Powering Africa: A massive challenge and a major investment opportunity
Sub-Saharan Africa has seen significant economic progress in recent years with growth rates in many countries that are among the highest in the world, and large numbers of once poor people joining the middle class.
But this recent progress sits against a backdrop of major ongoing developmental challenges, many of them related to access to electricity. Because it is essential to addressing so many other challenges from food security to small business development, limited electricity supply limits the health and wellbeing of millions and individuals as well as the continent’s future economic progress. Today, almost 600 million people, or more than half the population of Sub-Saharan Africa, live without regular access to electricity and in rural areas only about one in seven people have access to power.
On July 24, OPIC President Elizabeth Littlefield delivered the keynote address at Seizing the Opportunity to Increase Access to Electricity in Africa, an event on Capitol Hill sponsored by the ONE Campaign. The event comes at a time of growing recognition around this need for more power and the ways that private investors can play a central role. Earlier this month President Obama announced a new U.S. Power Africa initiative aimed at doubling access to electricity in Sub-Saharan Africa, and an Electrify Africa bill has been introduced in the U.S. House of Representatives.
During her address, Littlefield described how both the energy sector and Sub-Saharan Africa are key agency priorities and described some of the projects OPIC has supported to increase the supply of power from Kenya to Togo. OPIC has a long history of supporting projects in Africa’s power sector, with $900 million invested in 256 megawatts of energy projects in Sub-Saharan Africa.
Littlefield also stressed that the scarcity of electricity on the continent contrasted with an abundance of natural resources, from extensive natural gas reserves to 325 days of sun a year and windy climates across many regions.
OPIC’s approach to development is based on providing the tools to encourage private sector investment. Under the new Power Africa initiative, OPIC has committed to provide $1.5 billion to develop energy projects in Africa over the next five years, but Littlefield noted that since OPIC investments catalyze additional private sector investments, this commitment will ultimately result in much more money being mobilized.
OPIC also supports development of African energy resources through the U.S. Africa Clean Energy Finance Initiative (ACEF), a partnership with the U.S. State Department, the U.S. Trade and Development Agency and the U.S. Agency for International Development, to help jumpstart private sector investment in clean energy projects in Africa by providing funding for early stage project development costs.
During the July 24 event, ONE Campaign also unveiled a Statement on Electricity in Africa that encouraged support from both the U.S. government and the private sector to “energize progress in all areas of human development and self sufficiency on the continent.” Signers of the statement included Liberian President Ellen Johnson Sirleaf, more than a dozen African Ambassadors to the U.S. and several NGOs.