In a move that is expected to define his presidency’s engagement with the continent of his father’s birth, President Barack Obama on June 30 announced a multi-billion-dollar initiative to double access to power in sub-Saharan Africa. The United States will commit more than $7 billion in financial support over the next five years to the initiative, the president said.
Power Africa comes just over three months after the opening of the U.S.-Africa Clean Energy Development and Finance Center at the U.S. Embassy in Johannesburg, South Africa, to mobilize capital in support of clean energy project development in Africa. The Obama administration first announced the center in November 2012.
More than two-thirds of the population of sub-Saharan Africa currently is without electricity and more than 85 percent of those living in rural areas lack access. The International Energy Agency reports that sub-Saharan Africa will require more than $300 billion in investment to achieve universal electricity access by 2030.
Power Africa will build on the continent’s enormous power potential, including new discoveries of vast reserves of oil and gas, and the potential to develop clean geothermal, hydro, wind and solar energy. It will help countries responsibly develop newly discovered resources, build out power generation and transmission, and expand the reach of mini-grid and off-grid solutions.
The president’s announcement brought sighs of relief from business and professional circles in America’s Black communities, where hope for a non-military Obama imprint on Africa seemed to be treading water. On the eve of the announcement, that hope was very much on the minds of African, Caribbean and African-American professionals dining at famed Senegalese restaurant Joloff II in Brooklyn, N.Y.
“George Bush had PEPFAR, Bill Clinton had AGOA. Will Obama have anything?” one member of the group mused. He was referring, respectively, to George W. Bush’s $15-billion, five-year President’s Emergency Plan for AIDS Relief, and to Bill Clinton’s African Growth and Opportunity Act.
The view now is that President Obama likely will leave his Africa footprint in energy, the sector that underpins all economic and industrial activity.
PEPFAR, said to be the largest health initiative ever initiated by one country to address a disease, reportedly increased the number of Africans receiving antiretroviral treatment to at least 1.2 million in early 2008 from 50,000 at the start of the initiative in 2004, averting about 1.1 million deaths.
Signed into law in 2000 and coming up for its third reauthorization by the U.S. Congress in 2015, AGOA offers duty-free access to U.S. markets for goods manufactured in countries that undertake economic and commercial reforms to facilitate private investment. It is designed to expand U.S. trade and investment with sub-Saharan Africa and stimulate economic growth in the beneficiary African countries.
Arriving in South Africa from Senegal on Saturday on the second leg of his three-country Africa visit, President Obama pledged his support for improvements in and renewal of the legislation.
In Phase One of Power Africa, the U.S. will work with Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania to add more than 10,000 megawatts of cleaner, more efficient electricity generation capacity; increase electricity access by at least 20 million new households and commercial entities with on-grid, mini-grid and off-grid solutions; and enhance energy resource management capabilities.
The six countries were chosen as a reward for setting ambitious goals in electric power generation and for the reforms they implemented in the utility and energy sectors to pave the way for investment and growth. Power Africa will also work with Uganda and Mozambique on responsible oil and gas resources management.
Of the $7 billion committed to the initiative:
* The U.S. Agency for International Development will provide $285 million in technical assistance, grants and risk mitigation to advance private sector energy transactions and help governments adopt and implement necessary reforms to attract private investment in the energy and power sectors.
* The Overseas Private Investment Corp. will commit up to $1.5 billion in financing and insurance to energy projects in sub-Saharan Africa.
* The U.S. Export-Import Bank will make available up to $5 billion in support of U.S. exports for the development of power projects across sub-Saharan Africa;
* The Millennium Callenge Corp. will invest up to $1 billion in African power systems through its country compacts to increase access and the reliability and sustainability of electricity supply through investments in energy infrastructure, policy and regulatory reforms and institutional capacity building;
* OPIC and the U.S. Trade and Development Agency will provide up to $20 million in project preparation, feasibility and technical assistance grants to develop renewable energy projects.
* The U.S. African Development Foundation will launch a $2 million Off-Grid Energy Challenge to provide grants of up to $100,000 to African-owned and operated enterprises to develop or expand the use of proven technologies for off-grid electricity benefiting rural and marginal populations.
OPIC and USAID will jointly host an African energy and infrastructure investment conference in 2014, bringing together investors, developers and companies with U.S. and African officials to demonstrate the opportunities for investment and the tools and resources available from the U.S. government and other partners to support investment.
Private sector support for Power Africa was immediate, with more than $9 billion already committed.
* General Electric Co. (U.S.): help to bring online 5,000 megawatts of new, affordable energy through provision of its technologies, expertise and capital in Tanzania and Ghana;
* Heirs Holdings Ltd. (Nigeria): $2.5 billion of investment and financing in energy, generating an additional 2,000 megawatts of electricity capacity over next five years;
* Symbion Power LLC. (U.S.): Aims to catalyze $1.8 billion in investment to support 1,500 megawatts of new energy projects in Power Africa countries over the next five years;
* Aldwych International Ltd. (Britain): Will develop 400 MW of clean, wind power in Kenya and Tanzania – the first large-scale wind projects in each of these countries – and an associated investment of $1.1 billion.
* Harith General Partners (South Africa): $70 million in investment for clean, wind energy in Kenya, and $500 million across the African power sector via a new fund;
* Husk Power Systems Pvt. Ltd. (India): Will seek to complete installation of 200 decentralized biomass-based mini power plants in Tanzania, providing affordable lighting for 60,000 households.
* Africa Finance Corp. (pan-African): Will invest $250 million in the power sectors of Ghana, Kenya and Nigeria, catalyzing $1 billion in investment in sub-Saharan Africa energy projects.
