By: Raphael Apetorgbor
Ghana has been rated as one of the best among six African countries that attracts private investment based on the latest African Development Bank (AfDB) report.
In the report obtained by the Daily Express, it describes the record as disappointing for the region because it accounted for only 2 per cent of private sector investment in energy infrastructure.
“Over the decade ending in 2013, sub‑Saharan Africa accounted for only 2% of private sector investment in energy infrastructure in developing regions,” it stated.
Four‑fifths of this investment is concentrated in six countries: Cameroon, Ghana, Kenya, Nigeria, Tanzania and Uganda. However, since 2005, the level of investment in energy with private participation increased across Africa from US$5 billion to US$11 billion, despite the financial crisis.
While a number of African countries have public‑private partnerships (PPP) for power infrastructure, in most countries the main constraint on private sector investment is a lack of well‑prepared, bankable projects. Project preparation facilities, such as those provided by the AfDB and other development partners, will therefore play an important role, helping to fund the substantial costs involved in preparing viable regional energy projects, so as to attract investment from public and private sources.
Africa continues to face many challenges in providing reliable and affordable energy to a large proportion of the population. With rural electrification rates of just 10% across sub-Saharan Africa, about 6 of every 10 Africans are forced to live without reliable access to electricity. As a result, they are severely constrained in their ability to pursue livelihood opportunities, access public services and lift themselves out of poverty. Affordable and reliable electricity is an essential foundation for many of Africa’s development goals and aspirations.
More than $60 billion in annual investments are needed to close the infrastructure gap and achieve universal electricity access by 2040. There are positive signs: around half of this finance is already available, with a growing share coming from national revenues and financial markets. The development of regional power pools will help both to mobilise new investments and to boost the efficiency of existing networks, lowering the costs of electricity provision.
Equally important is the spread of clean energy technologies, including off‑grid and micro‑grid solutions to supplement traditional energy supplies. These solutions may have higher up‑front costs, but they offer significant returns over the longer term, helping to boost the supply of power without compromising sustainability. With over half of the world’s renewable energy sources, Africa has significant potential to leapfrog older technologies and become a global leader on clean energy.
In a foreword statement signed by Solomon Asamoah, Vice president Operations in charge of Infrastructure, Private Sector & Regional Integration of the Bank, it states that Energy is one of the most essential requirements for Africa’s development. In the 21st century, it is a matter of concern that over 620 million Africans still live without the benefits of an electricity connection. A reliable and affordable energy supply is key to generating the broad‑based and inclusive economic growth needed to make major inroads into poverty; it can transform the lives and livelihoods of Africans, helping them to take charge of their own development.
Energy is also a field of opportunity for Africa. The continent has significant share of the world’s renewable energy sources, of which only a fraction is under development. Africa has the potential to leapfrog over carbon‑intensive technologies and meet most of its future energy needs from renewable sources, putting it firmly on the path to green and inclusive growth. The African Development Bank has therefore placed energy at the heart of its portfolio. Over the past four decades, we have invested over $13 billion in the energy sector, to boost generation capacity and rural electrification. Under our new Energy Policy 2012, we help African countries build modern energy sectors that are socially, economically and environmentally sustainable. We will support regional investments that link national electricity systems into regional power pools, to enable power‑sharing across national borders and promote more efficient regional planning of energy infrastructure.
The Bank also helps develop Africa’s potential in clean energy. From the vast hydropower potential of Central Africa’s river systems, to some of the world’s largest solar power installations in North Africa, to innovative, small‑scale renewable energy solutions for remote areas, we will help African countries move towards a green development pathway.
However, the investment needs are very large: overcoming Africa’s energy deficits will require investments of more than $60 billion a year until 2040. As this amount is far beyond the capacity of any single institution, we are working to leverage other sources of finance and establish strategic partnerships with other development partners. We are also helping our member states to develop public‑private partnerships for power infrastructure and to access sources of climate change finance.