Monday, January 28, 2008

In Africa, everyone is home, but the lights are out

How important is it to have electricity in your home in Africa? It’s a convenience, yes, but would it help increase development? Most day-to-day living takes place out of doors (even in places like Ouagadougou), and heat is not really an issue in West Africa. Fans, of course, help. But are refrigerators a necessity? Meats and other food could be stored for longer periods of time without being covered by bacteria-carrying flies. How important are lights in a country where the sun goes down around 6 pm every night? You could make the argument it would be better for school kids who often have to sit under street lights to read past dark.

People have learned to cope, of course. People drink in bars with electricity in order to plug in and charge their cell phones. Televisions run on car batteries. So do small fluorescent lights. Cooking can be done on bottled gas and, in a less sustainable fashion, wood. Of course, this is very time consuming to collect, and often remains the responsibility of young girls who miss school for the pleasure of fulfilling this chore.

Regardless of how people feel on the development debate, the lights are mostly out across Africa. This map will show you. On average, only five percent of Africa’s population enjoys access to electricity. In rural areas, that number drops to about 2 percent.

A growing necessity
What may be seen as a luxury for home, electricity is a necessity for businesses. Machines or equipment can’t run without a current; nor can computers or lights. Cell phones won’t get charged.

What’s worrisome for entrepreneurs is not the lack of electricity, but an unstable electrical supply. When electricity is depended on, entrepreneurs embark in dangerous territory when the supply is cut or inconsistent. Stock could spoil; surges could damage machines; the workforce may be sent home without pay. The problem is that much of the continent’s manufacturing sector works in urban areas, and inconsistent electrical supplies in cities have become the norm. Growing metro regions sap a country’s electrical capability.

But in rural areas, where the possibilities of work outside of agriculture are minimal, a lack of electricity remains problem number one. Here is a good overview of small energy cooperatives making and selling power to everyday folks in rural Mali and Burkina Faso.

Resources, what resources?
On the macro level, however, Africa possesses enough resources to meet all its energy needs. Oil is a well known commodity. The continent’s fertile river systems – the Nile in the north, the Zambezi and Congo in the South and the Volta and Niger in West Africa – could easily be tapped for power. “The hydro potential of the Democratic Republic of Congo alone is estimated to be sufficient to provide three times as much power as Africa currently consumes,” writes Itai Madamombe in Africa Renewal, a UN-sponsored magazine.

West African energy production and consumption is a tale of the haves – Nigeria, Ghana, Cote d’Ivoire – and the have nots – Burkina Faso, Mali and Niger. For those three relatively poor Sahelian countries, located far from coastal energy producers, electricity is definitely viewed as a luxury. (My neighborhood not included.)

The problem appears to be two fold. Costs, for one: electricity in import countries like Burkina Faso and Mali can be prohibitively expensive for most people; Secondly, the reach of electrical utilities is low because of old power plants and aging equipment. This is a problem the entire sub-region and the rest of the continent, writes Madamombe in Africa Renewal:

The bulk of power plants and transmission facilities were built in the 1950s and 1960s. Little investment and maintenance has left the infrastructure creaking at the seams. Nigeria, a prime example, operates at one-third of its installed capacity due to aging equipment.

Times are changing, however. This recent report (cited above) on Independent Power Producers claims that people are willing to pay for electricity, but cannot receive it because of the limited reach of public utilities. The reach of these IPPs is, by definition, very limited: perhaps 50 to a couple hundred houses receiving energy. But their importance is staggering.

The writers have found that these local power supplies are, in fact, cheaper than using other forms of power. In the examples of Mali and Burkina Faso, running a single appliance costs around 1,500 CFA ($3.33) per month, cheaper than car batteries, which must be charged every three or four days, totaling nearly 4,000 CFA ($8.90) per month. (Car batteries also have a finite life span.)

Electricity Integration
Cote d’Ivoire, which already exports electricity to Togo, Benin and Burkina Faso, recently announced the creation of 500 km worth of power lines through the northern part of the country to Mali, where it will export 200 megawatts of electricity. The move is seen as a positive step not only for southern Mali’s development, but also for Cote d’Ivoire because the country was recently divided in two due to a prolonged civil war.

One problem facing the electricity project, which should be complete in 2010, is that Cote d’Ivoire itself is undergoing an expansion of its power grid at a time when consumption appears to be increasing faster than production. Cote d’Ivoire has long used gas-fired plants and dams to create power, but with the country’s consumption already increasing six or seven percent per year, blackouts like those witnessed in 2007 may become more common.

The Cote d’Ivoire-Mali project is part of a regional plan called the West African Power Pool, created in 2000 by the 15 ECOWAS-member states, that strives to increase power production and energy integration, allowing electricity to move freely across borders. This would allow countries to pool technical and mechanical resources and diversify everyone’s energy supplies. And, of course, hopefully bring down energy prices.

WAPP is also researching renewable energy sources, like wind, solar and biofuels.

$150 for Electric Company and Water Works?
One constant in West African power sectors is that the state remains a major player. Only Cape Verde and Cote d’Ivoire have portions of their sectors owned by foreign private companies, according to this report. And only Benin, Togo and Ghana allow independent distribution companies. (Presently, five countries permit IPPs: Burkina, Cote d’Ivoire, Ghana, Nigeria and Senegal.)

In a paper for the World Bank, a researcher argues the high rate of state ownership in West African public utilities takes away the profit motive to improve performance and “is liable to result in the excessive costs, low service quality, poor investment decisions, and lack of innovation in supplying customers in these markets.”

For governments that run their energy sectors, the only method to bring down electricity prices is by increasing user subsidies, never a popular method with World Bankers. The better way, researchers claim, is to allow private firms search out new markets they’ll find profitable, passing along savings to their customers. However, this group of researchers found that increased privatization in the energy sector has brought on greater rates of electrification for the poor, who often reside in rural areas. (The authors, Stephen Karekezi and John Kimani, argue electricity rates to the poor should drive the argument on the efficacy of reform.)

In defense of the World Bank paper, the author, John E. Besant-Jones, is less sanguine than you'd expect about developing countries jumping directly into reform. That’s because the power sector is unlike other areas of Bretton Woods-sponsored state retrenchment: Education and public health. One, the power sector is very complex, making highly technical specialists necessary; secondly, building new infrastructure requires a very large influx of cash. These reasons have led to failures (especially in the form of higher prices) when West African states have attempted to radically reform their energy sector.

Back to development
Because energy is so important for economic development, it is seen as a pre-requisite to lift many in Africa out of poverty. This is especially true for those who live in rural areas.

Presently, fossil fuels presently provide much of Africa’s energy consumption. Like Western countries, Africa needs to begin searching alternatives.

According to a speech at a workshop titled "Electricity Access and Development Challenge in Africa,” improved energy access will free up women’s time, reduce air pollution by moving away from burning charcoal and wood for cooking, thus improving health. (Girls not needed for collecting wood may find their ways back in the classroom.) Medical care will also be revolutionized, especially for maternal care, drug storage and increased sterilization.

For economic benefits, Africans could begin processing some of their many natural products – shea butter, cotton, palm oil, etc – that are made elsewhere to high profit margins.

No comments: