The US-Africa Summit on Energy shall be an annual event that would seek solutions to the debilitating shortage of power supply in sub-Saharan Africa. The summits would especially emphasize the salient fact that the model of centralized power supply as practiced in many African countries is no longer serviceable in a 21st century economy, and that decentralization and privatization provide a sustainable trajectory of growth and reliability. The inaugural summit of 2017 articulates the first steps in this promising enterprise of collaborative initiatives; it is co-convened by the International Business Resource Center (IBRC) at the University of Wisconsin-Platteville, and the Council on African Security and Development (CASADE).
Highlight of benefits to participating African firms/investors:
Highlight of benefits to US participants:
Rationale for the summits
Africa has incredibly enormous energy resources, much beyond what it needs to service its own needs. But paradoxically suffers acute deficiencies in energy generation and distribution. By the World Bank’s estimates, at least over half of the continent’s population does not have access to electricity, and for those fortunate to have access, the level of production is often unable to satisfy demand. The International Energy Agency (IEA) expects the total demand for electricity in Africa to increase at an average rate of 4 percent per year until 2040, and the demand from the industrial and service sectors to more than double in the same period. Generation capacity in Africa thus needs to expand exponentially to meet this anticipated increase in demand.
Eighty-two percent of Africa’s electricity was generated from fossil fuels in 2012. By IEA estimates, another 81 gigawatts of thermal capacity will have been built in sub-Saharan Africa in 2030; however, the current level of investment of $8 billion per year in electricity production is inadequate to meet the region’s current and future energy needs. The IEA further estimates that about $46 billion of investment in the region’s energy sector would be required each year to provide a steady-state supply of energy to the sub-continent.
Unsurprisingly, the quality of sub-Saharan Africa’s electricity supply remains abysmal and troubling. There is, on average, a power outage almost every two days in the sub-continent, and in most countries outages occur daily. The economic consequences of erratic supply of electricity are strongly felt through reduced productivity, and higher cost of electricity for users. Attendant losses have been estimated to depress the Gross Domestic Product of the sub-continent by 2% every year. By all accounts the deficiency of energy is perhaps the most important contributing factor to the continent’s grossly underdeveloped manufacturing base. Without reliable and sufficient energy, the economies of constituent countries would retain for long their current status as a market place for foreign imports.
Bridging the funding gap in the power sector
In addition to financial commitments made by several African governments (Nigeria, for instance, has budgeted US$1.3 billion to the power sector in its 2016 budget), Power Africa, a US led consortium, has set aside over US$42 Billion to fund the electrification of sub-Saharan African countries. This initiative aims to boost existing power supply by 30,000MW of electricity to power 60 million households and businesses in the sub-continent. This additional source of funding is crucial to the energy sector, for it bridges the financing gap African governments and private investors are unable to fill. This summit shall make available experts from USAID, the administrators of “Power Africa” to provide guidance and assistance to existing and new private investors in the power industry. Registered participants from Africa would be offered assistance, if needed, in securing US visas to the summit through our offices in Abuja, and at the University of Wisconsin-Platteville.
Economic impact on Wisconsin and surrounding states
The potential trade, economic and employment impact of the summit on the regional economy would be remarkable. The summit offers firms in Wisconsin and neighboring states opportunities to expand both domestic and global capabilities in terms of product and service competitiveness, technology development, expansion of market share, enhancement of local and domestic job creation with attendant beneficial externalities that impact economic growth, and quality of research in higher education facilities.
The summits as means to sustained development
For Africa to meet its goal of sustained economic growth, it must industrialize its economy. But industrialization requires, in the first instance, the ability to achieve a steady-state of electricity supply with the most minimal interruption. Such state of reliable power supply has eluded Africa for decades despite millions of US dollars spent in this regard. As well understood by both policy makers and private citizens in the continent, the absence of such steady-state of power supply is not due to want of resources or the requisite human capital; Africa has ample supply of these. It is, unfortunately, a result of an absence of a well-defined national consensus on the subject, and a dedicated effort that makes such endeavor a collective necessity and a societal imperative. Some African countries (Nigeria, Ghana, South Africa) have done exceptionally well in solving two of the puzzles a country needs for sustained development …telecommunication, and an efficient financial sector…the remaining two…. power supply and a dependable transportation network, are seriously lagging, and in need of immediate attention.
The beneficial externalities to other sectors from an enhanced and vastly improved energy sector would be transformational in magnitude in terms of cost of doing business, efficiency in the provision of services, and the ability to engage in actual manufacture and assembly of durable goods. Not least in the litany of benefits is the prospect that Africans would confidently set aside their environmentally damaging generators, and join other advanced economies in the experience of uninterrupted supply of power.