SunCulture has raised over $40 million to equip rural farmers with solar-powered irrigation systems.

By Finbarr Toesland
NAIROBI, Kenya, Feb 14 2024 (IPS)

Often referred to as the “Sun continent,” Africa receives more hours of bright sunlight than any other continent. But even with 60 per cent of the world’s solar resources, Africa has only one per cent of solar generation capacity, according to the International Energy Agency (IEA).

Due to energy production and infrastructure challenges, many African countries regularly deal with blackouts, brownouts and poor electricity supply. Then the COVID-19 pandemic hit the global economy hard, and commodity prices surged after the invasion of Ukraine, making energy even more difficult for poorer Africans to buy.

Increasingly, start-ups rather than established corporations are offering access to advanced solar energy solutions to the majority of people across Africa. By harnessing the sun’s power and transitioning to clean energy, Africans can expect major economic and social developments across the continent.

Solar energy brightens other industries

Headquartered in Nairobi, SunCulture has raised over $40 million to equip rural farmers with solar-powered irrigation systems. Instead of counting on rainfall or revving up diesel or petrol pumps, farmers can now rely on solar-powered systems that are cheaper, use renewable energy and need minimal maintenance.

Once the company installs a solar panel on top of a farmer’s house and connects it to a battery-powered water pump, the irrigation system can cover up to three acres.

“Solar is particularly attractive because of its positive environmental impact, job creation potential, and economic development potential,” said Mikayla Czajkowski, chief of staff at SunCulture.

“African nations have immense potential to benefit from utilizing solar energy – especially in remote and under-served regions where energy access is limited – and facilitates a reduction in the continent’s carbon footprint, making a valuable contribution to global efforts to combat climate change,” Ms. Czajkowski added.

In an impact survey of SunCulture’s customers, measurement company 60 Decibels [a US-based an organisation that offers customized assessments] found that SunCulture brought about significant improvements: 89 per cent of smallholder farmers experienced a boost in their quality of life, 90 per cent increased their production, and 87 per cent enhanced their earnings.

Ambitious start-ups

From GridX Africa, a firm that offers off-grid solar power to farms, safari lodges for tourists and construction projects in Kenya, Mozambique and Tanzania, to the pay-as-you-go solar company Bboxx and the Egypt-based solar power developer and electricity distributor KarmSolar, Africa has no shortage of original solar energy start-ups.

While the ambitions of these solar businesses are laudable, achieving high levels of growth is not easy.

Emily McAteer, founder and chief executive officer, of Odyssey Energy Solutions spent more than a decade working to finance and build distributed solar projects across Africa and India.

Her firm provides technology and finance solutions for distributed renewable energy businesses. At every stage of project development, she hit key bottlenecks that make it hard for solar companies like hers to scale.

By offering tools for solar developers to aggregate and pitch portfolios of projects to financiers, firms can access capital more effectively. To procure equipment more effectively, Odyssey streamlined the procurement process by negotiating directly with original equipment manufacturers for better prices and warranties and by working with developers for supply chain support.

“Operations and maintenance, especially in remote areas, can be a big hurdle,” Ms. McAteer said. “We offer hardware and software that sits on top of solar assets so that operators and investors can get deep insight into performance and optimize performance of their systems.”

Global initiatives need catalytic capital

More than 500 million people living in Africa have no access to electricity, according the IEA Africa Energy Outlook 2022. Governments and non-governmental organizations have launched many high-profile schemes to boost the solar energy sector in African countries, with mixed success. The continent needs a global response to address a challenge of this immense scale.

Launched in 2012, the US-Africa Clean Energy Finance (US-ACEF) initiative attempted to offset the costs of the early-stage development of clean energy projects, in a bid to draw investment to these ventures.

Solar is particularly attractive because of its positive environmental and economic impacts.

For Ms. McAteer, the US-ACEF model proved effective. Now innovators need higher levels of catalytic capital to continue scaling so that they can meet the UN Sustainable Development Goal 7, “Ensuring access to Clean and Affordable Energy.”

“Annual capital investment in renewables in emerging markets needs to reach $1 trillion per year if the world is to achieve the goal of net-zero emissions by 2050. US-ACEF set the model for how the industry can achieve that,” Ms. McAteer said. “Now the missing piece is continued investment from both public and private financiers.”

Innovation underway across Africa

So far, the US-ACEF has supported 32 projects, with country-specific investments in Ethiopia, Kenya, Morocco, Namibia, Nigeria, Rwanda, Senegal, South Africa, Tanzania and Uganda.

Nijhad Jamal, managing partner of Equator, an early-stage venture capital firm focusing on climate technology in sub-Saharan Africa, agrees that Africa’s solar energy sector has benefited greatly from US-ACEF.

“There is a lot more impact to come from US-ACEF with projects like the Health Electrification Alliance, which aims to electrify over 10,000 health facilities in Africa,” Mr. Jamal said. “Most of the US-ACEF projects emphasize sustainability. In our opinion, this will have a lasting impact on the solar energy sector.”

Source: Africa Renewal– a United Nations digital magazine that covers Africa’s economic, social and political developments—and the challenges the continent faces and the solutions to these by Africans themselves, including with the support of the United Nations and international community.

IPS UN Bureau

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Sandton Gautrain Station in Johannesburg, South Africa.

By Finbarr Toesland
UNITED NATIONS, Jul 9 2019 (IPS)

Megacities, cities with a population of at least 10 million, are sprouting everywhere in Africa. Cairo in Egypt, Kinshasa in the Democratic Republic of the Congo (DRC) and Lagos in Nigeria are already megacities, while Luanda in Angola, Dar es Salaam in Tanzania and Johannesburg in South Africa will attain the status by 2030, according the United Nations.

Abidjan in Côte d’Ivoire and Nairobi in Kenya will surpass the 10 million threshold by 2040. And by 2050 Ouagadougou in Burkina Faso, Addis Ababa in Ethiopia, Bamako in Mali, Dakar in Senegal and Ibadan and Kano in Nigeria will join the ranks—bringing the total number of megacities in Africa to 14 in about 30 years.

The number of people living in urban areas in Africa will double to more than 1 billion by 2042, according to the World Bank.

The University of Toronto’s Global Cities Institute, which monitors cities’ population growth and socioeconomic development worldwide, forecasts that Lagos will be the largest city in the world by 2100, housing an astonishing 88 million people, up from 21 million currently.

In a 2016 paper titled African Urban Futures, published by the Institute for Security Studies, an African independent research organization that aims to enhance human security on the continent, researchers Julia Bello-Schünemann and Ciara Aucoin wrote: “The current speed of Africa’s urbanisation is unprecedented in history. For some it is the ‘single most important transformation’ that is happening on the continent.” They add that African “cities and towns will increasingly shape the lives of people living on the continent.”

Africa’s demographic transition, caused by the “youth bulge,” an increase in the population of people between 15 and 29 years of age, will continue to fuel a move to the big cities because “young people are generally more prone to migrate to urban areas” than older people, according to Ms. Bello-Schünemann and Ms. Aucoin.

While millions of rural Africans move to cities in search of high-paying jobs and a better quality of life, these burgeoning metropolises also offer strong incentives to investors foreign and domestic.

Power of population

Lagos is a prime example of the economic power in Africa’s megacities. From its technology hub ecosystem—Africa’s largest—to its successful banking sector and prosperous film industry, venture capitalists see many investment opportunities in Nigeria’s commercial capital.

According to a report by the telecom trade body GSM Association, there are 31 tech hubs in Lagos, 29 in Cape Town and 25 in Nairobi. The value of innovative tech spaces to African economies is massive, as investors pump capital into start-ups and hence contribute to countries’ GDPs.

In 2017 outgoing Lagos State Governor Akinwunmi Ambode announced that the state’s GDP had reached $136 billion, about a third of Nigeria’s GDP ($376 billion) and more than the combined GDPs of Ghana ($47 billion) and Tanzania ($52 billion).

Steve Cashin, founder and CEO of the private equity firm Pan African Capital Group, believes that investors are focusing on Africa’s megacities because of market size.

“My firm does a lot of business in Liberia, and one of the main constraints to growing businesses and attracting investment there is the population size and density. When the entire country’s population is just about 4 million, and you’re likely only to reach a small fraction of that, it is harder to make a compelling business case,” says Cashin.

A single Lagos district can be a market the size of an entire country such as Botswana. Because people in Lagos are concentrated, companies can benefit from lower fixed costs and easier distribution. “The economics are just more attractive,” he adds.

Overstretched infrastructure

But highly populated cities have both positives and negatives. Rapid urbanization strains already overstretched infrastructure and creates complex problems for local governments.

For example, the population of Kinshasa is forecast to grow by 61 people every hour until 2030. People will have to look for jobs and use public transport and other social services.

Bello-Schünemann and Aucoin elaborate: “Most of Africa’s urban residents live in informal settlements or slums, lack access to basic services, face precarious employment conditions and are vulnerable to various forms of urban violence.”

They add: “Global climate and environmental changes, and pressure from water, food and energy insecurities, compound the challenges for human development and the complexities of contemporary urban governance on the continent.”

Around 75% of homes in Kinshasa are in slums, and Lagos has dozens of them: places like Somolu, Bariga and the floating slum of Makoko. If infrastructure growth fails to keep up with increasing population, more slums will develop, experts warn.

To address these problems, Africa’s fast-growing cities require all-inclusive infrastructure development, advises Cashin. “The importance of deliberate and thoughtful urban planning cannot be understated, not only for the efficiency and productivity of these cities but also for the safety of its inhabitants.”

He adds that “proper urban planning requires significant upfront investment” and that “local governments also need to harness the potential of these rapidly growing cities by making strides to formalise the economy.”

Informal economies

In sub-Saharan Africa the informal economy—economic activities that are not regulated and therefore not taxed—represents up to 41% of GDP and provides 85.5% of total employment, reports the International Labour Organisation (ILO), the UN body that sets international labour standards and promotes social protection.

Without collecting enough taxes, cash-strapped city authorities cannot finance critical infrastructure such as roads, hospitals and power.

Some local administrations depend on foreign direct investment (FDI) or opt for the BOT system—build, operate, transfer—in which investors finance a project (such as a bridge) and recoup their investments by, for example, collecting tolls for a limited period.

Investors who are attracted to densely populated cities are also repelled by a lack of infrastructure and incompetent city authorities.

The State of African Cities 2018, a UN report, says that Johannesburg, Lagos and Nairobi are the leading FDI attractions in sub-Saharan Africa.

Private investors often accompany financing with technological know-how. For example, smart city projects across South Africa, such as Melrose Arch in Johannesburg, require a diverse range of talent not often found in that country. Foreign investors with expertise in this field can draw on their own experience and contacts to put a skilled team in place.

In sum, the key to urban planning and attracting investors is to plan with an eye toward future population growth, notes Jonathan Hall, assistant professor at the University of Toronto’s Department of Economics and Munk School of Global Affairs and Public Policy.

He adds that, “People will continue to move to the megacities until unemployment is so high, and the infrastructure is so overstretched, that their quality of life is roughly the same in the city and the countryside.”

Authorities managing Africa’s megacities have their work cut out for them. Investors who are attracted to densely populated cities are also repelled by a lack of infrastructure and incompetent city authorities.

“Cities need strong, competent and democratic governments [that can] work with their low-income populations, rather than, as all too often happens, evicting them,” says David Satterthwaite, senior fellow with the Human Settlements Group at the think tank International Institute for Environment and Development.

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