Closing Africa’s energy gap

How can Africa solve its energy problem in the context of climate change and a slowdown in the global economy?

Despite a decade of soaring economic growth across much of sub-Saharan Africa through extractive exports and billions of dollars in inward investment, our continent is still struggling to come to terms with issues such as poverty and poor electricity grids. We have seen roads, schools, hospitals and airports built – but energy and utilities infrastructure is still lagging behind. Power deficits harm our ability to reduce poverty, threaten the scaling up of education and harm economic growth. The question is, can Africa deal with these challenges at the same time as moving towards sustainable, renewable sources of energy?

In short the answer is yes – but before we can even start to get there we need to face some home truths and harsh realities. As France’s President Holland rightly said at COP21 in 2015, “The world owes an ecological debt to the African continent.” He went on to make a highly accurate statement: “Though Africa is not responsible for emitting greenhouse gases, it is suffering the consequences of climate change.” It doesn’t take a climate change expert to ascertain that Africa is already experiencing a disproportionate impact from climate change – flooding, drought and starvation. Although Holland is mostly right on this particular aspect, he misses on one important point.

Africa did not cause climate change. But we, as citizens of the continent, are all guilty of allowing our natural resources to be sold – a trend spanning many decades – without insisting on a fair retribution from the international community. But let’s be clear – this is not a request for charity; it is an understanding that with hindsight, we should all have asked for a more responsible deal from our international customers. When a Chinese or American company invests in Africa in 2016, it is expected to do so in an ethical way – creating jobs for local workers, helping to skill-up the local workforce and operate in an environmentally responsible way. Hindsight is a wonderful thing. It is a lesson I believe we have learnt – the hard way. So in some small way, we have been complicit in.

When it comes to charity we also need to learn from the past – international aid has not always been funnelled through to the right causes. Good governance and transparency can change this. France, wishing to lead by example, has committed Euro 6 billion between 2016 and 2020 specifically for the development of renewable energy solutions in Africa. President Holland said that renewables are a way for Africa to secure security – and he is right on this aspect. Renewable energy will liberate millions, bring down the cost of energy and inject a boost to national economies. We should however stand proud when receiving these funds – we must remember that Africa is affected by climate change that it did not create. The international community does owe Africa an ecological debt, and international funds that are being gathered for African renewables is a fair and fitting development.

Our next challenge is how to use foreign investment (be it aid or private investment from foreign firms) to ensure that every dollar spent goes towards research, development and innovation. Young Africans are hungry to realise their dreams – they are early adopters of technology and right across sub-Saharan Africa we have millions of people under the age of 25 who want to become entrepreneurs. These individuals need to be tapped in to. There are myriad organizations in Africa that are already pushing the innovation agenda in agriculture and renewables – smart solutions that help to mitigate the impact of climate change. These include Gorta-Self Help Africa, which is helping young entrepreneurs to create solutions such as new drought resistant crops and technologies that maintain high levels of soil moisture.

Governments in the region also have an important role to play – nationally and regionally. The ‘holy grail’ could be said to be the development of a regional electricity grid, which would reach communities right across the continent. Whilst this might sound like a huge infrastructure challenge (the physical grid itself would be a major job) the reality is that Africa already has the ability to turn away from diesel power stations to natural gas within a very short space of time. Africa flares natural gas, wasting previous natural resources – yet it is a cheaper source fuel and much more environmentally friendly. Here, Africa can help itself. If Governments and mining companies can collaborate, gas fuelled power stations could be up-and-running within two years. In addition, those mining companies could act as anchor customers, paying the State-owned (or PPP owned) gas power stations for their electricity rather than burning their own diesel. This would contribute to the national economy and also provide additional funding for the expansion of a regional grid. Naturally, these kind of ideas require leadership and regional collaboration.

Governments also have the power to support local entrepreneurs with innovative ideas for the development of energy efficient solutions to local challenges. In Angola in 2014, the government launched a new venture capital fund called Fundo Activo de Capital de Risco Angolano – the country’s first ever government-backed investment fund. It has been set up specifically to help growing businesses in Angola to expand. The Fund is available to growing, viable businesses – particularly those innovating in energy and agriculture. FACRA also acts as a conduit, partnering foreign investors with Angolan businesses, making it much easier for foreign firms to invest in renewables in Angola and much easier for growing companies to expand their businesses.

We are clearly at a point in history where the world has decided that it is right and fair to give back to Africa, to try to put right the wrongs inflicted upon it by industrialisation. This is a welcome juncture. The onus is now on us as Africans to use those funds wisely to support home-grown entrepreneurs and innovators who are passionate about finding African solutions to African challenges. In some respects, we are only at the start of this journey but it’s a road we need to follow. We now have the world on our side and we mustn’t disappoint.

Author

  • Teodoro de Jesus Xavier Poulson Member of Investment Committee, Fundo Activo de Capital de Risco Angolano (FACRA). As a Member of the Investment Committee of FACRA, economist Teodoro Poulson leads the Fund's overall investment strategy along with sourcing investment opportunities in Angola and across the Sub-Saharan African region. Prior to that, from May 2003 to September 2013, Teodoro worked as a money market operator with the National Bank of Angola, the country's central bank. In this role, Teodoro was responsible for overseeing the asset management of the bank's investment portfolio. He also served as an external debt analyst at the bank. Previously, Teodoro was a visiting fellow of macroeconomics at the Superior Institute of International Relations and Social Sciences in Angola.Teodoro holds a postgraduate degree in International Commerce & Law from the Law School of Agostinho Neto University, Luanda, and a graduate diploma in Economics and Management from the Jean Piaget University Angola.

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Teodoro de Jesus Xavier Poulson Member of Investment Committee, Fundo Activo de Capital de Risco Angolano (FACRA). As a Member of the Investment Committee of FACRA, economist Teodoro Poulson leads the Fund's overall investment strategy along with sourcing investment opportunities in Angola and across the Sub-Saharan African region. Prior to that, from May 2003 to September 2013, Teodoro worked as a money market operator with the National Bank of Angola, the country's central bank. In this role, Teodoro was responsible for overseeing the asset management of the bank's investment portfolio. He also served as an external debt analyst at the bank. Previously, Teodoro was a visiting fellow of macroeconomics at the Superior Institute of International Relations and Social Sciences in Angola.Teodoro holds a postgraduate degree in International Commerce & Law from the Law School of Agostinho Neto University, Luanda, and a graduate diploma in Economics and Management from the Jean Piaget University Angola.

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