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Obama Plan to Electrify Africa Offers a “New Model” of Aid

An electricity pylon in Somaliland being repaired by Edwin Mireri. Somaliland’s first Electricity Energy Act will be launched this year and it will be the country’s first legal and regulatory framework aimed at managing energy production and distribution. Credit: IPS

An electricity pylon in Somaliland being repaired by Edwin Mireri. Somaliland’s first Electricity Energy Act will be launched this year and it will be the country’s first legal and regulatory framework aimed at managing energy production and distribution. Credit: IPS

WASHINGTON, Jul 2 2013 (IPS) - During an eight-day trip to Africa, President Barack Obama unveiled an ambitious plan to improve access to electricity across the continent, a move the White House says is designed to lift Sub-Saharan Africa out of poverty and help the region develop a stable middle class.

While the initiative may appear to be a generous increase in U.S. government aid to the continent, analysts suggest that it is perhaps more noteworthy as a change in the paradigm of how the United States assists developing nations.

The plan, dubbed Power Africa, will be aimed at doubling access to electricity in the region, where some 85 percent of the rural population continues to lack access to power. The hope is that vastly increasing this infrastructure will in turn strengthen African economies.

“The initiative seeks to address a major, major issue,” John Campbell, a senior fellow for Africa policy studies at the Council on Foreign Relations, a think tank here, told IPS. “The absence of electrical power, among other things, makes it difficult to establish the kind of manufacturing that generates employment.”

Power Africa was announced on the heels of an address given by President Obama at the University of Cape Town, in South Africa. The president, who has been criticised for actions that fail to live up to his impressive speeches and for largely ignoring Africa during his first term, called on the United States to “up [its] game when it comes to Africa”.

Obama referenced Nelson Mandela’s experience in captivity as analogous to Africa’s continued suffering with poverty and underdevelopment.

“(J)ust as freedom cannot exist when people are imprisoned for their political views,” he stated, “true opportunity cannot exist when people are imprisoned by sickness, or hunger, or darkness.”

The president also asserted that development assistance to the region would be in the United States’ own interests, saying an enlarged middle class there would translate into “an enormous market for [U.S.] goods”.

Assistance as insurance

Establishing reliable sources of electricity, the Obama administration believes, will be a key part of the effort to bolster that middle class.

An estimate endorsed by the administration states that it would take around 300 billion dollars to grant all Sub-Saharan Africans access to electricity by 2030. With Power Africa, the U.S. ensures the region will receive seven billion dollars over the next five years.

That sum will be split among six countries (Kenya, Ethiopia, Ghana, Liberia, Tanzania and Nigeria). It will be used to exploit the region’s large, newly discovered reserves of oil and gas, as well as its potential to develop renewable energy from geothermal, hydro, wind and solar sources.

But, as Campbell points out, the way the United States will raise the seven billion dollars represents a shift in how it provides aid to Africa, focusing more on private trade and investment rather than on direct government aid.

“The old model would have been a government aid agency providing U.S. taxpayer money to fund development projects,” he says. “Here we will have the government partnering with private sources of money by guaranteeing against losses.”

Essentially, Campbell explains, the United States will marshal seven billion dollars’ worth of both money and material from private investors, who will then provide much of this by exporting manufactured goods intended to improve African infrastructure. These investors will be protected from losses by guarantees from Washington, which will play a role similar to that of an insurance provider.

Five billion dollars of support will be provided by the U.S. Export-Import Bank (Ex-Im) to U.S. exporters, while another 1.5 billion dollars in financing and insurance will come from government’s Overseas Private Investment Corporation (OPIC).

Only a small portion of the seven billion dollars will come in the form of government aid. One billion dollars will come from the publicly-funded Millenium Challenge Corporation (MCC), while the country’s main foreign assistance arm, U.S. Agency for International Development (USAID), will provide just 285 million dollars.

“At the end of the day, if it all works out well, the U.S. government will actually make money,” Campbell says.

He also notes that the new model will mean insured profits and new jobs for U.S. manufacturers assigned with exporting needed products.

Campbell is concerned, however, that the new plan could fall short of its goals without additional U.S. government funding. But given the budget-conscious attitude prevailing in the U.S. Congress, he suggests this funding could be unobtainable.

China question

Some have speculated that the revamped assistance to Africa comes as a response to Chinese movement into the continent. China has, over recent years, invested massive amounts of its reserve funds into bolstering African infrastructure, and thus making inroads for future commercial and political relations.

Yet Campbell believes this speculation reflects an outmoded Cold War-era mentality and is an incorrect interpretation of what motivates the United States. He points out that Obama on Sunday welcomed investment in Africa by states other than the U.S. – including China.

“Governments and businesses from around the world,” Obama stated, “are sizing up the continent, and they’re making decisions themselves about where to invest [and] that’s a good thing. We want all countries – China, India, Brazil, Turkey, Europe, America – we want everybody paying attention to what’s going on here, because it speaks to your progress.”

 
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  • George Ansa Duke

    Obama please focus on giving the US, good governance. You have nothing to offer any nation outside your place of assignment. Dont be a busy body pls my brother and the propelling force behind you, leave AFrika alone. Oga we beg you in Christ Jesus plight or else the RIghteous Holy SPirit will prune you

  • AngelFive

    IPS this article is so one sided as to appear to be advocacy for Obama’s plans to sell off Africa’s natural resources to his investment bankers and hedge fund backers; all in the name bringing Enron’s plans for defrauding US ratepayers of billions of dollars; to Africa. The is a plan for corporate kleptocracy. This is Obama’s idea of democracy for Africa; a corporate thugocracy where Africa’s hundreds of millions of peoples; and their grandchildren will remain in debt peonage for generations to come. Let’s juxtaposition this articles quotes against the reality of Obama

    “Obama referenced Nelson Mandela’s experience in captivity as analogous to Africa’s continued suffering with poverty and underdevelopment. “(J)ust as freedom cannot exist when people are imprisoned for their political views,” he stated, “true opportunity cannot exist when people are imprisoned by sickness, or hunger, or darkness.” The president also asserted that development assistance to the region would be in the United States’ own interests, saying an enlarged middle class there would translate into “an enormous market for [U.S.] goods.””

    Obama’s talking not about the interests of the African peoples but his corporate crony investment banker buddies’ interests; that’s whose opportunity he is speaking of. Perhaps the fact that these are the same forces of evil that imprisoned Mandela in the first place; might explain the reluctance of the South African government to embrace Obama’s corporate platform now?

    The article goes on “”The old model would have been a government aid agency providing U.S. taxpayer money to fund development projects,” he says. “Here we will
    have the government partnering with private sources of money by guaranteeing against losses.” Essentially, Campbell explains, the United States will marshal seven
    billion dollars’ worth of both money and material from private investors, who will then provide much of this by exporting manufactured goods intended to improve African infrastructure. These investors will be protected from losses by guarantees from Washington, which will play a role similar to that of an insurance provider. Five billion dollars of support will be provided by the U.S. Export-Import Bank (Ex-Im) to U.S. exporters, while another 1.5 billion dollars in financing and insurance will come from government’s Overseas Private Investment Corporation (OPIC). Only a small portion of the seven billion dollars will come in the form of government aid. One billion dollars will come from the publicly-funded Millenium Challenge Corporation (MCC), while the
    country’s main foreign assistance arm, U.S. Agency for International Development (USAID), will provide just 285 million dollars. “At the end of the day, if it all works out well, the U.S. government will actually make money,” Campbell says.””

    That says it all; at the the end of the day we are talking about the US making money. On June 30 every major online news outlet had a front page article on the breaking story that the NSA had electronically bugged the diplomatic offices of the European Union in Washington, D.C.,at the United Nations and in Brussels – every outlet except the paper of record, the New York Times.The news first broke on Saturday at the online site of the German magazine, Der Spiegel, and went viral thereafter. The details of the story came from new documents leaked by Edward Snowden, the former intelligence contractor now sought by the U.S. for extradition and prosecution. On Sunday, as hour after hour went by, as more outrage and invective flowed out of Europe, the story was nonexistent on the Times web site. As European officials threatened to cancel trade talks, launch a criminal investigation, and compared the U.S. to the East German Secret Police, the Times remained silent. Finally, at 3:10 p.m. in the afternoon, the Times posted its own brief article headlined:”Report of U.S. Spying Angers European Allies.” There was the nagging suspicion that the Times has some spoken or unspoken agreement with the White House or State Department to get a confirmation or denial before it weighs in on national security or delicate matters of state. How about IPS too?

    For what can war but endless war still breed?

    Till truth and right from violence be freed,

    And public faith clear’d from the shameful brand

    Of public fraud. In vain doth valour bleed

    While avarice and rapine share the land.

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