Joy Jan. “Electrification of Africa: Marshall Plan” (Draft 2)

The following materials were submitted  on 18  March, as working notes and various ideas and materials that will be screened, sourced and rewritten as necessary for the purposes of  intellectual property and correct attribution. They are presented here as received, without editing or comment.J Jan Africa project - map of lights

The Dark Continent

Introduction

Former French Minister Jean-Louis Borloo presented a “Marshal Plan” on the 3rd of March 2015, for the electrification of Africa, which will require 200 billion Euros in funding over ten years. The aim of this plan is to bring energy to 600 million Africans who have no access to electricity. Estimate on the based on funding 200 billion Euros is needed over a decade including 50 billion grants which will require 4 billion Euros per year to acquire i.e. 3% of the European Unions’ Budget. Jean Louis Borloo emphasis the need to electrify African because according to him; “The growth for Europe is in Africa, it is vital to our growth, our stability, said the former French Minister of Ecology and former president of the centrist party IDUs. Because electricity is the basis for everything else: agriculture, access to water, health, and the economy”.

Thesis: To what extent is this project feasible in relation to it sustainability?

In order for us to answer this question, we need to first look at the situation in Africa as it is now, the we will look at what can make this project surmountable and what can hinder it. Then we will look at the benefit of this project to African and the world.

 J Jan Africa project - electricity consumption

 

 General overview

The lack of energy grid in most part of Africa is not a new issue; the number of grids available does not cover the demand for electricity a threat by population growth, the generation capacity of sub-Saharan Africa is only 28 Gigawatts for approximately 940 million people. 24 percent of sub-Saharan Africa has access to electricity compare to 86 percent without electricity, and according to the World Bank, the number of people without electricity in Sub-Sahara Africa has increased because the population growth has outpaced the growth rate of electrification.

The lack of electricity in Africa is one of the region’s biggest obstacles to its development and prosperity, and it continues to drive the continent deep into poverty. An estimate of seven out of ten people do not have access to electricity in Sub-Sahara Africa, this shortage of electricity has resulted to a low quality of life, premature deaths, poor health and great economic impacts. Most people in sub-Saharan Africa cook and heat their bath water with wood or coal which if not stopped will lead to disforestation or greenhouse emission, and those that can afford a generator use them to cook or at night when sleeping because of the heat.

This is dangerous to the planet and the human health because the inhalation of the fumes or smoke produced from wood burning and the carbon dioxide from generator results in over three million deaths per year and the diesel used in generator harms the environment. Furthermore, children read with nearly zero visibility, they use candles, oil lamps or the little that is left of the Sun to read or do their homework’s, as a consequence, it leads to bad eye sights or even blindness.

The Insufficient access to energy can impact the GDP growth by 2-5% per year. Economic growth is affected and it is almost at a stagnant point, as a result–60% of African businesses say that the lack of access to reliable power is a constraint on their operations. The consequences of this electricity deficiency include loss of developmental opportunity, and also a higher cost for basic needs and services. Businesses who run on generator all day will take into consideration the cost of paying for diesel for example; they will be forced to increase their prices in other to stay in business.

The Nigerian Government recently announced on Tuesday, March 17, 2015, the reduction of electricity tariff by 50% which takes effect from the end of March 2015. This reduction came as a result of complaints and petitions by the industrial and commercial consumers who repudiate the approval of a multi-year tariff order (MYTO 2.1) initiated in January 1, 2015, which resulted in an “astronomical” increases in electricity tariff for the industrial and commercial consumers. The Chairman of the Nigerian Electricity Regulatory, Sam Amadi, noted that the industrial and commercial consumers demanded under the endorsement of the Manufacturers Association of Nigeria, the drastic reduction of their tariffs. The complaints stated that the impact of increased electricity tariffs, threatens their businesses, which can lead to massive job losses. A lot of people in Nigeria see this electricity tariff cut as a strategy by the Nigeria Government to desperately get re-elected into power because this announcement came just 11days away from the national election which is on March the 28, 2015.

In order to understand how this compares to the developed countries, an official from the U.S. Agency for International Development (USAID) said: “Over a year, a refrigerator uses six times more electricity than a Tanzanian citizen, and it would take an Ethiopian citizen two years to consume the amount of electricity that an American does in three days.” This estimation sums up the situation of the lack of electricity in Africa because no electricity means no development.

 

The cost of Progress:
This challenge is huge. The rate of electrification has been slower than the rate of population growth in the Africa. This initiative is a David conquering Goliath project, in order to get all of sub-Saharan Africa which generates nearly as much electricity as Spain to generate a level comparably to what South African in enjoying would require 330 gigawatts of new energy capacity.  According to The World Bank, it would take; “$1 trillion a year in global investment to eliminate energy poverty by the year 2030” which is the double of what is being spent now. Furthermore, this huge level of investment in energy could only supply a minimal amount of electricity to the poor, enough to operate a fan, charge mobile phone and two fluorescent lights for only five hours a day.

 

Other schemes in place:

Jean Louis Borloo’s electrification of Africa has already been put in place by the Obama Administration which announced the expansion of electricity in Africa a $26 billion electrification project in six African countries such as; Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania, will help ensure the continent adds 30,000 megawatts of additional capacity and extend electricity access to at least 60 million households and businesses through on-grid, mini-grid, and off-grid energy supply. This is a collaboration of the U.S government institution and private companies which will together provide an additional $12 billion in aid to the administration’s electrification program for Africa; the U.S federal government is contributing  on its part $300 million a year to this program.

Also adding to this initiative is the World Bank which will commit $5 billion in “direct financing, investment guarantees and advisory services to Power Africa”, Swedish government will also contribute to the program. Also contributing to this program is African’s richest man Aliko Dangote, president and chief executive of the Dangote Group, he announced a $5 billion deal in collaboration with Blackstone to invest in power supply and power infrastructure in sub-Saharan Africa.

 

Feasibility

Financing: one of the major factors that hinder the completion of any project is financing. Governments and international donors, private sectors will have to come together and play their part in Africa. This initiative to electrify Africa seems to unite both the government and private sector where the government is using government funding, loans and diplomacy as a bait to attract greater investment from the private sector.

This project will be feasible if the government would build all the infrastructures and sell them to private investors, just like with the telecommunication sector in Africa which has become affordable for even a bin scavenger to afford, off course this great achievement even though it is still getting better has come a long way. For example, when MTN first came to Nigeria in 2001, their sim card was selling for 35,000 Naira which is equivalent to about 175 Euros, today; a sin card cost about 100 Naira which is equivalent to about 50 cents and airtime which cost from 1500 Naira equivalent to 8 Euros to 5,000 Naira equivalent to 50 Euros now cost as low as 40 Naira airtime which is equivalent to about 35 cents. As more telecommunication companies began operating in Nigeria, competition between the network providers drove prices down.

This can be possible with electricity in Africa, we can have different private sectors buy parts of the energy from the governments when they are completed and run them as private companies. If the payment and credit problem for this project can be resolved, the electrification of Africa can attainable.

 

New Infrastructures– however, may have a silver lining, as it has opened the door for new off-grid energy innovations to potentially circumvent current energy technologies in developing countries.

  • Rich energy resources –  Africa is  rich in renewable energy. There are enormous untapped resources of gas, oil, coal, geothermal, solar and wind power that could easily meet the region’s requirements.
  • Government support-
  1. Education

 

Obstacles:

    1. Corruption- The usual problems of corruption, war, lack of investment, poverty and the immense distances involved to power remote rural communities have all contributed to the failure of electrification. An estimate cost of running a generator in Nigeria for example is about 360,000 (1800 Euros)Naira per month for a small family in rich neighbourhoods.
      1. Lack of infrastructure- Africa is short of Power stations, hydro dams, wind and solar farms, as well as the transformers and electric grids. These grids were back from the Colonial era, they are enormously expensive and require massive capital investment to buy parts and keep them functioning.
      2. Lack of qualified workers- renewable energy is a new aspect developing in Africa, there are little or no trained workers to handle or operate the infrastructure when finished.
      3. Maintenance-
      4. Getting people to pay for power-
      5. Electricity and grid theft-
      6. Rural area- extending the power grid to rural areas is very expensive, and off-grid and micro-grid are the only solutions suitable to cover the vast isolated villages in Africa. Sustainable energy through the use of new off-grid energy innovations, could potentially replace the current energy technologies in Africa.

 

Benefits:

      1. For Africa
      2. For France/ the world (the next big emerging market) will boost exports for France and the rest on the world, this can also boost construction firms and equipment manufacturers will have a new market in Africa.
      3. It impact on the environment going off-grid

 

 

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Submitted in partial fulfillment of the requirements of the IMBA Seminar onSustainable Development, Economy and Democracy of the Institut Supérieur de Gestion, Paris, March 2015.

The author has certified that this submittal fully respects the

In accordance with the French law “Informatique et Libertés” of the 6th of January 1978 amended in 2004, students have a right to access and rectify their personal information collected on this website (see the Legal Terms).

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