Protocol
On behalf of the Management and Advisory Board of the African Energy and Infrastructure magazine, I welcome all of you to this very important Energy and Infrastructure forum with the theme Bridging Africa’s Energy and Infrastructure deficit.
Today’s Africa is one of a 54 countries’ large continent with tremendous economic growth, investment, and rapidly rising living standards. The 21st century Africa is about opportunities, technology, and entrepreneurship. Across the continent the conditions and environment for doing business is changing with improving legal structures, developing infrastructures, combating corruption, enhancing democracy, easing bureaucratic regulations and upgrading of frameworks for development and trade agreements. Trade between countries and across regions are increasing while trade organisations are strengthened and regional integration and trade are advanced as means to prosperity. Internet connectivity, increased interregional flights and trade are increasingly connecting and interconnecting the continent.
However, energy and infrastructure deficits on the continent has continued to rob us all of the immense potentials of the continent. This situation is all the more clear when we look at the facts and figures in these two very critical sectors in Africa.
Let’s take the case of Energy and Power:
In the power sector, the entire installed generation capacity of 48 sub-Saharan African countries is 68 gigawatts, and 25 percent of that capacity is unavailable because of aging plants and poor maintenance. It is dramatic since inadequate access to energy is the single largest impediment to economic growth. No country in the world has developed its economy without abundant energy supplies. If the light stayed on longer, the idea is that Africans would be noticeably more productive than they are at the moment. This would also translate into a wealthier society. The infrastructure necessary to power the continent would be, perhaps, second to building physical roads, the most labour-intensive and job-creating prospect in its building phase. This is also due to the gap between where African countries are at the moment and where they should be, given that the global conversation has now moved to a completely different kind of energy—Renewables. Energy, and the advances that have taken place in this scientific field, has defined mankind’s progress. One single change in this scientific field, using steam to power engines, meant people and services could travel to the far ends of the globe in half the time. The new phase of renewable energy stands to usher in a new era in global commerce and standard of living. Those who are expected to loose out are disproportionately Africans, if current trends continue. It is estimated that by 2030 1.4 billion people will not have access to electricity—600 million of those in this group will be on the continent.
The numbers supporting these assumptions makes as much sense as they are, equally, sad.
• Africa accounts for 13% of the world’s population, but accounts for only 5% of global energy consumption;
• Africa’s energy reserves are plentiful: It has nearly 8% of the world’s proven gas reserves; nearly 10% of the world’s oil;
• 56% of the energy consumed in Africa comes from firewood; it’s predicted that by the year 2030, the figure will have come down, but this source of energy is projected to still be the primary source of energy on the continent;
• Africa generates just 3% of the world’s electricity; South Africa generates more than 40% of the electricity produced in Africa. More than 25% is generated in the five countries of north Africa;
• Across the continent, one third of people have access to electricity; in sub-Saharan Africa alone, the figure falls to a quarter; in rural areas, the number is even lower: Fewer than 10% can turn on power at the flick of a switch;
The continent has, unfortunately, remained in the “dark.” But, the change in conversation from fossil fuel energy sources to sustainable, environmentally friendly alternatives delivers another opportunity for Africa to partake in the benefits of this coming change. And bold energy and infrastructural policies from the continent’s governments and public policy sectors are in order, if it is to succeed in not being left behind. Unlike fossil fuel energy, renewable energy requires infrastructures that demand a higher level of technical know-how. Investments in these new sources of energy will also mean investments in human potential, in addition to research and development projects. The continent is lacking the academic and commercial avenues for obtaining new technology and this will be crucial in its journey to close the energy gap. African governments will have to tap into the global market place for ideas. On this issue, the continent’s knowledge base is very little, if any, and global institutions—international organizations, world-class universities, and trans-national corporations—are willing partners with the expertise needed to craft the bold and visionary energy future the continent’s billion-plus populace needs to realise a better future. We must therefore all take advantage of the opportunities that exist in Africa’s energy sector.
On the infrastructure front, the story is much the same.
There is an obvious acceleration of infrastructure projects in Africa since 2000. One of the main reasons for this acceleration is the improvement of African economies, with growth averaging six percent of GDP in sub-Saharan Africa between 2000 and 2007 due to intensive economic reforms implemented in several African countries. And one cannot underestimate the importance of raising living standards, leading to sustained growth in demand for quality infrastructure. There is a clear demand for large investments in infrastructure projects, in all sectors.
The needs are evident in the water sector. Less than 60 percent of Africa’s population has access to drinking water and only a handful of countries are on track to reach the Millennium Development Goals. Over the last 40 years, only four million hectares of new irrigation have been developed, compared to 32 million hectares for India! Regarding transport, ineffective linkages between different transport modes (air, road, and rail), declining air connectivity, poorly-equipped ports, ageing rail networks, and inadequate access to all-season roads are key problems facing Africa’s transport system. Only 40 percent of rural Africans live within two kilometres of an all-season road, compared to some 65 percent in other developing regions. Improving road accessibility in rural areas is critical to raising agricultural productivity across Africa. The needs are also immense in the ICT sector. The number of African mobile phone users has indeed increased from 10 million in 2000 to more than 180 million in 2007, but high prices of services remain a problem, almost six times the cost in Bangladesh, India or Pakistan for prepaid services. In a nutshell, the prices paid by African consumers for infrastructure services are exceptionally high by global standards. The tariffs charged in Africa for power, water, road freight, mobile telephone service, and Internet access are several multiples of those paid in other parts of the developing world. According to economic data available, for Africa to catch up on infrastructure with other developing regions over the next 10 years, an annual investment of $93 billion would be required, instead of the current average of $45billion it is spending now.
We are however optimistic because Africa, in spite of the financial crisis, has been able to maintain a high level in infrastructure investments, including donor finance and private sector investments, hence this forum. There are several untapped sources to turn to. More efficient use of existing resources could release an additional US$17.4 billion in finance for infrastructure each year. That would reduce the gap to US$31 billion a year. Innovative solutions, therefore, have to be explored. Trade and foreign direct investment are also key engines of growth. African institutions have to be better positioned to be able to leverage public money to attract private finance. Africa’s infrastructure presents a compelling investment opportunity as long as the enabling environment is enhanced. A virtuous circle for public-private partnerships in infrastructure could easily be implemented to boost efficiency. Cross-border transportation is another key strategic area for infrastructural development. Transportation is probably the most important infrastructure barrier to trade in most African countries. It isolates markets from competition, reduces economies of scale, and directly raises import and export costs. Transport problems also pose a serious constraint to commercialization of agriculture in many African countries, limiting the ability to diversify into new export activities, such as horticulture and floriculture. All forms of transportation – road, rail, sea, and air – are generally costly in Africa. But costs are increased by the fact that, in many cases, cheaper forms of transport, such as rail, perform poorly or are non-existent, necessitating the use of higher cost road services (40 to 60 percent higher cost than rail). In some landlocked nations in Africa transport can be the single most important component of cost for some products. We must therefore seize the moment as we do the needful in a bid to bridge Africa’s Infrastructure and energy deficits.
Once again, i bid you all a warm welcome while congratulating the select few, who shall today be honoured for their contributions to the development of the energy and infrastructure sectors. Let this recognition today only serve to propel you to greater levels of commitments and modelling best practices. And in closing my remarks, may i wish all participants and stakeholders at this forum successful deliberations. Thank you for your attention.
