Continent powers up to meet industrialisation ambitions
29 Apr 2016 - by Liesl Venter
Growing recognition of the critical importance of power for industrialisation on the continent has seen an increase in the number of power projects as well as the mix, according to Duncan Bonnett of consultants Africa House.
“A lot of it is being driven by private investors and independent power producers,” he said. “It is impossible to transform Africa from a mineral-based space into a more integrated manufacturing and industrial continent without power,” he said.
“Without power you don’t attract large investments - and current investments will be downscaled. In the South African context for example we are now producing the same amount of steel as we were in the 1970s yet the population has doubled and the economy has quadrupled in that time. Our power constraints have restricted investments into key sectors like the industrial and mining industries,” he said. “And the rest of Sub-Saharan Africa has traditionally been in an even worse situation with regard to power access.”
At least 25 countries in Africa, according to the World Bank, are facing a crisis, evidenced by rolling blackouts. This is despite the continent being well endowed with fossil fuels and renewable resources.
Since the mid-nineties external finance for Africa’s power sector only averaged around $600 million per year of public assistance, plus a similar volume of private finance. More recently, Chinese, Indian and Arab sources have also emerged as significant energy financiers. Nonetheless, it is estimated that doubling current levels of energy access by the year 2030 will require sustained investment at much higher levels.
According to Bonnett this has been realised across the continent. “In nearly every country you go to there is a recognition that power is a driver of growth. Administrators and politicians are looking at two things - urbanisation and power,” he said.
Project development around the continent showed more and more interventions such as the US Power Africa initiative of $10 billion dollars, he added.
“Also more bilateral loans from the likes of China and India right through to independent power producers and the expansion of grids by governments and utilities themselves are increasing. There is without doubt a concerted effort to overcome the power deficit in Africa.”
He said activity in the power sector ranged from coal fired power stations and nuclear stations to more renewable and hydro power projects.
“Not only are the power projects increasing but the power mix is also changing. A lot of it is being driven by private investors and independent power producers although it is still not an easy sell to governments or utilities that have always had rigid control over the power sector on the continent.”