 12.3 million vulnerable households.

It laments that the pandemic has raised fiscal deficits and indebtedness significantly, reducing the capacity of African countries to invest in economic recovery.