March 13, 2017

Africa needs courage to face future energy challenges

 

The unexpectedly high spend on mobile phones in Africa in the past few decades surprised many Africa analysts who had largely written off the spending power of the poorest in society, preferring to focus their efforts on a rising middle class.

This expenditure highlighted the fact that people will find money, however little, to spend on goods and services they really want and need.

Another indicator of this is the expenditure across income groups on power generation. A huge $50bn a year is spent by Africans on fuel for energy, according to a speaker at last week’s African Energy Indaba in Johannesburg. Most of this is used to power generators — a staple energy source across Africa.

In Nigeria alone, more than $20bn a year is spent on fuel for localised energy solutions. The ubiquitous sounds of the fuel-guzzling machines can be heard across Nigeria, from the smallest market stall to the biggest hotel. They also help the government to function. In Nigeria’s recent budget, the highest generator spend was on the power, works and housing ministry.

Many across Africa rely wholly or partially on power from generators to supplement ailing power utilities. Those who are off the grid — an estimated 600-million people — also spend hard-earned money on nongrid energy options such as paraffin lamps, battery-operated flashlights, wood, charcoal and candles.

The United Nations Environment Programme says 26-billion candles are consumed every year in sub-Saharan Africa.

Deforestation is happening at an alarming rate as Africans cut trees for fuel, mostly in areas without sustainable reforesting programmes.

Roadsides in parts of Africa are lined by people selling large bags of charcoal. This information is not new but it bears repeating. It is easy, with all the high-brow discussions about energy funding and options in the world, to forget the reality.

At the top levels, talk about energy solutions is often about huge price tags and vast projects. Many never happen. More than two decades of talks about the merits of the Inga Dam hydropower project in Central Africa have yielded little but the example is still trotted out regularly.

While the debates rage about the right energy mix in the modern world, millions of Africans are counting out their money to see how they can keep the lights on, often just for the day ahead.

The amount of money spent collectively on these different, albeit inefficient, sources of power is significant. Africa’s consumers, even at the lowest income levels, put aside money for what they really need, which is good news for those in the right businesses.

As participants at the indaba highlighted last week, countries now have a large array of interventions at their disposal.

But without a clear vision of how to use these multiple options to best advantage, this can be overwhelming, particularly with so many vendors and experts bending the ear of policy makers.

A failure to plan for rapidly rising demand dogs energy provision in African countries.

Africans’ relative self-sufficiency, albeit at great personal cost, lets governments off the hook. Some states hide their inaction behind funding issues even while they spend millions on state subsidies. As industry experts said last week, courage, not money, is needed.

The money will come if governments have the courage to break away from old models, to embrace new technology, to play a more active role in developing regional power projects and, importantly, to loosen the reins of the state to allow the private sector to be a partner in moving forward into this brave new world.

• Games is CEO of business advisory Africa @ Work

 

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