Sub-Saharan Africa has large potential for hydropower generation, but is yet to exploit it. Pictured here is the Kariba Dam. Credit: Kristin Palitza/IPS

By Carey L. Biron
WASHINGTON, Jul 21 2014 (IPS)

Pressure is building here for lawmakers to pass a bill that would funnel billions of dollars of U.S. investment into strengthening Africa’s electricity production and distribution capabilities, and could offer broad new support for off-grid opportunities.

With half of the U.S. Congress having already acted on the issue, supporters are now hoping that the Senate will follow suit before a major summit takes place here during the first week of August. That event is expected to include heads of state or representatives from as many as 50 African countries."We could see an energy revolution that looks similar to what happened with mobile phones – leapfrogging centralised systems altogether and moving towards transformative solutions.” -- Justin Guay

The summit, the first time that such an event has been organised in Washington, will focus in particular on investment opportunities. As such, many are hoping that the three-day event’s centrepiece will be President Barack Obama’s signing of a broad investment deal aimed at Africa’s power sector.

“The overwhelming majority of the African leaders are going to be coming to Washington emphasising trade and investment, and in that context this issue is very central to their many constituencies – touching on economic, political and social issues,” Ben Leo, a senior fellow at the Center for Global Development, a think tank here, told IPS.

“Coming forward with something concrete that will lead to additional capital, tools or engagement will be noticed and welcomed. But lack thereof would also have a message for African leaders and others travelling to Washington.”

A U.S. Senate subcommittee did pass a bill, called the Energize Africa Act, late last month, but much remains to be done. The legislation now needs to be voted on by the full Senate, after which the final proposal would have to be brought into alignment with a similar bill voted through by the House of Representatives in May.

Meanwhile, the entire Congress is scheduled to go into recess for a month at the end of July. Still, backroom talks are reportedly well underway.

“There’s growing pressure and momentum in the Senate, as well as a growing appreciation of how doing this is both strategic and important,” Leo says. “Not having a bill to sign would certainly be a missed opportunity in terms of the optics and concreteness of action, either before or when everyone’s in Washington.”

Some 68 percent of the sub-Saharan population lacks access to electricity. Both the House and Senate bills would seek to assist African countries in expanding basic electricity access to some 50 million people.

“Our support for this bill is a direct response to what we hear from African leaders, citizens and global development experts,” Tom Hart, U.S. executive director of ONE, an advocacy group that focuses on eliminating poverty in Africa and has mounted a major campaign in favour of the Senate bill, said in a statement.

“[O]ne of the biggest challenges for overcoming extreme poverty is the inability for millions of people to access the basic electricity necessary to power health clinics, farms, schools, factories and businesses.”

Beyond the grid

The current legislative push comes a year after President Obama unveiled a new initiative called Power Africa, proposed during his June 2013 trip to the continent. Seen as the president’s signature development plan for the region, Power Africa aims to double energy access in sub-Saharan countries through a mix of public and private investment.

While Power Africa is ambitious, its long-term impact greatly depends on the legislation currently under debate.

For instance, while Power Africa directly affects just six countries, the bills before Congress take a continental approach. Likewise, as an executive-level project, the initiative’s policy priorities can only be cemented through full legislation.

Power Africa initially came under significant fire from environmental and some development groups for its reliance on fossil fuel (particularly natural gas) and centralised power projects. Many groups say that such a focus is ultimately counterproductive for poor and marginalised communities.

Yet last month, the United States announced a billion-dollar initiative to focus on off-grid energy projects across the continent. This approach could now be codified through the legislative discussions currently taking place in Congress.

“Congress is now looking to pass a bill that would be relatively historic in terms of its support for beyond-the-grid markets,” Justin Guay, Washington representative for the Sierra Club, a conservation and advocacy group, told IPS. “The [Senate] bill is the first legislation we’ve seen starting to drive investment to unlock that potential.”

To date, Guay says, most investment from the U.S. government and multilateral agencies has skewed in favour of fossil fuels and centralised power generation. For the first time, the new legislation could start to balance out this mix – a potential boon for the environment and local communities alike.

“If you look at the energy access problem in sub-Saharan Africa, it’s largely a rural issue. So this bill could stimulate distributed, clean-energy solutions that can get into the hands of poor populations today, rather than forcing them to wait decades in the dark for power,” Guay says.

“In this way, we could see an energy revolution that looks similar to what happened with mobile phones – leapfrogging centralised systems altogether and moving towards transformative solutions.”

The House’s companion bill includes fewer progressive provisions than the Senate version, but it also doesn’t include amendments that could deliberately doom the legislation. Still, it remains to be seen how conservatives in the House react to the Senate’s proposals.

Strengthened support

These new opportunities have broadened support for the Senate’s legislation. On Friday, for instance, the Global Off Grid Lighting Association, a Germany-based trade group, expressed its “strong support” for the Energize Africa Act.

The legislation is also being welcomed by African environmentalists.

“We believe this bill has emerged as a strong source of support for our efforts to address energy poverty,” Mithika Mwenda, secretary general of the Pan African Climate Justice Alliance, said in a letter to U.S. lawmakers from earlier this month.

“We are particularly supportive of new efforts to expand loan guarantee authority at USAID” – the main U.S. foreign aid agency – “as well as the goal of ending kerosene based lighting. Both of these aspects are critical to ending energy poverty in poor rural areas.”

Meanwhile, both the House and Senate bills have enjoyed an unusual level of bipartisan support. Still, it’s not clear whether that will translate into the passage of a new law – particularly by the U.S.-Africa Leaders Summit, slated for Aug. 4-6.

“There’s not a lot of time left, so it’s is very difficult,” the Center for Global Development’s Leo says. “However, if it doesn’t pass by the summit, the summit will invariably create a lot of action shortly thereafter.”

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

By Jared Metzker
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.”