The World Bank has said that energy is long neglected sector in Africa and now demands a new deal. Obiageli Ezekwesili, the bank’s Vice President for the Africa Region said inadequate power supply is constraining the growth of the continent, and curtailing the productivity of the enterprise sector.
He was addressing the eighth edition of the Sullivan Summit in Arusha Tanzania, a statement released from the bank’s headquarters says.
The statement quotes Ezekwesili as saying that African manufacturing enterprises register an average of 56 days of power outages per year.
As a result, firms lose 5-6 per cent of sale revenues with losses as high as 20 per cent of sales in the informal sector.
In a move to redress its chronic power shortages and make progress on electrification, Ezekwesili said that Africa needs to invest more than $20 billion per year in the power sector.
And allocate a similar amount for operations and maintenance pointing out that this would require quality planning, international cooperation and a dedication to transparency and good governance.
The cost of power outages typically amounts to around 2 per cent of GDP. Average electricity tariffs in Africa have almost doubled compared to those in the developing world since 2000, but even so, revenues usually are barely sufficient to cover operating costs, not to mention capital cost.
Among other reasons, the World Bank official blamed a combination of poor planning and inadequate finance as well as insolvent power utilities for the crisis in the sector.
Africa’s power sector is also held back by insufficient capacity (only 68 GW of power generated, the equivalent of the power generated by Spain) and low access (only 25per cent of sub-Saharan Africans have electricity).
The World Bank official urged African governments to ensure that any new energy supply must be more equitably distributed across Africa’s populations by rolling out electrification programs.
She called on governments to ensure that power subsidies that are currently absorbed by under-pricing power supplies to the better-off should be redirected to fund access subsidies for the poor.
She said that some of Africa’s most cost-effective energy resources are concentrated in countries that are remote from major centers of demand, and too poor to raise the multi-billion dollar finance needed to develop them.
For example, 60 per cent of sub-Saharan Africa’s hydro-electric potential is to be found in DR Congo and Ethiopia alone.