AFRICA’S ENORMOUS ENERGY POTENTIAL

AND WHAT IT MEANS FOR ELECTRICITY SUPPLY ON THE CONTINENT. @Mawuli Agboklu

Photo by Matthew Henry on Unsplash

Africa is on the move. Being the reserve of precious natural resources and home to both the most youthful populations and some of the fastest-growing economies globally- undoubtedly making it have enormous economic growth potential. However, for this potential economic growth to be harnessed, Africa must be fully powered. North Africa has been phenomenal in improving electricity access with 99% of its
population having electricity access.

However, the rest of Africa has great lengths to travel to archive similar successes.600 million of 1.2 billion people in sub-Saharan Africa live without electricity as of 2020 while only about 440 million have access. However, those with access to electricity do not enjoy uninterrupted power. Even though with access, there are long hours of power outages and intermittent due to generation and transmission difficulties. Sub- Saharan Africa’s population growth rate today is at 2.7% a year, surpassing by the Asian as the fastest-growing continent by population in the world today with electricity demand growth rate currently at 6.5%.

This means there is a constant increase in the electricity demand which supply must meet. Supply must be sped up to meet demand very early before the situation gets chaotic.United Nations experts project that at the current population growth rate, Africa’s population will double by 2050, translating into 2.5 billion people, making it home to more than a quarter of the world’s population.The doubling of the population means a significant increase in economic activities leading to a rise in average incomes, which drives up the power of ownership,the rapid urbanization of cities, increased housing, increased public infrastructure, etc; which will drive up electricity demand.

Indeed, the international energy agency in its 2019 Africa energy outlook forecasts electricity demand in 2040 to be 11%. Africa must take a crucial charge to improve electricity access to match its population growth, to drive its economic and energy future. Africa’s GDP growth rate is 3.7% today, with nominal GDP at USD2.6 trillion and unemployment at 15%. Compared with fellow emerging market Asia, whose GDP the growth rate is at 5.7% with nominal GDP at USD31.58 trillion and unemployment at 3.8-Asia has a lesser unemployment rate highlights the imperative that Africa needs to boost and expand its economy to provide for its many citizens. The key to doing that is an aggressive pursuit to recover its many energy potentials to generate power and efficiently distribute electricity to double annual electricity access
numbers.

Africa has 41% of newly discovered gas wells in the world between 2011and 2018. It has 7.5% of global oil reserves and 7.1% of global natural gas reserves. There are huge hydropower potentials untapped even though hydropower is the most used renewable energy source in Africa. DR Congo alone has an estimated hydropower potential of 100 GW with the rest of Sub-Saharan Africa having a technical potential of 3400 MW of mini-hydropower potentials. Solar energy potentials are estimated at 660 000TWh a year and wind energy at 460 000TWh a year. Africa’s geothermal potential is as high as 15GW.

Overall, electricity demand in Africa is about 705TWh annually with North African countries and South Africa accounting for 70% of the total consumption because they are fairly more industrialized than the other countries. These low levels of consumption cannot power the need growth of the continent. Africa’s overall consumption represents a fifth of demand in Europe in 2018. Per capita consumption is far below the world average.

With such enormous potentials, Africa should not be in the dark, but with the situation already existing, we ought to explore the increased impact of expanding electricity access on the continent and what it will mean for its economy. Given that some of the discovered potentials are nominal and in recovering them, there might be technical losses, let’s assume all the earlier referred prospects are recoverable at 50% of the estimated capacity.

There will be reductions in electricity tariffs. Currently, some African countries are among the highest paying tariff countries in the world. If more potential sources are brought on stream across the continent and power is efficiently transmitted to businesses and households, the prices will overtime fall to lower levels as demand volumes will increase, and utilities return on their investments by purchasing volumes on price.

According to the World Bank, almost 40% of sub-Saharan Africa companies perceive unreliable electricity as a major constraint. These are 40% of the few operating companies facing the constraint of unreliable electricity even though they are connected to the grid. Coupled with other policy difficulties, some might even close down. Harnessing the potential of the energy deposits across Africa to generate adequate electricity holds the key to Africa’s industrialization.

Nigeria is Africa’s biggest economy. It is known for crude oil production, but Nigeria has huge agriculture and industrial potential. Its 2019 nominal GDP stood at USD 446.5 billion, with a population of 200 million people. Yet, 78 million people of the 200 million are without electricity access, and those with access have extended hours and sometimes weeks of power cuts, which inhibits their full productivity. Its economy grew at 2.3%, which was below most emerging economies. The pursuit of expanding electricity access to the 78million people, off-grid, would hugely impact the economy.

It would see a surge in agric, industries, and services as more portions of the country become habitable and more suitable for investment due to their access to electricity. Consequently, increasing the current GDP and GDP Per Capita and give Nigerians more economic power.

Kenya is Africa’s technology hub. This means electricity is critical to the survival of many businesses, particularly in the services sector. It has a population of 47million people, and its 2019 nominal GDP stood at USD 99.2 billion. The services sector contributed 47.5% to the GDP, more than agriculture, which contributed 34.5%, yet 13 million people in Kenya are off-grid. Putting the 13 million people, most of whom are in rural Kenya on the grid, can unlock more agricultural and industrial growth. This effect ripples further to the services sector as more technological services will be needed to support the growth in agric and industries.

Tanzania is home to some of the most beautiful landscapes in the world and Africa, which means it has significant revenue from tourism. It is also dependent on agriculture like the rest of Africa is. Tanzania has a population of 58 million people producing a nominal GDP of USD 62 billion in 2019. However, 37 million of its 58 million are without electricity access. Agriculture is the major employer of its people but most of it is still mostly human-intensive. Expanding its electricity generation capacity to expand access to the 37 million people will see much transformation like it would in other parts of Africa.

The major occupation and revenue stream for most African economies remain agriculture, particularly from the export of cash crops like cocoa, cotton, and coffee. Yet, these countries have done very little to own the processing chain of adding value to the crops to generate more revenue. Due to climate change and irregular rain patterns, the crops are either excessively produced or are in shortage, and this leaves the whole agriculture industry in an imbalance year on year.

Ghana and Cote d’Ivoire collectively produce half of the world’s cocoa, which generated a world chocolate market of USD 44.35 billion in 2019 and is projected to be USD 61.34 billion by 2027 collectively earn a meager USD 6 billion of this market. Stable, affordable electricity is needed by processing factories for production to meet their great demands.

Agriculture in Africa should not be at the mercy of climate irregularities. Strong powered irrigation systems should be the solution to maintain an all-year-round harvest. If Africa can unlock its power potential to generate stable, affordable power, the industrialization drive will be authoritative. Most of the crops cultivated here will then be processed here, which will increase GDP and government revenues and reduce the cost of manufactured goods that would have otherwise been imported.

This will translate the ownership of the African economy into the hands of Africans. These big push activities will create smaller services companies that will support the growth by providing auxiliary services hence creating ripple effects and gradually fixing the unemployment problem. Healthcare and Education are inevitable in the Africa electricity puzzle. Due to Africa’s power inequalities, health facilities are unequally distributed in most countries, with most facilities concentrated in mega and urban cities with electricity access. So it is with educational facilities too. This makes such services expensive and inaccessible to many even in the mega and urban cities. This deprives many people across Africa of good healthcare and Education on the simple electricity inaccessibility or its affordability. Harnessing these energy potentials to expand power access will open up the health and education sectors which will support growth with human resources and adequate healthcare.

With huge populations, mobility has to be well thought to avoid congestion in cities across the continent. The mobility of goods and people has to be well planned. Due to the large numbers, there have to be efficient public transportation systems that can transport many people with comfort to avoid using personal cars as much as possible. Also, goods must be safely transported to their various destinations without much risk and inconvenience to other commuters.

This can be achieved with expanded access to electricity. High-speed electric-powered trains are a solution. These electric trains can transport people and goods comfortably to their destinations in shorter times than cars in most instances. However, without electricity access to every area of the country, this cannot be achieved fully, and it will be limited and ineffective. Expanding electricity access to open up transportation will increase trade volumes within the African continent. There can be intra-Africa railway networks spanning the different African regions, facilitating the movement of goods and people, all thanks to the expanded access to electricity.

The pillars of every continent and its countries are its economies, health, and Education sectors. Massive growth in these sectors engineer progress and gradually move people from poverty into wealth. For Africa to truly see improvement, it has to be deliberately innovative and create high growths in these sectors to provide for the large population across its regions. The game-changer here is increasing access to electricity across the continent by harnessing the already abundantly available potentials to drive progress.

Sources

International energy agency — Africa energy outlook 2019, Global Gas Report 2020, IMF World economic outlook database 2019- tradingeconomics.comstatista.com -UN Nations &World Economic forum.

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