Africa has been recording fast economic growth in the last two decades, with an average annual GDP growth of 4.6% (2000-2016).
However, that has not been sufficient to meet the developmental goals and poverty is again on the rise. In recent years, poverty rose slightly in Africa for the first time in more than a decade, especially in countries like South Africa, Niger and Uganda.
To make things more challenging, COVID-19 has had a negative effect on the GDP. The GDP of South Africa—the most economically developed nation in Africa—fell by 16.4 percent in the first quarter of 2020 compared to the previous quarter.
Like any other developing country, the countries in Africa depend on a strong energy sector to propel their economy. But economic recovery in the midst of an existing situation of energy poverty is not easy. The overall electrification in Sub-Saharan Africa stands at just 52 percent, lower than many developing countries.
The Way Forward
Increase in commodity trade and development assistance from international agencies have been the major propellers of development in Africa. But that is not sustainable in the future.
What Africa needs is a strong energy sector that can spur a growth in its industrial sector and also increased agricultural productivity. While the improvement in agrarian sector will ensure stability in local food demand, a robust energy sector will act as the backbone of its future economy.
In a 2014 U.S.-Africa Leaders Summit, Nigeria’s power minister Chinedu Ositadinma Nebo said, “I think Africa should be allowed to develop its coal potential. This is very critical. There are so many areas in Africa that will help to generate power for the over 60 percent of Africans that have no access to energy at all.”
His Tanzanian counterpart said, “We in Africa, we should not be in the discussion of whether we should use coal or not. In my country of Tanzania, we are going to use our natural resources because we have reserves which go beyond 5 billion tons.”
Both of them were right. Africa must be allowed to use the resources it has to pull itself out of energy poverty that has been keeping it way behind rest of the world.
But six years down the line, Africa finds itself in a very hostile world where there increasing difficulty in finding the capital to initiate and maintain their fossil fuel projects.
Anti-Coal Movement and The Sudden Investment Void
The World Bank Group that is financing coal projects is under pressure to discontinue its investment in fossil fuel projects. Only China remains as an active investor in major new fossil fuel projects in Africa.
Major international funders are beginning to withdraw funding for fossil fuel projects and enforce their pro-renewable policies. The African Development Bank announced in 2019 that it will no longer finance coal projects.
Norway excluded Africa’s biggest commodity firms from its $1 trillion wealth fund, in an effort to ensure that the fossil fuel sector does not receive Norwegian investment.
Private firms are also pulling out of fossil fuel projects in order to comply with the pro-renewable policy shift in Europe and Americas. One of the largest proposed coal power plant in East Africa is currently on hold, as the Lamu coal power plant is entangled in a legal battle.
In September this year, it faced further setbacks after the infrastructure provider General Electric chose to exit the project because of its new public policy of not aiding any new coal power projects.
Lessons from South Africa: Fossil Fuel is the Key
South Africa’s Eskom remains the largest energy producing company in the continent with about 50GW of installed capacity. Despite that, Eskom has faced significant challenges with its aging power distribution network, the growing demand-supply gap, and a host of other problems.
Further, Eskom’s dependence on renewables and hydroelectric power has its own set of problems. In March 2020, disruption from cyclone cut off power from hydroelectric plants in Mozambique.
Earlier this year, Eskom announced that load shedding (blackouts) will continue indefinitely. They stayed true to their word and residents across South Africa experienced scheduled and unscheduled blackouts throughout the year.
In contrast, increased dependence on fossil fuel-based power generating sources has proved to be fruitful. In August, resumption of power generation at idle units at coal-fired power stations helped Eskom suspend some of its planned power cuts.
Eskom is working tirelessly to fix the flaws in its aging coal fired plants in order to help them run at their full capacity. It has also decided to source electricity from independent power producers, which includes 3,000 MW of gas and 1,500 MW of coal.
Meanwhile, automation and digitization have helped mining operators in the country to enhance production. The proposed use of advanced wireless communication devices and machine control technology are examples of efforts aimed at increasing efficiency at mines.
Coal is also attracting traction in neighboring countries. In July, Zimbabwe’s largest thermal coal producer announced that it has clearance to produce 3 million tonnes of coal every year and would continue to do so for the next 48 years.
Besides fossil fuels, South Africa has also begun consulting nuclear power reactors suppliers for its ambitious 2,500MW Nuclear programme, which it believe will help address the huge demand-supply gap. The nation has already invested heavily (USD 1.2 billion) in reviving and prolonging the life of its only operational nuclear power plant in Cape Town.
Time to Liberate Africans from Energy Poverty
South Africa’s problems, despite being one of the most advanced country in Africa, is a wakeup call for the policy makers and leadership in other countries.
The opponents of fossil fuel projects have not provided solutions in alternate sources that could deliver the same type of stable electricity that coal projects would. Yet, they propose a ban on new fossil fuel projects in Africa, a move that can curtail developmental goals for many more decades.
According to Steve Chakerian from Northeast Group LLC, “Sub-Saharan Africa’s economic development remains tied to sustained growth in the power sector. The anticipated economic gains of the 2020s will depend in large part on bringing electricity to over 600 million people in the region that currently lack it.”
African leaders must rise up to the occasion, be open to investment help from China, and imitate the strong fossil fuel-based energy growth model of Asian countries like India and Japan. The very idea of a renewable energy-based grid must be put aside until the continent rises above energy poverty.