Energy challenges in Africa: solution channels and SME participatory opportunities

By Abiodun Dominic Odunuga - 28 October 2015 at 10:36 am

AP Photo/Schalk van Zuydam

“Africa could easily be growing at double-digit GDP rates if we solve this problem of energy,” – were the words of the newly elected and eight president of the Africa Development Bank – Akinwunmi Adesina (past Nigerian Minister of Agriculture). He also mentioned that solving the continent’s acute power shortages is one core focus of the bank in coming years.

This is understandable and justifiable in a continent that houses about 1.4 billion people, with 600 million of these people having no access to any form of electricity as well as millions of others whose livelihood continues to be threatened due to epileptic power supply. As a single country of about 65 million people, France alone generates four times more electricity than all 47 sub-Saharan African nations combined with a population of about 805 million people. Spain’s power consumption has also been compared to the overall consumption of sub-Saharan Africa. In the wake of an emerging continent like Africa in terms of productivity and growth, an efficient power sector remains a pivotal tool to salvage the growth being witnessed.

The AfDB is not alone in spotting the urgency needed to invest in power to sustain Africa’s growth dividends. Other global and international initiatives have also set ambitious targets to support the continent in meeting with her energy demands. One of such initiatives is the Sustainable Energy for All (SE4ALL) which brings high-ranking leaders from the business, civil sectors and government to achieve a broad-based transformation of the global energy systems while making sustainable energy accessible for everyone. In September 2011, the UN Secretary General (Ban Ki-moon) communicated his vision to make sustainable energy available for everyone a reality by 2030. Africa has also been tasked to lead the vision at home with the SE4ALL African hub secretariat being hosted at the AfDB headquarters.

President Obama’s Power Africa initiative is yet another platform with a mandate to double access to power in sub-Saharan Africa by helping countries build power generation and transmission while expanding towards mini-grid and off-grid solutions. The initiative has flagged off its implementation with initial partner countries such as Kenya, Tanzania, Nigeria Liberia, Ghana and Ethiopia. The US will be committing over 7 billion dollars over the next five years to support the initiative alongside external commitments coming from various international organizations and Africa based private investments companies.

The International Energy Agency (IEA) estimates that sub-Saharan Africa will require over $300 billion in form of investments to realize the universal electricity access by 2030. IEA also adds that the continent will require an additional $450 billion investment in the power sector to halve blackouts and achieve access to electricity for all urban areas by 2040.

A probing question will then be ‘what part do SMEs have to play’ within these big numbers. The ‘scary billions’ in terms of needed finance and ‘humbling millions’ of Africans needing attention in terms of electricity could be mind-boggling. SMEs remain a fountain of hope whose potential within the continent can enormously sustain growth and create more economic opportunities. We should not allow their collective need for more support in terms of infrastructure to impede our judgment to recognize the power embedded in their aggregated potential to tackle a challenge.

Interested SMEs can look into some areas below to contribute to solving energy challenges in Africa at a comfortable scale;

  1. Training and Capacity Development: As the movement for renewable energy progresses, there is a need to shift the paradigm associated with using fossil fuel sources for power. The cost and benefits of making this switch is still oblivious to many people especially in rural communities. SMEs can fill the void by taking a responsibility where they have some form of influence or can create any.
  2. Sales, Installation or Distribution: Manufacturing costs presently constitute a hindrance to small enterprises working towards promoting renewable energy technologies. To build capital, SMEs can connect with big organizations that need available channels to deliver their products to market segments. This offers SMEs the chance to remain in the loop of the business while working on scaling up their own businesses.
  3. Participating in innovative green solutions’ bidding: Whether in form of loans, grants or other form of investments, many international organizations are on the lookout to promote green solutions meeting local power needs. SMEs can position themselves for such opportunities with promising and feasible projects.
  4. Information and Communication Technology: The world revolves around technology. The future of power services (both renewable and non-renewable) will still be hinged on technological innovation in information and communication. SMEs can work on using technology to solve some basic challenges being faced by power operators or within the transmission and distribution chain.
Abiodun Dominic Odunuga

Abiodun Dominic Odunuga

Abiodun Dominic Odunuga is a development practitioner and social entrepreneur.

Abiodun has cognate field, consulting and delegation experience having worked on various projects and forums alongside organizations such as the United Nations (UN), Africa Development Bank (AfDB), and The Commonwealth on themes related to education, environment and sustainability. As a social entrepreneur, he has co-founded four different social enterprises focusing on Africa as it relates with SMEs, IT empowerment and youth development. He holds a Masters in Development Practice (MDP) degree from SciencesPo, Paris. He is passionate about sustainable development with a core concentration on Africa.

Twitter: @abiodunodunuga

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