Can Africa’s energy crises be resolved?

Visiting any African country, there are stories you cannot miss in the headlines - energy, graft, and humanitarian crisis. If you dig deeper into these stories, there are conferences being held, all of them seeking solutions to crises facing Africa.

The problem though is that there is never an end to any of these crises. It is palaver at its best as economies continue to hurt.

In today’s column, I will focus on the energy crises. In South Africa, an electricity crisis remains a major threat to the country’s economic outlook over the coming years. It is estimated that energy disruptions cut the country’s economic growth by as much as one percent every year.

Unlike other African countries, when power goes off in South Africa, telecommunications companies cease to function since they built their infrastructure on the assumption that power would be available 24/7.

When the African National Congress (ANC) met for its bi-annual lekgotla early this month, the energy crises were top on the agenda but sceptical media characterised the ensuing melodrama with headlines like: “Power to the people”, “ANC seeks enlightenment” and “ANC seeks power.”

ANC secretary-general Gwede Mantashe, while addressing the function, did not even recognise that politicians had the responsibility to ensure adequate energy to grow the economy. Instead he told the gathering that “directors in government would have to address the growing energy crises.” He promised to check if ministers and departments understood their priorities and whether they had been funded.

In Nigeria, Africa’s largest oil and gas producer, the British Broadcasting Corporation (BBC) noted in its March 25 coverage BBC Africa Eye: On the front line of Nigeria’s energy crisis, that half of the country’s “population has no access to electricity, and those that do face daily power cuts that can last for hours on end.”

Yet, President Buhari and APC’s nine point pledge in 2014 promised to “vigorously pursue the expansion of electricity generation and distribution of up to 40,000 megawatt (MW) in four to eight years.

Total installed capacity of the power plants in 2015 was 7,445 MW. Effective average generation was less than 3,900 MW.

In 2017 the country’s generation capacity rose to 8,300MW but its peak production stands at 5,222MW which happened on the 18th of December, 2017. Still Nigeria has a long way to go to reach the 40,000 MW target.

In Kenya the story is similar as the Kenyatta Government promised 5,000 MW before the dream was abandoned in favour of expensive subsistence production of energy by independent power producers.

Peak demand

As a result, Kenya’s generation capacity is 2,651 MW with a peak demand of 1,802 MW, as at June 2018. Pundits who support subsistence generation of energy argue that there isn’t sufficient demand to warrant increased production but this is all a calculated move.

What they don’t mention is latent demand and the fact that more than 40 percent of the population is in the dark.

The energy companies in Kenya, although quoted in the Nairobi Securities Exchange, are technically insolvent, going by pieces of information that get leaked to media. The extent of damage is colossal as manufacturers complain about accessibility and affordability of energy that is key to economic growth.

In spite of the inefficiencies surrounding the energy industry in Africa, investor interest remains high. It does not require any genius to raise funds and for once resolve the continent’s greatest hindrance to economic growth.

Our failure to manage local resources to become lucrative investment is what is luring Kenyan investors into the hands of conmen in the cryptocurrency space. By now, it should be very clear that minimalist approach to infrastructure development is not working.

There isn’t a good economic model to predict consumption of any product. The approach to building enabling infrastructural projects should never be left to private sector whose motive is profit. Virtually all such projects that that the country gambled on have paid off. From Thika Highway to undersea cables, we have had good lessons that could be invoked to deal with energy more effectively and move away from analysis by paralysis.

The writer is an associate professor at the University of Nairobi’s School of Business.

The views expressed in this article are of the author.

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