By Timothy Cama - 08/06/14 06:01 AM EDT
This week’s U.S.-Africa summit gives leaders in governments and the private sector the opportunity to catch up on efforts to increase access to electricity in sub-Saharan Africa, just over a year after President Obama launched a major effort toward that goal.
About 70 percent of residents in sub-Saharan Africa lack reliable access to electricity, according to the White House. Beyond the humanitarian goal of improving people’s well-being, gaps in electricity availability make it difficult for companies, whether domestic or foreign, to operate in those countries.
Andy Herscowitz, who leads USAID’s efforts, said the administration has done “surprisingly well” in working toward the goals of adding 10,000 megawatts of power generation capacity and electrical connections for 20 million people.
“We’ve helped reach financial close on 2,786 of the 10,000 megawatts already and we have about another 5,000-plus in the pipeline of projects that we’ve identified,” he said.
Obama announced a $9 billion private sector commitment to Power Africa last year, and Herscowitz said he expects “a significantly larger announcement” this week.
Power Africa added a component in June aimed at bringing energy to rural areas in Liberia, Ghana, Nigeria, Ethiopia, Kenya and Tanzania.
“Beyond the Grid is really meant to figure out what we can do to stimulate private-sector investment to increase access in off-grid areas,” Herscowitz said.
Power plants and infrastructure take years to plan, finance and construct, so little physical evidence of the program can be unveiled a year out.
At the root of Power Africa is the idea that it is difficult to spur further economic growth in the region without significantly improving electricity. While USAID coordinates the effort, the Overseas Private Investment Corporation (OPIC) provides significant help with financing, the State Department helps find projects and investors and other agencies assist where appropriate.
“The focus the administration has taken on power in particular is an unquestionably good thing,” said Eliot Pence, who directs the Africa practice at McLarty Associates, an international business consulting firm.
“Nobody disputes that power is really key to so much of development, especially due to the business operations, which is itself a real driver of development,” he said.
To Pence, what stands out about Power Africa is the leading role that Africa-based companies are playing in the effort, as opposed to governments or U.S. companies.
“It’s part of a broader shift the U.S. is taking in Africa,” Pence said. “It’s been dominated for decades by a focus on humanitarian assistance and broader development assistance.”
But the program’s main fault may come from its lack of formal congressional support. In an effort to avoid congressional gridlock and the desire not to spend new money on Capitol Hill, Obama formulated the plan without lawmakers’ help.
“That was always designed as something that the administration could do without Congress,” said Todd Moss, senior fellow at the Center for Global Development. It makes sense in the short term as a way to get it off the ground, Moss said.
“I think it was a long-term mistake, because if Power Africa is going to outlive a handful of people who designed it in the White House, then you have to build much broader support, starting with Congress,” he said.
It’s not as if Congress hasn’t tried, though. There is widespread bipartisan support for the program, as long as it doesn’t spend new money.
Earlier this year, the House passed the Electrify Africa Act to give its blessing to the program and provide OPIC more flexibility to finance projects. A Senate bill that is similar, but gives even more flexibility to OPIC to hire more staff, has passed the Foreign Relations Committee but not made it to the floor.
The measures would actually save money, because OPIC earns money from its investments.
“If OPIC did what was in the Electrify Africa Act, they would have more deals, there would be an acceleration of their portfolio investments and you would see more fees,” Moss said.
Crucially, both measures would make it much easier for OPIC to fund power plants that use fossil fuels like natural gas and coal in Africa. Those projects are currently limited by their carbon emissions.
Moss said that while encouraging renewable energy in Africa may be a good goal, it’s not realistic.
“All six countries in the Power Africa initiative either have their own natural gas or they’re exploring for gas, and they’re going to want to use it for domestic power generation,” he said. “We just need to be very careful and clear about not over-romanticizing renewables in an environment where the needs are so great.”