President Obama talking at the Ubongo Power Plant in Dar es Salaam, Tanzania during his trip to Africa. Photo credit: Pete Souza/White House
President Obama recently announced his Power Africa initiative – a bold effort to scale up electricity access and address energy poverty in sub-Saharan Africa. But what exactly is it, what is it missing and how can you help support the initiative’s goals?
As part of a recent blog series, ONE has highlighted how a lack of modern energy access traps millions in extreme poverty unable to fulfill their potential. Power Africa is an initiative announced by President Obama last Sunday to address this huge inequality. The initiative’s overarching aim is to double electricity access in sub-Saharan Africa by responsibly building on Africa’s power potential in gas and oil as well as the continent’s huge potential to develop clean energy.
Initially focusing on six key partner countries, the initiative will mobilize the US private sector to achieve the aims of adding 10,000 MW of cleaner more efficient electricity generation capacity, as well as increasing electricity access by at least 20 million new households and commercial entities through a combination of on-grid, mini-grid and off-grid solutions. By comparison, this is roughly equivalent to the current power needs of London.
The initiative focuses on addressing many of the bottlenecks to scaling up energy access in Africa. By utilizing public-private partnerships it seeks to directly mobilize U.S. private capital to increase access. Complementary to this, the initaitive includes a strong focus on supporting African countries in increasing their technical capacity and strengthening their national energy governance systems to increase energy access. USAID and other government bodies will also be utilized to promote innovative solutions to provide first time energy access to the poorest in Africa.
The US government will initially provide $7 billion over the next 5 years in support of the initiative – and because of the structure of the initiative’s public-private partnerships, most of this finance will be returned to the U.S. tax payer when companies pay back the U.S. treasury for this support. On top of this, the US private sector has committed an additional $9 billion of direct support.
So what is missing – and what more is needed?
The initiative could be strengthened in four key ways:
1) Placing an emphasis on getting the rest of the world to step up and increase support for energy access. The US government should use its significant influence at the World Bank and with the African Development Bank to ensure these institutions, and importantly the donors that support them, also step up their support for addressing energy poverty in Africa. To provide universal, modern energy access in sub-Saharan Africa, an estimated $19 billion in additional annual investments needs to be mobilized. While the initial US commitment is significant, it isn’t close to the scale of investment needed. With the commitment of other countries, this necessary amount of money can be reached.
2) Expanding the scope beyond the initial focus countries. You can’t double electricity access in sub-Saharan Africa by focusing on only six countries. There are many African countries, such as Senegal, Botswana and the Ivory Coast, that are ready for US investment support to increase energy access but are currently excluded from this initiative.
3) Recognizing the important role the Overseas Private Investment Corporation (OPIC) can, and will need, to play in dramatically scaling up energy access and addressing energy poverty. Currently, most of the investment in the Power Africa initiative is from the Export-Import Bank. This institution is limited by primarily only being able to subsidize the export of specific US products, which may not always be appropriate for the specific energy access needs. In contrast, OPIC can provide investments, utilize medium/long term loans, provide more risk guarantees, engage early to put together viable energy deals and provide necessary public-private deal experience. The means OPIC is able to fund both a much wider variety of energy access projects and some of the riskier, or lower financial return, projects – e.g. projects in the poorest countries where returns may be lower but where the need is greatest. However currently – despite its relative benefits – OPIC only accounts for $1.5 billion of the dedicated finance in the Power Africa initiative. To achieve the initiative’s electricity access goal, it will be necessary to employ OPIC more aggressively to drive, finance and insure the next phase of energy projects.
4) Getting supportive legislation passed. You can’t double energy access overnight, so the success of this initiative will depend on continued political support. In US politics, this can’t always be guaranteed. Indeed the policies of one government are often displaced when the next government comes into power. One of the most effective ways to ensure the necessary sustained political support for Power Africa and increased energy access in sub-Saharan Africa is to get bipartisan supportive legislation passed. This action will ensure continued legal and political support for the initiative’s aims. And that is where you come in…
Last week, House Foreign Affairs Committee Chairman Ed Royce, R-Calif.,and Ranking Member Eliot Engel, D-N.Y., introduced the “Electrify Africa Act of 2013,” a non-country specific, sub-Saharan African energy access bill that addresses some of the limitations of the Power Africa initiative and would have the complementary goals of providing electricity access to over 50 million people and installing 20,000 MW of energy capacity by 2020.
By getting this “Electrify Africa Act of 2013” passed into law, we can ensure continued political support for the Power Africa initiative’s goals as well support first-time electricity access for 50 million Africans.
But this won’t happen without your support.