Rush to Build African Infrastructure Brings Challenges and Opportunities

According to the IMF, ten of the twenty fastest growing economies in the world are in Africa. These include the top three: São Tomé and Principe, South Sudan, and Guinea. Considering the fact that many of these are starting with very little in the way of development, these countries represent a tremendous opportunity, not only in terms of revenue potential, but also, given something resembling a clean sheet, a chance to truly get it right, from a sustainable development perspective.

Recognizing the opportunity, the Chinese have moved aggressively, establishing economic ties and quickly becoming Africa’s largest trading partner. In 2012, China’s trade with Africa reached $198.5 billion, twice that of the US.

Now the US wants to pick up its Africa game. Just this week, the US government announced commitments from American businesses to invest $14 billion in Africa. Coca-Cola alone has pledged $5 billion. Other companies  coming to the table include Chevron, IBM, Mastercard, GE and Marriott.

The primitive level of African infrastructure will surely pose an obstacle to these development efforts. For example, two out of three people living in sub-Saharan Africa lack access to electricity. The number is even higher in rural areas. That’s over 600 million people. That is where the US has targeted its assistance through a program called Power Africa, which was announced in June 2013. The program is a collaboration of “African governments, the private sector, and other partners such as the World Bank and African Development Bank in six focus countries — Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.” The goal is to install more than 10,000 megawatts (MW) of clean, renewable electric generation capacity.

As a recent Wall Street Journal article has pointed out, there will be challenges. Early investors took advantage of landowners, who were mostly poor farmers, creating distrust. Now farmers are refusing to move their farms to make way for wind farms.

Ethiopia’s first private power project—a geothermal plant—required an embedded adviser inside the government before it got done. Small solar projects in Tanzania required regulatory overhauls. Nigeria is seeing large-scale privatization of power plants, which is revealing the sorry state of its grid.

To some extent these kinds of barriers are fairly typical in a infrastructure overhaul of this magnitude. Barriers arise which must be addressed one at a time. But then, again, some of this might be a question of imposing a legacy vision on a future prospect where it might not be a perfect fit.

Is a large-scale grid infrastructure, created in the image of American and European cities really the right answer for Africa? Would a model based more on distributed generation possibly make more sense in a land with as many geographical and political challenges as Africa has. Why string hundreds of miles of power lines when the sun or the wind is often available right where it is needed?

Look at the telecommunications explosion in China and India, which combined now have over two billion cell phones. Most of those people have never heard of a land line and couldn’t imagine why anyone would go to the trouble to erect such things.

This is an opportunity to do things right. Sure there is lots of money to be made and developers are itching to get in there first. But perhaps we should take a minute to look before we leap.

Article by RP Siegel of Justmeans, appearing courtesy 3BL Media.