How can we harness business to close the energy gap in Africa?

SDGs
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Andrew Scott: Research Fellow, Climate and Environment, ODI
Chris Camponovo: Power Senior Adviser, Initiative for Global Development
Christian Spano: Global Lead for Socio-Economic Development, Anglo American
Lauren Callie: Regional Head of Business Communications, Africa, Standard Chartered Bank
Peter Guest: Journalist
Tim McNeill: Private Sector Development Adviser, UK Department for International Development


Power is routinely cited by large and small businesses as the most significant barrier to their success, adding huge costs to them and their customers. Poor infrastructure slows foreign direct investment and limits countries in their attempts to diversify their economies away from primary commodity export.

Unreliable or inaccessible power has a cost that goes beyond GDP figures and business growth, impacting on healthcare and education outcomes, which in turn have long-term implications for the future prosperity of individuals and societies.

The International Energy Agency estimates that more than 620 million people in sub-Saharan Africa live without electricity. While 950 million people will gain access to electricity in Africa between 2014 and 2040, demographic expansion will mean that 75 per cent of the population will still be without power.

A step-change in investment into electricity generation, distribution and efficiency is needed over the next quarter-century to unlock the potential of Africa’s demographic boom. This was the focus of a report published recently by Business Fights Poverty and the Initiative for Global Development (Click here to find out more and to download the report here)

Join our panel to discuss the following questions:

1. What is the real, day-to-day impact of Africa’s energy gap? What are some practical examples of the impacts on the ground?

2. What are the opportunities for business to be part of the solution to closing the energy gap?

3. What building blocks need to be put in place by governments and other development partners to harness the potential contribution that business can make to closing this gap, and by doing so helping unlock the Continent’s potential?

Editor's Note:

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Looking forward to this discussion tomorrow! In the mean time, check out IGD's works on developing standardized Power Purchase Agreements (PPAs) in Africa at: http://www.igdleaders.org/programs/electric-power/

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Thank you for joining us today for this live written discussion! We're joined by a great panel to explore how to close Africa's energy gap, and the role of business in helping do this.

Before we start, I'd like to ask our panelists to introduce themselves.

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Good afternoon (/morning). I’m Tim McNeill, Private Sector Development Adviser with the UK’s Department for International Development (DFID), covering Southern Africa.

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Thanks Zahid. I’m looking forward to the discussion. I am a journalist working on development in Africa and other emerging markets, and I worked with BFP and its partners on the New Africa 2015 report.

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Hello everyone. I'm Chris Camponovo, Senior Power Adviser at the Initiative for Global Development. I'm also looking forward to the discussion.

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Let's kick off with our first question!

Question 1: What is the real, day-to-day impact of Africa’s energy gap? What are some practical examples of the impacts on the ground?

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Good Afternoon! I am very excited to be joining this panel and I look forward to our conversation.

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Hello,

I am Andrew Scott, a research fellow at the Overseas Development Institute, based in London. My research interests include questions concerned with energy access and the transition to low carbon energy systems.

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Eastern Zambia cotton unable to be harvested due to lack of sufficient power to run the ginnery machinery.

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Great to have everyone here - including over 130 people from our community. Please do share you thougths, insights and examples - and of course any additional questions you have for our panelists!

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Investment, investment, investment. If you speak to any investment promotion authority in Africa, they'l tell you that the first question a potential investor asks is about the power situation. When you have to run auxiliary generators to supplement unreliable power from the grid, it's an extra cost that must be factored into your decision whether or not to invest in a particular country. The less reliable grid-provided power is, the less likely you are to invest in a country....

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Thanks for sharing that, Thuy!

Thuy Dinh said:

Looking forward to this discussion tomorrow! In the mean time, check out IGD's works on developing standardized Power Purchase Agreements (PPAs) in Africa at: http://www.igdleaders.org/programs/electric-power/

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It’s hard to over-state the impact on day-to-day life in many countries. Anecdotally, you talk to entrepreneurs, or would-be entrepreneurs, who tell you the extent to which their ambitions are curtailed by the cost, the shortages and the unreliable supply. That touches pretty much every sector, from mom-and-pop shops without light or refrigeration through to manufacturing businesses.

The lack of affordable, reliable connections hits strategic sectors – agriculture, which is still the majority employer – suffers from weak cold chains and processing. Manufacturing and natural resource processing can become uncompetitive, meaning that productive job growth is slower. Healthcare suffers, education suffers.

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This is a timely discussion! This is a newspaper excerpt from today - "Zambia has started rationing power supply to mines, an industry source said on Tuesday, as Africa’s second-biggest copper producer struggles to meet electricity demand."

South Africa is also currently plagued by load shedding due to insufficient generation capability.

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Central , Zambia commercial farmers can not use the center pivot irrigation systems due to insufficient power.

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I am sorry...I did not intorduce myself. I am Chirstian Spano, socio-economic development (SED) manager working for Anglo American based in London. I look after the SED group strategy and support BUs to implement their activities at the site level. Access to energy is a very relevent area in the strategy.

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I think the energy ‘gap’ has several dimensions.

Lack of access to clean fuels imposes a physical and health burden on women and girls, for fuel collection, and unimproved biomass stoves are the cause of disease and premature deaths.

The 620 million Africans who lack access to electricity are disadvantaged in a number of ways. The absence of electricity limits their opportunities to improve productivity and earn higher incomes. It limits their education and their access to good quality health services. Without electricity, opportunities to obtain information and knowledge from the radio or television are more limited, and the absence of street lighting reduces people’s sense of personal security.

Lack of electricity also disadvantages people by requiring them to spend a higher proportion of their income on less-efficient lighting and communications than can be provided by electricity.

Rodger's comment about lack of power to run machinery highlights another element of the 'gap', namely the unreliability of electricity supplies in many African countries.

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The impact of Africa’s energy gap varies, depending on whether you’re speaking with an individual or a business; somebody in a city or the countryside. On the whole though the impact tends to be detrimental.

The IEA estimates that each year lower income users spend a fraction under $40billion on low quality energy for cooking and light. About a third at the base of the pyramid rely on wood, charcoal and animal waste for energy needs.

This has a tremendous effect on health, education and ability to earn a living. Added to this, WHO estimates that 4.3mln people die prematurely due to illnesses attributed to household air pollution from cooking with solid fuels. This often falls disproportionately on women and children.

On the healthcare side, storage of medicine is made difficult, as is running of health centres and maternity wards.

From a business perspective, it’s detrimental whether you run a SME, or work in agribusiness, manufacturing or extractives.

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Thanks for sharing that example, Rodger. How do farmers overcome that - if they do, that is. Or does it simply mean they lose their harvest all together?

Rodger Chali said:

Eastern Zambia cotton unable to be harvested due to lack of sufficient power to run the ginnery machinery.