Africa’s long standing label as the “dark continent” extends beyond the color of the skin of citizens; it typifies the overall backwardness that has crushed the tiniest emergence of a potential socio-economic development. The continent, holding over a billion plus people, boasts one of the largest clusters of poverty stricken settlements, a growing inequality gap, and, despite isolated encouraging signs, is still in its formative stages of a concrete democratic environment. Among the continent’s long list of socio-economic challenges lies one of its most critical; the energy challenge.
Along with oil and poverty, power has been the most discussed on a global scale, largely because of its impact on the growth of African economies. The continent remains till date the single region unable to provide adequate access to sustainable energy for a significant portion of its population. Its largest economy, Nigeria, still battles to sustain a peak production of 4,000MW for a population surging beyond 170 million people.
Data from the World Bank revealed that 60 percent of Africans and over 40 percent of Nigerians lack access to decent energy supply; a vivid reality of the challenge Africa faces. However in this trial lies the continent’s potential cashcow, one that could upsurge the oil boom experienced in several African nations, most notably Nigeria. It could provide a healthier return than what agriculture’s promising potentials offer. Electricity could be the next big thing for investors looking towards the emerging continent for sustainable business.
The continent’s power epidemic is already attracting the most significant sector-focused investment worldwide. Last year, on President Obama’s tour of Africa, a $7 billion Power Africa Initiative was launched by the United States (US). It was the first time the US was committing such funds towards the continent’s development and made it the largest single investment committed to a power project globally.
General Electric (GE), a US-based energy and infrastructure conglomerate, has strategically set up camp on the emerging continent, seeking to exploit this untapped gold mine. Nigeria has benefited immensely from this foray, playing host to over $1 billion invested towards developing human capital and infrastructure across the country’s power value chain. GE further confirmed a growing interest in this sector by announcing a further $2 billion plan at the US-Africa Summit held in Washington DC earlier this month. Among its key activities include the development of $1 billion electricity infrastructure plant in Calabar, Cross River state, Southern Nigeria.
It is also the technical partner in Transcorp’s Ughelli Power Plant – a facility that has the potential to generate in excess of 1000MW, a quarter of the country’s current peak output. From the Americas, through Europe and down to Asia, investors have raced down to Africa in search of deals associated to the continent’s power sector. Geothermal and solar plants are currently being developed in East Africa. North Africa is pushing the boundaries in Dam construction, and West Africa is seeing an exploration of alternative sources of energy like coal. With the love affair seemingly poised to grow deeper in coming years, it is hard to envision just how much more investments will flow into a sector that has plagued the continent and impeded sustainable development across the it’s economies. The huge inflow of funds therefore makes this sector Nigeria’s, and Africa’s, next cashow.