An ambitious plan to electrify Africa was launched by the African Development Bank (AfDB) on January 21st, as part of the World Economic Forum in Davos.
The New Deal for energy in Africa provides that the private sector and local governments join forces on projects to enhance power generation capacity, with a view to achieving universal access to energy Africa by 2025. The initiative was unveiled in September 2015 at a consultative meeting of senior AfDB headquarters in Abidjan.
“It is time to act decisively […] to enlighten and electrify Africa, increasing the pace of economic transformation, unlocking the business potential and stimulate industrialization necessary to create jobs,” said Akinwumi Ayodeji Adesina ( portrait below), the President of the African development Bank (AfDB), at the launch.
Increase the production of electricity
The New Deal has four major goals to be achieved by 2025:
• increase the production of electricity on the network by adding an additional 160 gigawatts of capacity,
• improve the distribution and connections to the system by creating 130 million new connections (160 percent more than today),
• increase production outside the network, to add 75 million connections (20 times more than today),
• increase access to clean energy for cooking to 130 million households.
The New Deal will be implemented through a platform, the revolutionary Energy Partnership for Africa, which will coordinate between public and private partners around project generation and distribution of electricity, including in the existing programs in the energy sector in Africa. ADB will oversee this process in close collaboration with the heads of state, ministers of energy and finance ministers of each country. The partnership also aims to help governments to coordinate at regional level, so that countries can exchange energy resources transnationally.
New opportunities for a brighter future
The lack of electricity in Africa has profound implications. More than 645 million Africans lack access to electricity, representing 53 percent of people without electricity worldwide. This power shortage delays the progression of African economies. ADB estimates that the bottlenecks in the energy sector and power shortages cost African country with 2 to 4 percent of GDP each year. Businesses in Tanzania and Ghana are seeing the value of their sales fall by 15 percent due to power shortages.
“Energy needs are beginning to increase 25 to 30 percent, exceeding the growth rate of the economy. This means that we need to develop energy very quickly if we want to go even faster towards development, “said Hailemariam Desalegn, Ethiopia’s first minister, during a debate on the great challenges of the African continent.
Untapped potential
Africa has great potential for renewable energies which, if exploited further, could bridge the gap between supply and demand in the field of energy. The potential of the continent is more than 10 terawatts of solar power, 350 gigawatts for hydroelectric power, 110 gigawatts of wind power and 15 gigawatts of geothermal energy. However, the New Deal was developed as an initiative “neutral in terms of resources and technologies”, encouraging countries to develop infrastructure according to their comparative advantages of non-biased way in favor of renewable energies.
Mobilize this potential to achieve the goals set by the New Deal will require investments in the energy infrastructure sector in the order of 40-70 billion US $ per year. Between 2016 and 2020, the African Development Bank will invest alone about 12 billion US $. The funding will be done through private sector organizations. Akinwumi Ayodeji Adesina said during a press conference about the New Deal, that African countries should also devote a larger share of GDP in the energy sector, with an expected increase of 0.3 to 3.4 percent.
To read more here!