Provide power, Africa will grow – Dangote tells African governments

Business leaders on the continent have singled out the unavailability and erratic supply of power as the biggest impediment to Africa’s growth, urging governments to provide consistent energy, at the real cost, to drive growth.

Aliko Dangote, Executive Chairman of the Dangote Group, noted that one of the biggest challenges Africa needs to look at is power, calling for urgent attention if governments want to see the continent grow.

“No power, no growth. We need to make sure we tackle the issue of power,” the businessman said at the first panel discussion at the ongoing Development Finance Forum (DFF) in Accra.

The forum, organised by the World Bank Group and the African Centre for Economic Transformation (ACET), aims at scaling up private sector investment in Africa.

Mr. Dangote said small businesses on the continent can never survive without stable power when the income or revenue generated is used in purchasing diesel to power and service generators.

“Meanwhile, these generators are meant to be backup or standby. But now the generators are those that are providing consistent power and the grid is now standby,” he bemoaned

Urgent called for urgent action to address the continent’s power challenges. “That does not make sense. For example, the entire state of Kano, with a population of 21million people, has a power supply of less than 35megawatts from the grid. These are the issues we need to do. We must make sure that power is available, if not businesses cannot grow,” he said.

The World Bank has declared 32 of the 48 nations on the continent to be in an energy crisis. Energy development has not kept pace with rising demand in developing regions, placing a large strain on the continent's existing resources over the first decade of the new century.

From 2001 to 2005, GDP for over half of the countries in Sub Saharan Africa rose by over 4.5percent annually, while generation capacity grew at a rate of 1.2percent.

According to the World Development Report published by the World Bank in 2012, Africa’s economy is about the size of the Netherlands' economy, which is equivalent to only approximately six percent of the U.S. economy.

Consumers must pay true cost of power

Helen Tarnoy, Managing Director, Aldwych International Limited, an energy company, noted that energy and power underpins every other aspects of life and African governments must work harder to provide consistent power at the real cost.

“There are some things that must be done. In places that they are being done, we are seeing changes. In Kenya, consumers of power pay the cost of power. Where countries and governments are reluctant to raise tariffs and cover the cost of generating power, you see enormous deficits and lack of power,” she added.

Ms. Tarnoy, noted that the single most important thing that governments on the continent need to do is to have the courage to explain and persuade consumers to pay the real cost of power.

“The level of theft and losses in the system are astronomical and prejudice, not only the ability of these countries to attract more investments, but also the people who honestly pay their bills. For everyone who pays their bills, there is someone sitting next door who isn’t paying. So the person paying is paying twice. These are the things governments must do,” she added.

President Nana Addo Dankwa-Akufo Addo, opening the forum, noted that government is in the process of formalising the economy through the implementation of a digital property addressing system for Ghana and also the issuance of biometric National Identification cards to residents so that every resident will have a unique identification number.”

Touching on energy and power generation, the president added that: “We have encouraged majority Ghanaian private sector participation in the Electricity Company of Ghana (ECG), the main distributor of power in Ghana, under the Millennium Challenge Compact with the U.S. Government.

Government has reviewed existing Power Purchase Agreements (PPAs). Our policy is to move Ghana from a reliance on thermal towards renewable energy. We have, thus, decided that new PPAs will only be signed for renewable energy,” he said.

Finance Minister, Ken Ofori-Atta, touching on the Ghanaian power challenges, noted that there are two levels in fixing the power problems.

“First, we have the issue of mismanagement and secondly the inability to explore renewable options. We are trying to clear the backlog so that we can get back into decency and how we negotiate these contracts and ensure there is stable power,” he added.

The event brought together more than 300 public and private sector leaders from around the world to identify constraints and opportunities to developing a vibrant private sector that supports infrastructure, technology, agribusiness, manufacturing and job creation.