News / Africa

Greater Investment in Electricity Could Spark African Economic Growth, say Analysts

Specialists say continent has underutilized water and wind resources

Multimedia

Audio

Part 5 of a 5 Series: Investment in Africa

Economic growth in many sub-Saharan countries has been stunted by an energy crisis that many say will continue without more government and private investment.

Many economists agree that increasing the region’s energy supply is essential for economic growth and poverty reduction.  Improved investments would also help African governments meet the U.N.’s Millennium Development Goals, which encourage drastic reductions in poverty and illness by 2015.

Studies show that investing in energy resources and increasing electricity has a significant impact on women and children.  Without it, they often spend hours gathering wood for cooking, which affects their ability to attend school or engage in income-generating activities.

According to statistics, 70 percent of all African governments do not have enough access to electricity, although they spend $40 billion annually on fossil fuel-based energy products.

Need in numbers

Robert Adam Mosbacher, Jr., is the former head of the Overseas Private Investment Corporation (OPIC), a U.S. government agency working to promote development by working with the private sector.  He was also the president and CEO of his own company in Houston.

Mosbacher says, “Clearly Africa…needs more electricity, and there are Western companies that would be interested in helping develop more electrical capacity….”   He cites as one example the Democratic Republic of Congo, where millions go without electricity even though the country has millions of square kilometers of water for hydropower.

Sub-Saharan Africa could also benefit from investment in wind energy, but the statistics from the World Wind Energy Report show that 95 percent of that investment is currently concentrated in Egypt, Morocco and Tunisia.


Barriers

Development in the energy sector could be daunting.  Observers say such investments are capital-intensive and involve high start-up costs.  But many economic analysts say it’s not the cost that turns away potential investors, but the volatile political climate of many African countries.

Mosbacher says for investment dollars to flow, “a few essential elements must exist.…”

He says that for every power project, which often costs hundreds of millions of dollars, “there has to be a legal framework that gives you comfort that…you will get your money back plus some return on your investment.”

“It is true,” he says, “that investors often shy away from countries considered high risk,” although he says it’s these very countries that need investment the most.

Current projects

The CEO of Africa Finance Corporation, Andrew Ali, says some of the largest projects invested in Africa today are in the energy sector.

Three are in East Africa.  They include a hydropower scheme at Bujagali, Uganda.  The 250 megawatt hydropower plant on the Nile is expected to supply electricity to millions of Ugandans in rural and urban areas, including the site of daily power failures, the capital, Kampala.

The second is a new geothermal plant under construction a few hours away from Kenya’s capital Nairobi. The plant is being built by the Kenya Electricity Generating Company (KenGen). Money for the projects has been raised mainly from local sources with help from the government.

Another is the African Rift Geothermal Project (ARGeo Project) is funded by a Global Environmental Facility contribution of US$ 17.75 million. The program seeks provide the region with more geothermal development – and investments.

Dr. Crowther Pepela, the former chair of the Kenya power and lighting company, says that there is lots of room for expansion in the energy sector, especially power and distribution.  He says “the world bank and other consortium of investors are helping in availing funds.”


Energy investment in Africa is not limited to hydro electricity and geothermal projects.

In Rwanda, organizations like The Solar Electric Light Fund (SELF), a not-for-profit organization, is implementing sustainable energy solutions to enhance the health and education sector.  The group’s director, Robert Freling,  says he is encouraged by the number of African governments that are promoting public and private investment in solar energy. He says a recent project in Benin shows that investing in the power of sunlight can provide long-term solutions to hunger in underdeveloped nations.


Making investments in big energy projects is becoming easier. Alex Twinomugisha, an analyst based in East Africa says that’s because banks are more willing to lend.  He attributes their change of attitude to the potential for success, and since, as he puts it, “they are probably making a killing arranging deals for the local financial market.”

You May Like

US Imposes Sanctions on Alleged Honduran Drug Gang

Treasury department alleges Los Valles group is responsible for smuggling tens of thousands of kilograms of cocaine into US each month More

At 91, Marvel Creator Stan Lee Continues to Expand his Universe

Company's chief emeritus hopes to interest new generation of children in superheroes of all shapes and sizes by publishing content across multiple media platforms More

Photogallery New Drug Protects Against Virus in Ebola Family

Study by researchers at University of Texas Medical Branch, Tekmira Pharmaceuticals is first looking at drug's effectiveness after onset of symptoms More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
African Media Tries to Educate Public About Ebolai
X
George Putic
August 20, 2014 8:57 PM
While the Ebola epidemic continues to claim lives in West Africa, information technology specialists, together with radio and TV reporters, are battling misinformation and prejudice about the disease - using social media to educate the public about the deadly virus. VOA’s George Putic has more.
Video

Video African Media Tries to Educate Public About Ebola

While the Ebola epidemic continues to claim lives in West Africa, information technology specialists, together with radio and TV reporters, are battling misinformation and prejudice about the disease - using social media to educate the public about the deadly virus. VOA’s George Putic has more.
Video

Video Ferguson Calls for Justice as Anger, Violence Grips Community

Violence, anger and frustration continue to grip the small St. Louis suburb of Ferguson, Missouri. Protests broke out after a white police officer fatally shot an unarmed black teenager on August 9. The case has sparked outrage around the nation and prompted the White House to send U.S. Attorney Eric Holder to the small community of just over 20,000 people. VOA’s Mary Alice Salinas has more from Ferguson.
Video

Video Beheading Of US Journalist Breeds Outrage

U.S. and British authorities have launched an investigation into an Islamic State video showing the beheading of kidnapped American journalist James Foley by a militant with a British accent. The extremist group, which posted the video on the Internet Tuesday, said the murder was revenge for U.S. airstrikes on militant positions in Iraq - and has threatened to execute another American journalist it is holding. Henry Ridgwell has more from London.
Video

Video Family Robots - The Next Big Thing?

Robots that can help us with daily chores like cooking and cleaning are a long way off, but automatons that serve as family companions may be much closer. Researchers in the United States, France, Japan and other countries are racing to build robots that can entertain and perform some simpler tasks for us. VOA’s George Putic reports.
Video

Video In Ukraine, Fear and Distrust Remain Where Fighting has Stopped

As the Ukrainian military reclaims control of eastern cities from pro-Russian separatists, residents are getting a chance to rebuild their lives. VOA's Gabe Joselow reports from the town of Kramatorsk in Donetsk province, where a sense of fear is still in the air, and distrust of the government in Kyiv still runs deep.
Video

Video Five Patients Given Experimental Ebola Drug Said to Be Improving

The World Health Organization has approved the use of experimental treatments for Ebola patients in West Africa. The Ebola outbreak there is unprecedented, the disease deadly. The number of people who have died from Ebola has surpassed 1,200. VOA's Carol Pearson reports on the ethical considerations of allowing experimental drugs to be used.
Video

Video China Targets Overseas Assets of Corrupt Officials

As China presses forward with its anti-graft effort, authorities are targeting corrupt officials who have sent family members and assets overseas. The efforts have stirred up a debate at home on exactly how many officials take that route and how likely it is they will be caught. Rebecca Valli has this report.
Video

Video Leading The Fight Against Islamic State, Kurds Question Iraqi Future

Western countries including the United States have begun arming the Kurdish Peshmerga forces in northern Iraq to aid their battle against extremist Sunni militants from the Islamic State. But there are concerns that a heavily-armed Kurdistan Regional Government, or KRG, might seek to declare independence and cause the break-up of the Iraqi state. As Henry Ridgwell reports from London, the KRG says it will only seek greater autonomy from Baghdad.
Video

Video In Rural Kenya, Pressure Builds Against Female Circumcision

In some Kenyan communities, female genital mutilation remains a rite of passage. But activists are pushing back, with education for girls and with threats of punishment those who perform the circumcision. Mohammed Yusuf looks at the practice in the rural eastern community of Tharaka-Nithi.

AppleAndroid