“Africa can be the world’s next economic success story." President Obama’s message of optimism in his speech in Tanzania recently, which I was fortunate enough to attend, was loud and clear.
It was also backed up by action – not least by the eye-catching new initiative Power Africa, which pledges $7bn and a multi-stakeholder approach to double the number of people with access to electricity in sub-Saharan Africa. It’s a bold and welcome move, and it’s hard not to feel inspired when America’s first black President travels to Africa and stands alongside the impressive President Kikwete and others.
But it was the other type of power that struck me when I heard President Obama’s announcement, political power. A question posed at the lunch earlier in the day, hosted by the US Corporate Council on Africa, summed it up: is the political will to deliver there? For me, this raises a fundamental challenge that Power Africa will need to overcome and which is holding back the development of Africa’s power sector: politics. Only by understanding the political economy of reform, and backing and incentivising the leadership necessary to do things differently, will Africa’s energy potential, and with it its economic potential be realised.
Africa’s energy need is well-documented. It has been estimated that the whole of Sub-Saharan Africa has less than 100 GW of installed capacity, no more than Spain, and this falls dramatically if you take out South Africa. Less than a third of the population have access to the grid. Where there is power, average prices are 2-3 times higher than elsewhere in the developing world, but service significantly less reliable and power cuts more frequent. This stymies growth and leaves millions without a basic standard of living. And yet African countries have vast potential for electricity production – from new finds of gas to hydro on both small and massive scales, and a range of other renewable sources, like solar and biomass. Addressing Africa’s chronic power gap is therefore both an economic and developmental imperative.
The new US initiative is an innovative approach to an age old problem. Focussed on power reforms in 6 countries – Tanzania, Kenya, Ethiopia, Ghana, Nigeria and Liberia – it takes a “transaction-centered approach” and brings together capital from the US Government, the AfDB and the private sector, including Tony Elumelu’s "africapitalism", with a focus on building capacity both in technical skills and what Jim Kim, President of the World Bank, has taken to calling the "science of delivery". This is very similar to our own thinking and approach here in AGI, based on practical support to reforming Presidents on the “3Ps” of prioritisation, planning and performance management, the basic functions necessary to get things done in government – and we shall watch its development with great interest, especially given our existing work with President Johnson Sirleaf in Liberia and Dr. Okonjo-Iweala, the Co-ordinating Minister for the Economy in Nigeria.
But the barriers to developing the energy sector in Africa are not just about money and skills – though there is a shortage of those things no doubt and more of both is necessary. Too often what has been missing is political will. Not at the outset, when reforms are first touted and bold goals set. But when it comes to the hard yards: to increasing tariffs to make the system economically viable and explaining to an angry electorate why they need to pay more; to replacing management teams in dysfunctional utilities that block investment; to taking on ingrained systems of patronage; to issues of sovereignty and security in regional power pools. And the reason is that these things are hard: reform is hard, leadership at such times is lonely, and political will is a dynamic, fluid thing. Which is why, alongside the partnerships, the funding and the technical assistance – all welcome – Power Africa needs to explicitly support the leadership that is a prerequisite for its success.
In each country a strong coalition from the President or Prime Minister, through the Finance Minister, to the lead Minister and head of agency or regulator will be needed. Where regional projects are mooted, this will be even more important: investment is always based on confidence, especially in long term infrastructure projects, and so investors won’t just need to know that a predictable regulatory framework can be put in place but that all players will stick to it. And “getting the politics” will require a sophisticated and differentiated approach to Power Africa in each country: the political economy of reform will not be the same in Ethiopia as in Nigeria or even Kenya, and each needs to be understood in its own terms and support tailored accordingly.
In a speech to the Center for Global Development this time last year following the launch of President Obama’s Africa Strategy, Mike Froman, now US Trade Representative, in talking of anti-corruption measures said: “taking bold and persistent steps on this front requires few resources – other than political will.” Power Africa can break new ground in mobilising the resources necessary in the power sector, but the same point is still fundamentally true. In the past decade the telecoms sector in Africa has been transformed and growth and development unleashed. Reform and rapid progress are possible. If the same kind of leap could be made in the power sector in the next decade, the impact would be greater still. Can Power Africa kickstart that? I for one share the President’s optimism.
Nick Thompson, CEO
Photography: USAID U.S. Agency for International Development