Africa Needs Long-Term Solutions

The Export-Import Bank of the United States wants to create a sustainable power sector in Africa.
Published: Mon 18 Aug 2014

Five out of the 12 US agencies, under the Power Africa Initiative, attended the Africa Energy Forum. These agencies, forming part of both the US government and public sector, are collaborating to bring 10,000MW of power to Africa. The aid comes in the form of technical assistance, financing, and capacity building.

Of the US$22 billion the US government agencies have committed to the Power Africa Initiative, the US Export-Import Bank is supplying US$5 billion as part of the US government’s commitment. This is according to Wanda Felton, vice chair and first vice president of the US Export-Import Bank who spoke to Engerati at the Africa Energy Forum.

Sustainability of the energy sector is key

While the Export-Import Bank has committed to providing finance for projects in Africa, they want to ensure that a sustainable power sector in Africa is created. “This is why some projects may take a bit longer,” explains Felton. She adds that the Bank is investing for long-term financial and operational viability in utility development.

Says Felton, “Although the financial offering is large, a great deal is needed to improve access to electricity in Africa and certain aspects have to be established to ensure long-term support from the private sector. This must be done correctly. Also, skills transfer is critical for sustainability.”

Millennium Change Corporation and USAID, both part of the Power Africa Initiative, are active in a number of countries to help develop sustainability. For instance, they help to establish tariff structures with the aim of attracting private investment. Without the potential of receiving an adequate return, the private sector will not be interested in investing. Countries are also enabled to ensure collections are made from the retail sector and that technical losses are addressed.

Providing reliability

Felton explains that people in Africa are generally in a position to pay for their electricity. She says that the growing telecommunications sector in Africa is evidence of this. However, consumers must get value for their money in the form of a reliable power supply. Consumers should also receive accurate billing as a result. “This would be a sustainable approach to power delivery,” explains Felton. She adds that many locals are using costly diesel to power their homes but if the central grid provides more access and reliability, consumers are likely to switch to the central grid and pay for the service.

Felton concludes, “Millennium Change Corporation wants African countries to give their input and to be fully invested in the outcome.”