Power [electricity] in Africa: current state of Africa’s Power sector
Africa’s largest economies produce significantly more energy than other African peers. Also, the oil-producing nations record substantial energy surpluses, but similar to other African countries with energy surpluses, a substantial amount of energy is exported without domestic demand being widely satisfied. Rising fuel and electricity prices also continue to impact Africa’s manufacturing sector adversely. In most parts of West and East Africa, backup power systems (diesel-powered generators) are used by manufacturing companies as their main energy source. The reliance on higher-priced electricity for production processes inhibits African manufacturing companies from competing effectively with Asian and developed world counterparts.
Access to electricity plays a salient role in economic growth and investment decisions. In its Doing Business 2014 report, the World Bank measures the ease with which businesses in 189 countries can access electricity. The “getting electricity” indicator captures the procedures, time and cost involved for a business to obtain a permanent electricity connection to supply a standardised warehouse. In this regard, Africa performed relatively poorly, with 38 African countries ranked outside of the top 100, and only 13 countries managing to rank inside the top 100. In fact, 21 African countries, including the continent’s two largest economies, namely South Africa (150th) and Nigeria (185th), did not even breach the top 150 countries.
The best performing countries in the region were Mauritius (48th), Rwanda (53rd), Tunisia (55th), and Cameroon (62nd), while the worst performing countries were Guinea-Bissau (188th), Madagascar (187th), Nigeria (185th), and South Sudan (184th). Other large African economies that performed poorly include Angola (170th), Kenya (166th), and Algeria (148th). However, it should be noted that six out of the 10 countries that have narrowed the distance to the frontier the most since 2009 are in Africa, including Sierra Leone, Tanzania, Zimbabwe, Ghana, Central African Republic and Liberia (the frontier is the best performing country in each indicator).
Access to Electricity
While access to electricity affects investment decisions and consequently potential growth, the quality of electricity supply has an impact on productivity, with further implications on economic development. Energy networks that provide reliable and affordable electricity are also essential because disruptions in the energy supply can impose large costs on companies, especially large manufacturing, electricity-intensive businesses, which need to stop and restart their operations after a power interruption. Figures from a recent World Economic Forum’s (WEF) 2013/14 Global Competitiveness Report (GCR) show that only five African countries have scores above the global average with regards to the quality of electricity supply. Only Namibia, Morocco, Tunisia, Mauritius and Seychelles perform better than the world average, while Guinea, Chad, Angola, Nigeria, Burundi and Cape Verde are all ranked within the 10 worst performing countries in the indicator. At least 30 countries in Africa experience daily electricity outages, which can result in an annual loss of anywhere between 5% of GDP in countries like Uganda and Malawi, and between 2% and 5% of GDP in Tanzania and Kenya.
Please download the Power in Africa sector report here
About David Okwara
Africa, Africa brief, Africa challenges, Africa opportunities, African countries, challenges, development, East Africa, economic growth, economy, Ethiopia, FDI, financial services, Foreign Direct Investment, foreign investment, investment, Oil and gas, opportunities, South Africa, sub-Saharan Africa, WEF, World Economic Forum