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

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?

 

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This is very true – and goes all the way down to the individual entrepreneur level. There are obviously huge numbers flying around relating to the direct cost to economies of weak infrastructure, but it's hard to put a figure on the opportunity cost of entrepreneurs unable to start up businesses or grow. If you look at the World Bank's Doing Business rankings, you'll see the extraordinary cost that African entrepreneurs need to pay to access a connection.



Zahid Torres-Rahman said:

David - that highlights one key issue - that smaller companies, who may not be able to afford on-site generation capacity, or for whom it represents a higher proportion of their costs, are potentially far more impact by the energy gap.

David Grant said:

All our facilities have on-site generation capacity where there is a likelihood of power interruption, so we have not had any production impacts. There are of course costs associated with the capital outlay of buying on-site generators and operational expenditure to run them when there are power cuts.
 
Zahid Torres-Rahman said:

Interesting article, David.  Can you share any examples from your business?

David Grant said:

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.

Christian - I'm one of those people who argues that central utilities are not the sole solution...and, as you say, there are a number of challenges with smaller distributed generation projects.  One of the biggest problems is one you haven't mentioned -- that is, coming up with commercially viable models that can be financed.  The challenge is that the traditional project finance model isn't working for these smaller projects in Africa -- due largely to actual and perceived risk on the part of lenders....

I guess this is where business can be part of the solution...by developing innovative financing models and promoting distributed generation to close the Africa energy gap.

Hi Robert.  The easiest way to stay on top of the discussion is to track the feed on the right hand side of this page.  Click on the the word "replied" after the name of the person commenting to be directed straight to their comment.    The comments in this central panel are in time order.  Also - we'll be doing a summary of all this afterwards!


Robert Laporte said:

First time user, and just cannot seem to figure out how to follow and participate in the discussion. Looks like every time a person says something u need to click on their reply and be redirected to their site. Is there not a single pane where we can follow and enjoy all conversations?

Business has to be part of the solution.  Closing the energy gap absolutely, without any doubt requires private investment - state-owned utilities are clearly not only up to solving the problem, but many would argue that they're actually a big part of the problem....inefficient, ineffective and often rent-seeking in all of the worst possible ways.



Christopher Camponovo said:

There are so many ways that the energy gap impacts life - and business - in Africa, that it's almost the wrong question to ask.  The better focus is on what development advancements could be made by increasing access to reliable, cost-effective power to Africans - or more a propos to this forum.  How will closing the energy gap reduce poverty...?

I think its important to hear the full impact of energy shortage in Africa- yes we know its there but how? Hence the question is relevant. 

If u eliminate political participation then u eliminate the red tape and most of the obstacles. Business to business is faster and more productive


Christian Spano said:

One of the challenges I see for African countries in closing their energy gap is the momentum that needs to be maintained in terms of political drive and investment to keep the physical infrastructure being built continuously both in transmission and generation capacity. One response that is usually suggested is to complement that big centralised effort with decentralised energy projects e.g. solar but that also shows other challenges such as maintenance costs, scale, etc...what's your take on that?

For large companies their role as core clients providing the cash flow supporting new generation capacity is key, however for that to happen a strong institutional infrastructure is needed in advance...

For smaller SMEs commercialising decentralised low carbon technologies leveraging their knowledge of local markets and local networks (people) could make a significant contribution...

 

We see that businesses increasingly tend to see the energy gap as a new market and an opportunity. The almost $40billion spent on expensive, low quality product can offer a considerable market.

 

There are 3 main channels businesses can be a part of closing the energy gap… either at the (i) household level with small products offering a robust, affordable and value proposition; (ii) at the community level with mini-utilities/grids or at the (iii) grid level (but in sub-Saharan Africa still serving only circa 30% of households).

Conall - that's a powerful example - thanks for sharing.

Conall O'Caoimh said:

Last Fri at a Virgin Unite event in London Claire Reid founder of Reel Gardening, SA, said that because she faced so many power outages (in J'berg) she had taken some of her production processes back to manual labour.

http://www.reelgardening.co.za
Thanks, i found myself on the type of page i was seeking, this is great!


Zahid Torres-Rahman said:

Hi Robert.  The easiest way to stay on top of the discussion is to track the feed on the right hand side of this page.  Click on the the word "replied" after the name of the person commenting to be directed straight to their comment.    The comments in this central panel are in time order.  Also - we'll be doing a summary of all this afterwards!


Robert Laporte said:

First time user, and just cannot seem to figure out how to follow and participate in the discussion. Looks like every time a person says something u need to click on their reply and be redirected to their site. Is there not a single pane where we can follow and enjoy all conversations?



Christopher Camponovo said:

Christian - I'm one of those people who argues that central utilities are not the sole solution...and, as you say, there are a number of challenges with smaller distributed generation projects.  One of the biggest problems is one you haven't mentioned -- that is, coming up with commercially viable models that can be financed.  The challenge is that the traditional project finance model isn't working for these smaller projects in Africa -- due largely to actual and perceived risk on the part of lenders....

I guess this is where business can be part of the solution...by developing innovative financing models and promoting distributed generation to close the Africa energy gap.

" I'm one of those people who argues that central utilities are not the sole solution" This is where the major problem of African energy shortage lies. Central Utilities are usually government controlled and suffer from dis-investments. 

Great - thanks for joining the discussion today, Robert!

Robert Laporte said:

Thanks, i found myself on the type of page i was seeking, this is great!


Zahid Torres-Rahman said:

Hi Robert.  The easiest way to stay on top of the discussion is to track the feed on the right hand side of this page.  Click on the the word "replied" after the name of the person commenting to be directed straight to their comment.    The comments in this central panel are in time order.  Also - we'll be doing a summary of all this afterwards!


Robert Laporte said:

First time user, and just cannot seem to figure out how to follow and participate in the discussion. Looks like every time a person says something u need to click on their reply and be redirected to their site. Is there not a single pane where we can follow and enjoy all conversations?

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