Power Africa Summit critical to unlocking just energy finance for the continent

I’m in Washington D.C at the time of penning this article, here for this week’s 9th annual Power Africa Summit, at a critical time in Africa’s climate-energy juncture. Following on from COP28 that concluded at the end of last year, this year’s PAS24 is the next big meeting for African leaders and international financial organisations. This year’s theme of “Capital flows underpinning the energy transition” is critical as Africa navigates its need to provide its citizens with power, while ensuring it does so in a sustainable and just way.

Access to electricity is fundamental to the social and economic development of any country. Power provides light for children to study at night and improves the standard of living for families. Power gives farmers tools to increase and improve agricultural output and ensures business efficiencies. Power is the engine that fuels an economy.

Unfortunately, around two-thirds of the African continent does not have access to electricity and so the focus of this year’s summit remains squarely on sustainable energy project development, infrastructure and the enabling environment. PAS24 will focus on the critical financial aspects needed to develop Africa's energy sector more effectively, with conversations rooted in reducing the cost of debt and innovative solutions to the sovereign guarantee impasse.

How successful has the Power Africa Summit been and will it continue?

The first Power Africa Summit was launched by former US President, Barack Obama in June 2013 as a private sector-led initiative with the ambitious goal of doubling electricity access for the 570 million sub-Saharan Africans that have no power in their homes.

Despite the change in presidents and regimes, Power Africa has continued to work on its initial goal of adding more than 10,000 megawatts (MW) of new, cleaner electricity generation capacity and increasing electricity access by at least 20 million household and business connections.

Under President Obama, the US government successfully fostered private investment in off- grid and small-scale energy solutions that sought to expand access to remote areas across sub-Saharan Africa. Power Africa was the first-ever U.S. presidential initiative that was headquartered outside of Washington, D.C. - in Nairobi, Kenya - and the initiative continued under President Trump. It is now its 10th year under, President Biden.

Though the U.S. government has advised countries on electricity access for years, Power Africa’s approach is different in that it has taken a demand-driven, transactional approach. Power Africa looks at actual transactions between private-sector players like investors, entrepreneurs, and manufacturers — and with governments to identify obstacles that prevent transactions from moving forward. A large reason for the success of Power Africa is the power of diplomacy to level the playing field for U.S. investments in the energy sector.

Led by USAID, the twelve U.S. government agencies that implement Power Africa activities have provided financing and technical assistance to support the power sector in 40 African countries since its inception.

Early on, Power Africa recognised that the U.S. government does not have all the tools and resources necessary to achieve its ambitious goals, so they have collaborated with international partners for help. The World Bank and the African Development Bank are financing partners and other international partners include the governments of Israel, the Republic of Korea, Norway, Canada, the U.K., France, Japan and the European Union.

Power Africa has a number of important achievements to its credit. The programme has:

• established nearly 16 million new electricity connections for homes and businesses that provide first-time access for roughly 74 million people.
• facilitated the first-ever independent power producer transactions in Malawi, Ethiopia and Senegal.
• helped electricity distribution companies in Nigeria dramatically reduce their losses and increase revenues, which strengthens power delivery and improves the health of the entire energy sector.
• created the Power Africa Tracking Tool, a mobile app that monitors power project deals across sub-Saharan Africa. With a simple tap, one can find details on more than 900 deals representing upwards of 80,000 MW of installed electric power.

Energy financing must be favourable

The challenge for Africa is it needs to industrialise and electrify its economies, but at the same time it needs the finances to do so in a sustainable way. Africa has also been most severely affected by climate change and so its infrastructure development needs to be climate resilient. African nations, for the most part, don’t need an Energy Transition but an unlocking of Energy Potential and that is why Power Africa continues to be critical for the continent.

The energy landscape has become more complicated over the past decade, even as climate change considerations have risen to the forefront of global political discussions.

The world has also become a more precarious place, with shifting geopolitical alliances and conflicts in the Middle East, Ukraine and Africa. Many countries are grappling with rising inflation which has also impacted the amount of developmental finance available to African nations. But the U.S. will want to maintain its presence and footprint in Africa, especially as China seeks to play a leading role in the continent’s infrastructure development.

The conflict in the Middle East will certainly be part of the sideline discussions at the event, as Power Africa and the government of Israel had previously signed an MOU for increased cooperation between the government to increase access to electricity in sub-Saharan Africa.

In spite of the challenging global political environment, the African continent needs international governments and partners at Power Africa to take the next steps to funding

Africa’s energy revolution with international financing mechanisms that are just. After all, Africa is responsible for less than 3% of the world’s carbon emissions and home to unlocked energy potential.