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Africa’s energy challenge

Africa is the world’s most energy poor continent. The energy capacity of 40 sub-Saharan African countries combined is less than the capacity for the 20 million people in New York. Some African countries such as Mali, Burkina Faso and others, because they are Sahelian and landlocked, pay more for a kilowatt hour of energy than the rest of the world. In some African countries, energy costs are between US30 and US50 cents per kilowatt hour compared to US4 to US17 cents in most other parts of the world. In Nigeria, Sierra Leone and many other African countries every factory or restaurant has a generator, which add 20% to 30% to their cost of operation.

African leaders are saying the right things about energy. Many countries across the continent are discovering oil and gas. They must learn from the lessons of Nigeria though. That country flares almost US$2 billion to US$3 billion of gas every year while it cannot generate even 4,000 megawatts for its 170 million people. Thus there is an initiative across Africa for just zero flaring. Even Ghana, one of the most electrified countries in West Africa —almost 72%, still sees almost 80% of the population using charcoal and firewood for cooking.

A piece of good news is that a number of banks are beginning to look at the energy sector in Africa. There is also a greater intent to locally source capital. Ethiopia’s Renaissance Dam has seen funding for the project raised through internal taxes. The country is also planning to sell half of the energy to Kenya and other neighbours, like Sudan. For projects the size of the Renaissance dam, large markets are needed as well as cross border transmission lines.

However the numbers are large; to achieve universal access to energy, for the 1.4 billion people who currently have no access, the majority of whom live in Africa US$50 billion a year is required.

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Africa’s energy challenge