Jeanna Smialek
By Jeanna Smialek
The meat spoils when the electricity goes out for an extended time at Sadi John’s butcher shop outside of Dar es Salaam. It’s a common and costly occurrence, he says. “I lose a lot of money,” said John, 26, who lives about 30 kilometers from the country’s largest city, where he waits tables for extra income. He said outages can last three to four days and happen as often as once a week. “Power in our country is a big problem.”
Six-hundred million sub-Saharan Africans lack electricity, and supply can be inconsistent for those like John who have it. The International Energy Agency has estimated the region will need more than $300 billion in investment to extend access to everyone by 2030.
President Barack Obama’s $8bn Power Africa initiative is trying to draw investors to sub-Saharan Africa’s inadequate grid, with initial help from companies such as General Electric Co. More than a year after it was announced, the program faces obstacles such as local capacity shortages and political wrangling in the United States over sources of public funding, as well as a longer- term question about whether the next American president will keep it going. “If Power Africa works, then it would deliver a huge boost for African countries,” Ben Leo, a senior fellow at the Center for Global Development in Washington and a former White House director of Africa affairs, said in an email. “Addressing the energy poverty challenge will take years, and Obama only has two left.”
Treasury Secretary Jack Lew Friday completed a five- day tour of Africa intended in part to promote the electricity push. Stops included Tanzania, one of six Power Africa focus nations, and South Africa, where Obama first announced the initiative in 2013. Power Africa, now in an initial five-year phase, aims to add 30,000 megawatts of cleaner, more efficient electricity- generation capacity in sub-Saharan Africa, connecting 60 million new homes and businesses. Based on the average African household size of five people, that would turn on the lights for about 300 million people, Leo said.
“I’m pleased to say that we are on track,” Lew said this week in Johannesburg. The initiative has fostered development of 2,800 megawatts of new and expected power production and is supporting transactions that will deliver an additional 5,000 megawatts of power, he said.
It also attracted more than $18bn in private investment in its first year, according to a U.S. Agency for International Development annual report. The World Bank, African Development Bank and Sweden have also dedicated money. Even as the program gathers momentum, the limited experience and low starting point some African nations bring to infrastructure development pose a challenge. That’s the case in Tanzania.
“Capacity in the country is limited,” Babu Ram, chief power engineer at the African Development Bank, said outside of a power station in Dar es Salaam, constructed as part of the initiative. “That slows down the tempo.”
Disease is a barrier in Liberia, another of the six focus nations and an epicenter of the Ebola outbreak.
“The health crisis is obviously a short-term deterrent for investors,” Todd Moss, a former deputy assistant secretary in the State Department’s bureau of African affairs, wrote in an email. He pointed out that the country has no large-scale power plants. “Part of the recovery will be building an electricity sector.”
US AID, which oversees the initiative, is temporarily redirecting funds in Liberia to pay for electricity generators to power health-care centers, said Andrew Herscowitz, Power Africa’s coordinator. The four other Power Africa focus countries are Ethiopia, Ghana, Kenya and Nigeria.
A cloud hanging over the program’s future has little to do with Africa. Congress reauthorized the Export-Import Bank, the US’s official export credit bank, through a stopgap measure after a political scuffle this year. Last month, Congress extended the bank’s authority through June 30.
The bank has pledged as much as $50bn of the $8bn total US public funding, Ben Todd, business development officer for Africa, said in an email. To date, it has approved $45m in Power Africa-related transactions, he said.
The Overseas Private Investment Corp., the US government’s development finance institution and a major player in Power Africa funding, has also drawn ire on Capitol Hill. Club for Growth and Heritage Action for America, two conservative lobbying groups, in May called on Congress to block its reauthorization.
The Senate has yet to pass a bill that would reauthorize OPIC, which is extended for now through a continuing resolution on the budget, said Charlie Stadtlander, spokesman for the corporation. OPIC has earmarked $1.5bn for spending across the continent as part of the initiative, and has already dedicated $400 million of that to specific projects, he said. Leo called OPIC “a cornerstone for Power Africa’s financing.”
A longer-term risk is whether the push outlives the current administration, said Moss, now the chief operating officer and senior fellow at the Center for Global Development. “The big challenge right now is for Power Africa to find a home in the US government,” he said. “Building modern power systems is a long-term effort. If Power Africa is going to make a real difference, then it must exist after President Obama leaves office.”WP-BLOOMBERG
By Jeanna Smialek
The meat spoils when the electricity goes out for an extended time at Sadi John’s butcher shop outside of Dar es Salaam. It’s a common and costly occurrence, he says. “I lose a lot of money,” said John, 26, who lives about 30 kilometers from the country’s largest city, where he waits tables for extra income. He said outages can last three to four days and happen as often as once a week. “Power in our country is a big problem.”
Six-hundred million sub-Saharan Africans lack electricity, and supply can be inconsistent for those like John who have it. The International Energy Agency has estimated the region will need more than $300 billion in investment to extend access to everyone by 2030.
President Barack Obama’s $8bn Power Africa initiative is trying to draw investors to sub-Saharan Africa’s inadequate grid, with initial help from companies such as General Electric Co. More than a year after it was announced, the program faces obstacles such as local capacity shortages and political wrangling in the United States over sources of public funding, as well as a longer- term question about whether the next American president will keep it going. “If Power Africa works, then it would deliver a huge boost for African countries,” Ben Leo, a senior fellow at the Center for Global Development in Washington and a former White House director of Africa affairs, said in an email. “Addressing the energy poverty challenge will take years, and Obama only has two left.”
Treasury Secretary Jack Lew Friday completed a five- day tour of Africa intended in part to promote the electricity push. Stops included Tanzania, one of six Power Africa focus nations, and South Africa, where Obama first announced the initiative in 2013. Power Africa, now in an initial five-year phase, aims to add 30,000 megawatts of cleaner, more efficient electricity- generation capacity in sub-Saharan Africa, connecting 60 million new homes and businesses. Based on the average African household size of five people, that would turn on the lights for about 300 million people, Leo said.
“I’m pleased to say that we are on track,” Lew said this week in Johannesburg. The initiative has fostered development of 2,800 megawatts of new and expected power production and is supporting transactions that will deliver an additional 5,000 megawatts of power, he said.
It also attracted more than $18bn in private investment in its first year, according to a U.S. Agency for International Development annual report. The World Bank, African Development Bank and Sweden have also dedicated money. Even as the program gathers momentum, the limited experience and low starting point some African nations bring to infrastructure development pose a challenge. That’s the case in Tanzania.
“Capacity in the country is limited,” Babu Ram, chief power engineer at the African Development Bank, said outside of a power station in Dar es Salaam, constructed as part of the initiative. “That slows down the tempo.”
Disease is a barrier in Liberia, another of the six focus nations and an epicenter of the Ebola outbreak.
“The health crisis is obviously a short-term deterrent for investors,” Todd Moss, a former deputy assistant secretary in the State Department’s bureau of African affairs, wrote in an email. He pointed out that the country has no large-scale power plants. “Part of the recovery will be building an electricity sector.”
US AID, which oversees the initiative, is temporarily redirecting funds in Liberia to pay for electricity generators to power health-care centers, said Andrew Herscowitz, Power Africa’s coordinator. The four other Power Africa focus countries are Ethiopia, Ghana, Kenya and Nigeria.
A cloud hanging over the program’s future has little to do with Africa. Congress reauthorized the Export-Import Bank, the US’s official export credit bank, through a stopgap measure after a political scuffle this year. Last month, Congress extended the bank’s authority through June 30.
The bank has pledged as much as $50bn of the $8bn total US public funding, Ben Todd, business development officer for Africa, said in an email. To date, it has approved $45m in Power Africa-related transactions, he said.
The Overseas Private Investment Corp., the US government’s development finance institution and a major player in Power Africa funding, has also drawn ire on Capitol Hill. Club for Growth and Heritage Action for America, two conservative lobbying groups, in May called on Congress to block its reauthorization.
The Senate has yet to pass a bill that would reauthorize OPIC, which is extended for now through a continuing resolution on the budget, said Charlie Stadtlander, spokesman for the corporation. OPIC has earmarked $1.5bn for spending across the continent as part of the initiative, and has already dedicated $400 million of that to specific projects, he said. Leo called OPIC “a cornerstone for Power Africa’s financing.”
A longer-term risk is whether the push outlives the current administration, said Moss, now the chief operating officer and senior fellow at the Center for Global Development. “The big challenge right now is for Power Africa to find a home in the US government,” he said. “Building modern power systems is a long-term effort. If Power Africa is going to make a real difference, then it must exist after President Obama leaves office.”WP-BLOOMBERG
