Africa requires between $60- $90 billion yearly to address its energy shortfall as the continent’s energy supplies are not meeting the needs and aspirations of its people, according to a new Economist Intelligence Unit report on renewable energy infrastructure in Sub-Saharan Africa released yesterday.
The report commissioned by IHS Towers, the largest provider of mobile towers in Europe, Africa and the Middle East, in support of Africa’s renewable energy goals entitled ‘Power Up: Delivering renewable energy in Africa’ with a focus on solar and wind looks is based on desk research, expert interviews and fieldwork in Nigeria, Zambia and Uganda.
Reports claim Each year, the average Sub-Saharan African manufacturing firm loses 5.5 per cent of annual sales due to power outages, over double the global average (2.6 per cent). Nigeria has nearly 33 outages a month; the average duration is eight hours, according to the World Bank. Overall, almost 600 million people in Sub- Saharan Africa lack access to electricity.
According to McKinsey, only seven countries—Cameroon, Côte d’Ivoire, Gabon, Ghana, Namibia, Senegal and South Africa—have access rates above 50 per cent. The rest have an average grid access rate of 20 per cent. Many utilities also face challenges in bill collection. This results in off-takers having weak balance sheets, as in Nigeria.
Andrew Johnstone, CEO of Climate Fund Managers said “Distribution companies are financially distressed at the moment. They’re not achieving their target loss ratios and you’ve got shareholders and financiers who are under pressure due to slowing down economies, low oil prices, and no hard currency; the whole market is just in a very difficult place at the moment.”
Rentia Van Tonder, head of Power, Corporate and Investment banking at Standard Bank said given this context, “investors and funders want to make sure there is a move towards a cost-reflective tariff-regime.” While fossil fuels, notably coal, oil and gas, continue to provide a significant quantity of energy renewables need to play a greater role.
Following high-level declarations at the Sustainable Development Goals and the Paris Climate Conference in late 2015, there is a growing appetite for renewable energy in Africa. A better system will promote economic diversification, raise productivity, and improve the health and wellbeing of citizens. Africa has plentiful resources, from geothermal power to hydropower.