Spring meetings: light up Africa!

Today we revert to the recently concluded IMF/World Bank spring meetings. We attended a briefing on “The State of the Africa Region”, with energy the primary focus. In some African countries such as Gabon, Swaziland and Kenya, the pace of electrification has been rapid, with access rates increasing by around 50% over the past decade. However, the household electrification rate in sub-Saharan Africa (SSA) is the lowest globally, at an average of 42%. Excluding South Africa, industrial electricity consumption across SSA is low, reflecting the poor level of industrialization.

                                                                                                                  

  • Fossil fuels remain the main source of electricity generation in SSA, accounting for 64% of total energy output. However, hydroelectricity is dominant in some countries such as the Democratic Republic of Congo, Namibia, Zambia and Ethiopia.
  • For South Africa, 82% of generation capacity is coal based.
  • Recent attempts to reform the energy sector have resulted in increased electricity tariffs in most countries. The average tariff for the region is US$0.17 per kilowatt hour (KWh). Nonetheless, there are wide disparities within the average, ranging from US$0.04/KWh in Ethiopia to US$0.50/KWh in Liberia. These figures do not include VAT.
  • Rebecca Miano, managing director of KenGen, shed some light on Kenya’s energy landscape. Initially, Kenya was highly focused on hydroelectricity, which was not sustainable due to drought. However, energy generation via geothermal has improved significantly; 633MW is generated from geothermal energy, placing Kenya as eighth in the global ranking for such production.
  • Further, when compared with other African countries, Kenya has made good strides with renewable energy generation. About 70% of Kenya’s energy is from renewables (solar and wind inclusive).
  • Besides building energy infrastructure, Africa needs to consider its skills gap (not only within this industry but generally). The Ivorian minister of petroleum, energy and renewable energy, Thierry Tanoh, disclosed that only 20% of formally educated African youth are science, technology, engineering and mathematics (STEM) trained.
  • We understand that South Korean partners have collaborated with a few African countries including Côte d’Ivoire to assist with educating the youth population by offering post-graduate degrees in science and technology related courses via sponsorship programs.
  • Nigeria’s generation capacity only caters to about 25% of its national demand. We often make the point that improved power supply is a prerequisite for Nigeria’s industrialisation agenda. This is also the case for other African countries. Based on our estimates, if “full power” is attained in Nigeria and made routinely available to businesses and households, it could add at least two percentage points to annual GDP growth.
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