Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
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Eva Nilsson, Obert Hodzi, Erkki Sutinen, Mika Kautonen, Neema Komba & Liisa Laakso Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation Ministry for Foreign Affairs of Finland
E.Nilsson, O.Hodzi, E.Sutinen, M.Kautonen, N.Komba & L.Laakso, 2020. Connecting Africa, 77 p. Ministry for Foreign Affairs of Finland. @Ministry for Foreign Affairs of Finland 2020. This report can be downloaded through the home page of the Ministry for Foreign Affairs: https://um.fi Contact: ALI-20@formin.fi ISBN 978-952-281-673-3 (PDF) ISBN 978-952-281-674-0 (Print) Layout: Anna Kalso Cover photo: Traffic and pedestrians, Lagos, Nigeria. Photo: Adedotun Ajibade, 2015. Back cover photo: Internet available here, Nairobi, Kenya. Photo: Laura Rantanen, 2010.
Preface
IN 2020, the Ministry for Foreign Affairs These types of reports have an impor-
of Finland commissioned a development tant role in strengthening evidence-ba-
policy related study on Africa’s connec- sed decision-making. Last year the Mi-
tivity. nistry for Foreign Affairs published two
Development policy related studies reports on Africa that sparked a lot of
are not academic research as such. The interest in the wider public as well. The
authors are academically qualified re- first deals with political and economic
searchers, however, and they base their integration in Africa, and the second dis-
findings on academic studies. The Mi- cusses megatrends in Africa. Similarly to
nistry for Foreign Affairs chooses aut- them, the Ministry decided to publish on-
hors through a call for proposals orga- line the current report, Connecting Africa
nized by UniPID, the Finnish University - Perspectives for Digitalization, Energy,
Partnership for International Develop- Transport and Research & Innovation.
ment, of the University of Jyväskylä. The current Covid-19 pandemic crisis
The group of researchers chosen to highlights the importance of connecting
author the current report consisted of Africa.
Ms. Eva Nilsson, PhD candidate at the On behalf of the Ministry for Foreign
Hanken School of Economics, Dr. Obert Affairs, I would like to thank the research
Hodzi at the University of Liverpool, Ms. team and UniPID for an excellent report
Neema Komba, PhD candidate at the and commendable cooperation. I hope
Hanken School of Economics, Professor that this publication on Africa’s connec-
Erkki Sutinen at the University of Turku, tivity finds its way into the hands of an
Dr. Mika Kautonen at Tampere University interested readership that can put it to
and Dr. Liisa Laakso at the Nordic Africa good use.
Institute.
The report focuses on Africa’s connec-
tivity in the sectors of energy, transport,
digitalization and research & innovation. At the Ministry for Foreign Affairs
Each chapter includes a summary, an on 24 July 2020
overview of the sector, an overview of the
policy and investment environment, and Martti Eirola
recommendations for Finland and the EU. Senior Adviser on Africa Policy
Contents
Introduction.................................................................................................4
References..............................................................................................................9
ENERGY CONNECTIVITY..................................................................................10
Summary................................................................................................................11
Current understanding of energy connectivity in Africa.........................................12
Policy and investment environment of energy connectivity...................................17
Recommendations for Finland and the EU for supporting sustainable
energy connectivity................................................................................................20
References..............................................................................................................22
TRANSPORT CONNECTIVITY............................................................................24
Summary................................................................................................................25
Current understanding of transport connectivity in Africa.....................................26
Road transport....................................................................................................28
Rail transport......................................................................................................29
Air transport.......................................................................................................30
Sea transport......................................................................................................32
The policy and investment environment of transport connectivity........................36
Recommendations for Finland and the EU related to supporting
transport connectivity............................................................................................38
References..............................................................................................................40
DIGITAL CONNECTIVITY..................................................................................42
Summary................................................................................................................43
Current understanding of digital connectivity in Africa.........................................44
The policy and investment environment of digital connectivity.............................49
Recommendations for Finland and the EU related to supporting
digital connectivity................................................................................................52
References..............................................................................................................56
RESEARCH AND INNOVATION CONNECTIVITY...................................................58
Summary................................................................................................................59
Current understanding of research and innovation connectivity in Africa.............60
Higher education................................................................................................61
Research and innovation.....................................................................................63
Policy and investment environment of research and innovation connectivity.......66
Recommendations for Finland and the EU to support research and
innovation connectivity..........................................................................................68
References..............................................................................................................70
Concluding words..........................................................................................72
The Covid-19 pandemic and connectivity...............................................................74
References..............................................................................................................75
Author Bios...................................................................................................76
4 CONNECTING AFRICA – INTRODUCTION
Introduction
Obert Hodzi & Eva Nilsson
THIS STUDY ANALYSES the potential of its Belt and Road Initiative (BRI). Eu- The levels of connectivity in Africa
improving connectivity, both in Africa rope and Asia have agreed on a common vary. Although some areas – mostly ci-
and between Africa and Europe. As so- understanding of connectivity which ties such as Johannesburg, Lagos and
cieties across the globe depend on flows emphasises mutual interests in bringing Mombasa – are globally connected, the
of goods, services, people and capital, countries, people and societies closer overall picture is that, based on global
networks that enable these flows – tran- while narrowing varying gaps in levels of measures, connectivity in sub-Saharan
sport, logistics, communications, and access, development and capacities. In Africa is still low. As the African popu-
electricity networks – have become cru- Europe–Asia engagement, the principles lation is growing quickly, the need for
cial for the global economy and an essen- of free and open trade, free markets, in- investments to improve connectivity
tial part of world politics. In addition to clusiveness, fairness, transparency, fi- is even more pressing. However, as it
physical infrastructure, regulatory fra- nancial viability, cost-effectiveness and stands, current investment levels lag be-
meworks, standards and policies related sustainability underpin connectivity hind population growth. Because of that,
to connectivity are constantly in the ma- (ASEM, 2017). for instance, even though internet speed
king in all parts of the world, including In this study, we seek to unders- has increased and the cost of access to
Africa. tand how connectivity within Africa and the internet has decreased, the propor-
In social science research, conne- between Africa and the rest of the world tion of people connected to a fixed broad-
ctivity has become synonymous with has progressed and how it can further band connection has decreased in Africa.
networks and a common proxy for improve in an environmentally, economi- Only about 40 per cent of the population
measuring the intensity of globalisation. cally, fiscally and socially just and sus- in Africa have access to 4G networks, and
Broadly, connectivity describes how dif- tainable manner. No region can improve the mobile internet penetration was, as
ferent nodes – such as cities, ports and its connectivity alone – connectivity en- of 2018, merely 24 per cent. However,
people – are networked physically and capsulates cooperation and mutual ef- while mobile subscriptions are showing
virtually (Castells, 2010). Connectivity fort, thus, we provide recommendations a stabilising trend, fixed connections are
can be ‘formal’ or ‘informal’, the latter regarding the role that Finland and Eu- on the increase. Undersea cable connec-
encompassing common activities in the rope can play alongside African countries tions are developing fast and terrestrial
informal sector and illegal forms of con- to enhance their connectivity. We focus cables connect countries to each other
nectivity, such as illicit financial flows on connectivity in the sectors of energy, better.
or drug trade (e.g. the Organisation for transport, digitalization, and research Essential to enhancing connectivity
Economic Co-operation and Development and innovation. Our underlying assump- is energy supply. In Africa, per capita
[OECD], 2018). Connectivity, except in tion is that greater connectivity is a pre- electricity consumption is rising by 4–6
its illegal and illicit forms, potentially requisite for enhancing Africa’s role in per cent annually. However, 645 million
fosters integration, peace and prosperity. the fourth industrial revolution,1 as well people still lack access to electricity, and
Connectivity has become a common as leading to economic development and 80 per cent rely on fuelwood and charcoal
concept in world politics, especially in prosperity on the continent. for domestic heating and cooking. The
relation to Chinese foreign policy and implication is that Africa is behind other
1 The fourth industrial revolution refers to technology-driven change in which new digital technologies, such as artificial intelligence, become embedded within
societies and create entirely new capabilities for people and machines.
CONNECTING AFRICA – INTRODUCTION 5
regions and, by 2040, an estimated 90
per cent of the global population without
access to electricity will be concentrated
in sub-Saharan Africa (IEA, 2019). Based
on the current levels, it will take sub-Sa- We focus on connectivity in the
haran Africa until 2080 for its entire
population to have universal access – it sectors of transport, energy,
would mean considerable investments in
energy infrastructure (of about US$43– digitalisation, and research
55 billion annually) to reach universal
access by 2040 (UNEP, 2017). Currently, and innovation. Our under-
Africa relies heavily on fossil fuels for
its energy needs. However, a push to in- lying assumption is that greater
crease Africa’s energy connectivity offers
great potential to transform the conti- connectivity is a prerequisite for
nent’s countries into low-carbon econo-
mies. enhancing Africa’s role in the fourth
Transport infrastructure is crucial to
realising regional integration and the industrial revolution, as well as
meaningful engagement of Africa within
the global production chain. Despite sig- leading to economic development
nificant investments in road infrastruc-
ture, more than half of Africa’s roads are and prosperity on the continent.
unpaved and less than half of the rural
population has access to an all-seasons
road. In addition, the rail network is eit-
her dilapidated or non-existent while Af-
rica’s air transport industry is the smal- Domestic Product (GDP) stands at only innovation hubs. For these, affordable
lest in the world. The effects of COVID-19 about 0.5 per cent compared with the shared office space, fast internet conne-
have extinguished prospects of growth world average of 2.2 per cent. Fortuna- ctions and reliable electricity, which are
in the aviation industry, as had been tely, the number of higher education still in short supply in Africa, are crucial.
projected by PricewaterhouseCoopers. institutions (HEIs) has grown rapidly. The pressure to develop the infra-
Furthermore, reflecting its participa- However, the quality of higher education structure essential to enhancing Africa’s
tion level in the global production and has not grown in the same pace. The connectivity has resulted in some Afri-
supply chains, Africa has a two per cent student-to-teacher ratio, research capa- can countries being heavily indebted.
share of the global container port traffic. city and basic infrastructure are serious African governments have financed over
Nonetheless, growth in trade relations concerns all over the continent. While 40 per cent of their own infrastructure
with China has led to the construction there are a number of graduates from needs. They have contracted debt from
and refurbishment of port facilities in HEIs that become unemployed, there are international debt markets (in particu-
Djibouti, Mombasa, Dar es Salaam and shortages of skilled labour in the fields lar, Eurobond issuance), domestic mar-
other regions – significantly connecting of engineering, science, agriculture and kets, multilateral institutions and va-
Africa with its commodities markets in health in particular. rious countries. According to the World
China and, to a lesser extent, India. In A positive trend is that there has been Bank’s Global Economic Prospects, the
sum, Africa’s transport connectivity re- a boom of the start-up culture in several average debt-to-GDP ratio in Africa was
mains challenging due to the lack of inf- entrepreneurial and innovative hotspots 61.3 per cent as of 2019. Even with these
rastructure, and adequately harmonised in Africa. In 2010, there were altogether huge debt burdens, the continent’s inf-
and standardised transport policies and only about USD 20 million venture ca- rastructure financing gap is approxima-
regulations. pital (VC) investments to Africa – nine tely US$68–108 billion annually2 (ICA,
Against this picture, Africa’s gross years later the estimation is that this 2017). The huge infrastructure gap in the
expenditure on research and develop- figure will be as high as USD 1.5 billion. continent means that support from exter-
ment (R&D) as a proportion of Gross In parallel, there has been a boom of nal partners such as the Infrastructure
2 Calculations about the financing gap vary. The Infrastructure Consortium of Africa has estimated the gap to in the USD 53–93 billion range and the Brookings
Institution has pointed to research that argues that, if public spending on infrastructure was managed better and accompanied by policy and institutional reforms,
the financing needs would drop significantly (Devarajan, Gill, & Karakulah, 2019).
6 CONNECTING AFRICA – INTRODUCTION
IHUB
Youth working at the innovation space iHub in Nairobi, Kenya.
Consortium for Africa members3 is im- & Senbet, 2019). In 2018, China com- Chinese embassy in Ethiopia posted on
perative. For example, in 2019, exter- mitted US$25.7 billion, which constitutes its website in July 2018 that ‘the intensi-
nal partners funded 22.8 per cent of the 26 per cent of the total of US$100.8 bil- fying repayment risks from the Ethiopian
projects, while most of government-fun- lion committed to Africa’s infrastructure government’s debt reaching 59 percent of
ded projects in Africa relate to transport programmes in 2018. Although this is GDP is worrying investors’. Angola owes
(55.3%) and energy (20.4%) (Deloitte, welcome, there are growing concerns over China about US$21.5 billion, which is half
2019, p. 6). In addition, emerging infra- the increased indebtedness of some Afri- of its external debt. Djibouti owes 59 per
structure development partners, such as can countries and their over-dependence cent of its external debt to China. As a
China and India, have increasingly pro- on China. Already, Kenya and Ethiopia result, US senators warned that African
vided considerable alternative financing have had to request rescheduling of their countries, such as Djibouti and Zambia,
for Africa’s infrastructure development. loans from China. Kenya got Chinese risk losing strategic national assets to
In particular, China has been Africa’s loans to fund the Mombasa–Nairobi Stan- China over such un-serviced loans. Alt-
major bilateral lender, external funder dard Gauge Railway, which cost appro- hough, there is little evidence to suggest
and constructor of key infrastructure ximately US$3.3 billion, while Ethiopia that it would be the case, this is a wor-
(such as railways, roads, power plants got US$4.3 billion for the Addis Ababa rying concern.
and ports) in Africa (Coulibaly, Gandhi, Railway. According to media reports, the
3 Infrastructure Consortium for Africa members include: Canada, France, Germany, Italy, Japan, the UK, the US, South Africa, the AfDB, the EC, the European
Investment Bank, the European Union and the World Bank Group.
CONNECTING AFRICA – INTRODUCTION 7
Grand Ethiopian Renaissance Dam, which
will be the largest hydroelectric dam in
Africa, have stalled due to disputes with
Egypt.
At the continental level, the AU is
Within Africa, geopolitical consid- committed to improving connectivity as
espoused in Agenda 2063 and through
erations also affect integration and the Programme for Infrastructure Deve-
lopment of Africa (PIDA). PIDA is focu-
connectivity between countries. sed on improving African infrastructure
and improving regional interconnecti-
vity. In addition, the African Develop-
ment Bank (AfDB) is hosting the Inf-
rastructure Investment Consortium,
In response to the debt-trap allega- Failures to agree on funding and imple- which aims to coordinate efforts made
tions, China announced that it would ad- mentation mechanisms also derail criti- towards improving infrastructure in Af-
just its overseas development lending in cal infrastructure projects, particularly rica, and the AFRICA50 investment fund.
order that will be more sustainable. Howe- the Trans-African Highway network, a AFRICA50 funds national and regional
ver, at the core of this crisis of bilateral network of transcontinental highway inf- projects, mostly energy and transport
debt in Africa is the absence of standard rastructure development projects conne- projects. On the sub-regional level, Af-
lending practices, particularly between cting African cities, which still has mis- rica’s Regional Economic Communities
OECD countries and emerging actors like sing links. In addition, despite Africa’s (RECs) have some parts of key regional
China. Trilateral cooperation between, for energy needs, projects such as Ethiopia’s transport and energy corridors missing,
instance, the European Union (EU), China
and Africa may go a long way in creating
uniform working conditions.
Although, both the traditional and
emerging development partners agree
on the need to enhance Africa’s conne-
ctivity, their motivations and strategies FIGURE 1: REGIONAL AND CONTINENTAL
for achieving that connectivity vary. The INFRASTRUCTURE PROJECTS BY THE AU 2012–2019.
World Bank (2019) noted that ‘while there
ECCAS=Economic Community of Central African States, COMESA=Common
is little controversy over the resources Market for Eastern and Southern Africa, EAC=East African Community, ECO-
that need to be invested in connectivity, WAS=Economic Community of West African States, IGAD=Intergovernmental
there are varying expectations of what Authority on Development, SADC=Southern African Development Community,
AMU/UMA=Arab Maghreb Union
connectivity is intended to achieve’. This
is partly because connectivity ‘influen-
SOURCE: AU-PIDA (2019).
ces the distribution of power between
the connected parties, be it regions, ci-
ties, firms or communities’ (World Bank,
100
2019). The African Union (AU) regards
Number of projects implemented
connectivity as essential to continental
75
political and economic integration, and a
necessary step to enhancing Africa’s role
in global governance. On the other hand, 50
China’s BRI aims at enhancing China’s
connection with the rest of the world – 25
to its advantage. Thus, geopolitical and
strategic considerations within Africa 0
and between Africa’s external partners
Continental
ECCAS
COMESA
EAC
ECOWAS
IGAD
SADC
AMU/UMA
often underpin connectivity in Africa.
Within Africa, geopolitical conside-
rations also affect integration and con-
nectivity between countries. Support for
continental and regional projects seems Energy Subtotal ICT Subtotal Transport Subtotal
to be dependent on national interests.
8 CONNECTING AFRICA – INTRODUCTION
Improved connectivity could have
huge development impacts.
hence cross-border energy trade is still wind energy to meet its energy needs. Furthermore, most of the loans from
very limited. In addition, there are a lack Large hydro dams, prioritised across Af- China have economic conditions tied
of policies that aim to increase regional rica as a source of electrification, have to them – especially that the materials
connectivity and remove obstacles (such proven to have massive negative environ- should be procured in China. Some of the
as visa restrictions) in order to enable mental and social impacts. As a result, loan conditions attached to Chinese loans
unhindered cross-border movements by due to limited sources of energy, Africa are secretive, thus making it even more
people and goods. Largely, the harmoni- lags behind the global move toward ele- difficult for open competitive bidding for
sation of policies might remain unresol- ctric vehicles. projects. Beyond the construction of new
ved because the membership of most The business environment in Africa infrastructure, the focus should also be
RECs, especially the Economic Commu- is among the world’s most cumbersome. on the maintenance of the existing infra-
nity of Central African States (ECCAS), Among the bottom 20 economies rated structure. For that, Africa has to improve
comprise of low-income and middle-in- according to the ease of doing business, its tax revenues, increase foreign equity
come countries, as well as fragile states 12 are in sub-Saharan Africa (World Bank, investments and improve the sustaina-
and landlocked states – hence they face 2020). The investment and business en- bility of existing infrastructure. This will
challenges in accommodating the inte- vironment related to connectivity varies reduce the dependence of Africa on bila-
rests of all parties. from country to country and region to teral debt from gigantic projects that are
Of all the continents, Africa will pro- region. Renewable energy markets have, unprofitable.
bably be the one that is most affected for example, been open to foreign inves- Improved connectivity could have
by climate change. Already, floods and tors in Kenya whereas some countries, huge development impacts. Access to
droughts have left millions of Africans in such as Ghana, have long-term power reliable electricity would change the
financial and food distress. That means purchase agreements (PPAs) with fos- lives of more than 600 million people
transport, energy and digital infrastruc- sil fuel–based independent power pro- who currently lack such access. Better
ture development projects require consi- ducers. The bidding process of many inf- transport infrastructure could improve
derable environmental assessment. This rastructure projects is less competitive intra-African trade and lead to domestic
has been a challenge for African states. and, according to some analysts, favour manufacturing and more diversified eco-
Environmental and climate change con- Chinese firms (Dezenski, 2020). State of- nomies. The further development of di-
sideration have often come second. For ficials partly influence the projects from gital services that also serve low-income
instance, in Kenya, environmentalists their inception stage. Thus, according to earners could have immense impacts on
have denounced the Mombasa-Nairobi European International Contractors, Chi- financial inclusion, access to electricity
railway for endangering wildlife and their nese firms undercut their competition by and access to markets, to name but a few
natural habitat. In addition, to meet its at least 20 per cent. They are able to do impacts. A more connected research and
energy needs, some African countries re- so because they get subsidies from the education sector would increase people-
main focused on fossil fuels, with limited Chinese government and considerable to-people exchanges of knowledge and
transition to sustainable renewable preferential treatment from African go- assist mutual learning, equality and par-
energy (such as solar, wind, thermal vernments who are keen on maintaining tnership building.
and small hydro energy). Ethiopia is a cordial bilateral relations with China.
leading example of a country harnessingCONNECTING AFRICA – INTRODUCTION 9
References
African Development Bank. (2020). African economic outlook 2020. Abidjan: African Development Bank.
Asia-Europe Meeting. (2017). ASEM foreign ministers’ meeting: Strengthening partnership for peace and development, Novem-
ber 2017, Myanmar. Annex I.
Castells, M. (2010). The rise of the network society. Cambridge: Massachusetts Blackwell Publishing.
Coulibaly, S. B., Gandhi, D, & Senbet, L. W. (2019). Is sub-Saharan Africa facing another systemic sovereign debt crisis? Africa
Growth Initiative. Washington DC: Brookings Institution.
Deloitte. (2019). Capital projects in a digital age: Africa construction trends report 2019. Johannesburg, South Africa: Deloitte.
Dezenski, E. K. (2020). Below the belt and road: Corruption and illicit dealings in China’s global infrastructure. Washington,
DC: FDD Press.
Infrastructure Consortium of Africa. (2017). Infrastructure financing trends in Africa – 2017. ICA, African Development Bank.
Organisation for Economic Cooperation and Development. (2018). Illicit financial flows: The economy of illicit trade in West
Africa. Paris: OECD Publishing.
United Nations Confederation on Trade and Development. (2020). World economic situation and prospects 2020. New York:
United Nations.
United Nations Economic Commission for Africa. (2020). Policy brief: Impact of COVID-19 in Africa. Addis Ababa, Ethiopia:
United Nations.
World Bank. (2019). Doing business 2020. Washington, DC: World Bank.10 CONNECTING AFRICA – ENERGY CONNECTIVITY
01
ENERGY
CONNECTIVITY
Eva Nilsson1
1 Eva Nilsson is a PhD candidate at the Hanken School of Economics, Finland. She wishes to thank Joni Karjalainen from Finland Futures Research Centre and
Stephen Karekezi, Director of the Energy, Environment and Development Network for Africa, for their insightful comments and suggestions for this chapter.CONNECTING AFRICA – ENERGY CONNECTIVITY 11
Summary
THIS CHAPTER DESCRIBES how energy in have had most growth in the past years.
Africa is generated and how people have Despite its huge potential, renewable en-
access to energy and electricity. It anal- ergy only covers slightly over 20 per cent
yses the possibilities for African coun- of the total electricity generation capac-
tries to transform to zero-carbon econ- ity. However, investment into renewable
omies and to reach universal access to energy is growing fast, especially into
electricity. solar photovoltaic (PV) energy. Small-
Africa is rich in energy sources but scale and off-grid solar solutions have
faces an energy crisis. It produces about increased rapidly in East Africa and are
nine per cent of the world’s oil, six per now expanding to West Africa, with pri-
cent of the world’s natural gas and four vate investors playing a pivotal role. Most
per cent of the world’s coal. It also pro- of the continent’s renewable energy in-
duces about 18 per cent of the world’s vestments take place in South Africa. In
uranium for nuclear power. One country, addition, Kenya is among the forerunners
the Democratic Republic of Congo (DRC), in having both large-scale and small-
provides more than 70 per cent of the scale renewable energy that powers the
world’s cobalt for batteries in electronic grid and off-grid areas.
appliances that are needed for a green African countries are the main inves-
energy transition. tors in their own infrastructure. The in-
While Africa is an important exporter vestments are normally financed by loans
to global energy markets, approximately and, in past years, especially China has
half of the population in sub-Saharan emerged as a key lender to African energy
Africa still lack access to electricity and infrastructure markets. In addition, other
more than 80 per cent of the popula- foreign actors – such as the US and mul-
tion rely on traditional uses of biomass, tilateral institutions like the African De-
mainly fuelwood and charcoal, for cook- velopment Bank (AfDB), the World Bank
ing. Businesses and households that are and the EU – have increased their efforts
connected to the grid suffer from its un- in building energy infrastructure and
reliability and regular power cuts. reaching universal access to electricity.
In all of Africa, fossil energy is by far China operates in many large hydropower
the largest source for electricity gener- projects, the US prioritises natural gas
ation and large hydro and natural gas and the EU emphasises renewable energy.12 CONNECTING AFRICA – ENERGY CONNECTIVITY
Current
understanding of
energy connectivity
in Africa
THERE ARE LARGE variations in access to and more than 80 per cent of the popu- to electricity, while the respective per-
electricity across the African continent, lation rely on traditional uses of biomass centage for urban communities is above
between countries and between urban (mainly fuelwood and charcoal) for cook- 70 per cent (IEA, 2019). Worst off are
and rural areas. North African countries ing, drying and heating (IEA, 2019b). women living in rural areas as they are
have achieved universal access to elec- The average electricity consumption rate usually the ones who provide households
tricity and non-solid cooking fuel. South of sub-Saharan Africa, excluding South with energy through gathering fuelwood
Africa is the only country in sub-Saharan Africa, is only about 150 KWh/capita or paying for energy for cooking, lighting
Africa with rates close to those in North per year compared to a global average and heating. The poorest households are
Africa. The lowest levels of access are in of 7,000 KWh. Power is inaccessible, un- estimated to spend USD 10 billion annu-
rural communities in the Central African affordable and unreliable for most peo- ally on charcoal, candles, firewood and
region (6%) and several countries across ple. Only 34 per cent of hospitals have kerosene (UNEP, 2017). In addition, the
the continent, such as Zambia, Soma- reliable electricity access and about fuelwood or charcoal used for cooking is
lia and Liberia, have a rural access rate 58 per cent of health facilities have no unsafe and polluting, and has significant
below five per cent (International Energy electricity at all. Human muscle power is health effects, especially on women. Each
Agency [IEA], 2019b). the major energy source for agriculture year approximately 600,000 Africans die
In sub-Saharan Africa, more than 645 (UNEP, 2017). On average, only 26 per of household air pollution (UNEP, 2017).
million people lack access to electricity cent of rural communities have accessCONNECTING AFRICA – ENERGY CONNECTIVITY 13
According to estimates, 90 per cent
RUSSELL WATKINS/DEPARTMENT FOR INTERNATIONAL DEVELOPMENT
of the global population without access
to electricity will be concentrated in
sub-Saharan Africa by 2040 (IEA, 2019),
and it will take until 2080 before full ac-
cess is reached at the current pace (UNEP,
2017). Solving the energy crises there-
fore requires considerable investments
in energy infrastructure. Despite some
progress made, current and planned
efforts to provide access to energy ser-
vices barely outpace the fast population
growth on the continent. Reaching uni-
versal electricity access by 2040 would
require tripling the average number of
people gaining access every year from
around 20 million today to over 60 mil-
lion people. Against the current $8–9.2
billion, an estimated US$43–55 billion is
needed annually in new investment until
2030–2040 in order to meet the total A shop called Off-grid electric near Arusha, Tanzania.
investment needs in the energy sector
(UNEP, 2017). The IEA estimates that
grid extension and densification would generator power is a necessary cost of Research also shows that where grid
be the least costly option for nearly 45 doing business in any sector, ranging power is accessible, many low-income
per cent of the population gaining access from heavy industries to banks and mo- households still cannot afford to be con-
by 2030, mini-grids for 30 per cent and bile-phone companies. Of the businesses nected and pay for electricity. Because
stand-alone home systems for about 25 in Kenya and Tanzania, 57 and 42 per of this, millions of people in Africa are
per cent (IEA, 2019a). cent respectively own their own genera- living ‘under the grid’, meaning that they
Where grid power is accessible, it is tions. On average, generator power is at could be connected to the main grid but
often unreliable. More than 30 coun- least four times the price of grid power. they are not. Only considering Nigeria,
tries in sub-Saharan Africa experience Because of large energy costs, African Kenya, Tanzania, Ghana and Liberia, 95
regular power shortages. Installed grid- markets are uncompetitive with many million people are estimated to live in
based capacity is around 90 GW and, at businesses that operate in other parts of under-the-grid areas (Leo et al., 2014).
any one time, as much as one quarter of the world (McKinsey & Company, 2015). Research shows that reasons behind
that capacity is not operational (UNEP, this are that connection charges are too
2017). Electricity is cut about six times high, the connection process is long and
per month for about 5.5 hours at a time complicated, poor households have too
(Trimble et al., 2016). These shortages Where grid low-income levels to afford meaningful
could cost African economies 2–4 per electricity consumption, income flows
cent of GDP annually and more than 70 power is acces- are irregular, housing quality is poor
per cent of businesses in sub-Saharan Af- and the electricity service is unreliable
rica identify unreliable power as a major sible, it is often (Blimpo & Cosgrove-Davies, 2019). Con-
constraint for growth (APP, 2015; AfDB, necting people living under the grid
2015). Due to unreliable electricity, busi- unreliable. would be a low-hanging fruit in regard to
nesses and well-off households own die- reaching universal energy access.
sel fuel–powered generators. Paying for14 CONNECTING AFRICA – ENERGY CONNECTIVITY
FIGURE 1:
ACCESS TO ELECTRICITY
(% OF POPULATION) 2018
SOURCE: WORLD BANK, SUSTAINABLE
ENERGY FOR ALL (SE4ALL) DATABASE.
< 20
20 – 25
25 – 50
50 – 75
> 75
No Data
Africa’s per capita energy consumption gas have seen the most growth in recent Political will for large hydropower
is rising. A significant factor behind the years (BNEF, 2020). Within the past dec- seems evident despite rises in hydro-
rise of energy consumption is Africa’s ade, large liquefied natural gas discov- power prices compared to solar and
rapid population growth coupled with eries have been made, for example, in wind energy. The AU’s Programme for
rapid urbanisation. Residential demand Mozambique, Tanzania and Ghana. Coal Infrastructure Development in Africa
is growing at a 5.6 per cent annual rate is heavily present in South Africa, but has identified several dams as priority
and industrial demand is growing at a 4.1 recently, new plants have been opened projects for increasing continental con-
per cent annual rate (McKinsey & Com- in Niger and Senegal. Renewable sources nectivity, of which some are underway
pany, 2015). Fossil energy is by far the account for about 23 per cent of total in- and others are being planned. In addi-
largest source for electricity generation stalled electricity capacity (Res4Africa, tion, the AU’s Agenda 2063 identified the
(AFREC, 2019). There is steady invest- 2018). Calculations about the share of Grand Inga Dam project on the Congo
ment into numerous gas, coal and large renewable energy vary depending on River as one of its high priorities. This
hydro projects that are being planned whether large hydro projects are included dam, if realised, will be the world’s larg-
across the continent, and large hydro and or not. est hydro power plant.CONNECTING AFRICA – ENERGY CONNECTIVITY 15
FIGURE 2: POWER GENERATION CAPACITY ADDITIONS
BY SOURCE IN SUB-SAHARAN AFRICA 2009–2018.
SOURCE: BNEF, 2020.
GW 8.0
6.5
6.1
4.7 Geothermal
4.3 4.4
Onshore wind
3.4 Solar thermal
2.7
2.3 PV
Small hydro
Biomass & waste
0.7
Low carbon non-renewables
Fossil Fuels
2009 2012 2015 2018
According to research, a 100 per cent re- also upward in other countries in sub-Sa- wind energy is still very limited in Africa,
newable energy system is technically and haran Africa (BNEF, 2020). Out of the the use of solar energy has grown fast.
economically a possible and practical different sources of renewable energy, The IEA projected that the use of solar
solution for sub-Saharan Africa to meet solar and wind energy have the most PV will grow by more than 3000 per cent
its energy demands (Barasa et al., 2018). potential due to their constantly falling between 2018 and 2040 (IEA, 2019).
Despite the large potential of renewable prices. Prices for solar PV have fallen by Off-grid renewable energy capacity
energy – almost unlimited solar sources around 80 per cent since 2009 while the in Africa has increased by nearly 360
(10 TW), abundant hydro sources (350 respective figure for wind is 30–40 per per cent, from 295 MW to 1.4 GW, dur-
GW), wind sources (110 GW) and geother- cent (IRENA, 2020b). Whereas the use of ing the past decade (IRENA, 2020a). As
mal energy sources (15 GW) – the use of
renewable energy other than traditional
biomass is still quite limited. In compar-
ison to other emerging markets, sub-Sa-
haran Africa has low levels of renewable The declining costs of solar PV and
energy capacity and commissioning and
operating renewable energy is still more the simultaneous emergence of
costly in Africa than the global average.
Some reasons behind this are a lack of pay-as-you-go business models that
enabling environments, political will,
currency and default risk, and a lack of tap into the widespread availability
access to finance.
However, renewable energy capacity of mobile phones have been key
is increasing fast. Currently, South Af-
rica is attracting over 60 per cent of the drivers for growth.
renewable energy investments coming to
sub-Saharan Africa, but the trajectory is16 CONNECTING AFRICA – ENERGY CONNECTIVITY
EVA NILSSON
The Ministry of Energy and Minerals in Dar es Salaam, Tanzania.
off-grid power markets are more accessi- from East Africa. Solar home systems certification requirements. Micro-grids
ble to companies than on-grid utilities, can be the cheapest power option where are still reliant on subsidies and differ-
which are often state owned, the num- power demand is low and households are ent results-based financing schemes are
ber of renewable energy businesses on dispersed. entering the field (BNEF, 2020).
the continent has increased. Businesses In addition to household systems, Climate change does not only spur
can make use of pay-as-you-go business solar powered household appliances – es- renewable energy markets it also has
models that enable households to make pecially TVs and fans – are becoming a more diverse effects on Africa’s energy
mobile phone–based payments. Pay-as- major driver of the sector. Globally, most economy. As a transition towards greener
you-go business models in Africa exem- solar powered TVs are sold in East Africa energy production takes place globally,
plify the technological convergence of (Lighting Global, 2020). However, solar demand for fossil fuels might decrease
the global megatrends of electrification powered agricultural and productive ap- and cut revenues of African countries ex-
and digitalisation. Where digital con- pliances, such as pumps or refrigeration porting oil and gas, such as Nigeria and
nectivity is available, businesses can, appliances, are still few. In addition, the Angola. In contrast, the demand for min-
for example, monitor how off-grid sys- uptake of solar off-grid energy by indus- erals that are needed for battery technol-
tems function and whether payments are trial parks, shopping malls, public insti- ogy in power grids or electric cars, for
made on time. tutions and other commercial and indus- example, is growing heavily. This means
The declining costs of solar PV and trial actors has remained slow despite its that the cobalt-exporting DRC will see
the simultaneous emergence of pay-as- potential to substitute for the expensive a steady flow of export revenue as the
you-go business models that tap into the diesel generators that are used as back- country provides over 60 per cent of the
widespread availability of mobile phones ups for unreliable grids (Bhamidipati & world’s cobalt. Other African countries
have been key drivers for growth. Off-grid Gregersen, 2020). that export minerals that are needed for
solar energy capacity has rocketed from a Furthermore, the number of mi- battery technology are Guinea, Gabon,
tiny 89 MW to 998 MW in ten years. Solar cro-grids is increasing fast globally and Mozambique and Madagascar. While cur-
mini-grid capacity has increased, par- research shows that they could now be rent mineral sources will not be enough
ticularly in North Africa (Algeria), whilst the best scalable option to solar home to cater for the needs in the global bat-
solar lights and small solar home sys- systems and grid extension. Currently, tery technology market, the circular
tem capacity has increased, especially the largest share of the world’s planned economy (i.e. the reuse and recycling
in Eastern Africa, in countries such as micro-grid investments are in Africa of minerals) becomes ever more crucial
Kenya, Tanzania, Uganda and Rwanda (World Bank, 2019). Many countries re- (Hund et al., 2020). These trends under-
(IRENA, 2019, 2020a). In 2019, the fast- quire some form of license to set up score the need for African countries to
est increase of solar pay-as-you-go unit distributions systems and sell power diversify their economies and to think
sales was seen in West Africa, where many to customers, but several countries are strategically about the continent’s en-
companies are expanding or licensing excluding the smallest projects from ergy future.CONNECTING AFRICA – ENERGY CONNECTIVITY 17
Policy and
investment
environment of
energy connectivity
THERE IS AMPLE political commitment of these are large hydro power projects.
to improve energy access in Africa. This The PIDA programme has identified 15
commitment is spelled out in continen- China is priority projects, mostly dams and re-
tal and Africa-led initiatives aiming for gional transmission lines. These are
improved energy access and achieving the largest estimated to cost about US$40 billion
interconnections between national grids. (PIDA energy vision, n.d.). In addition,
The Program for Infrastructure Devel- bilateral foreign the AU’s Agenda 2063 defined the Grand
opment in Africa (PIDA, with its Africa Inga Dam project in the DRC as one of its
Power Vision (APV), the Africa Renewable financier of the high priorities.
Energy Initiative (AREI) by the AU and The AREI aims at increasing renew-
the New Deal on Energy for Africa (NDEA) African power able energy generation capacity by 2030
by the AfDB are the main drivers of Afri- to 300 GW through promoting socially
can energy policy and integration. sector, mainly and environmentally appropriate solar,
The AU’s and AfDB’s energy visions wind, hydro, biomass, geothermal and
are largely connected around increasing through loans. marine power. The AfDB has, for exam-
regional energy integration and imple- ple, a Desert to Power Programme that
menting critical energy projects. Many aims to light up and power the Sahel18 CONNECTING AFRICA – ENERGY CONNECTIVITY
region by building 10 GW worth of solar universal energy access by 2030. These pricing are limited to just a few coun-
systems via public, private, grid and off- include, for example, Gabon, Ghana, tries. In sub-Saharan Africa, 23 countries
grid projects by 2025. Kenya and Ethiopia. South Africa, Cape have implemented import duty and VAT
There are five regional power pools in Verde, Ghana, Kenya and Gabon have exemptions. Renewable energy feed-in
Africa. These are the Central Africa Power made significant progress in rural elec- tariffs, which have been popular globally,
Pool (CAPP), the Comité Maghrebin de trification. In these countries, on average have been rare in Africa. The recently
l’Electricite (COMELEC), the Eastern Af- at least 40 per cent of rural populations introduced renewable energy auctions
rica Power Pool (EAPP), the Southern are connected to the grid (UNEP, 2017). have been more successful in reaching
Africa Power Pool (SAPP) and the West Kenya has made significant progress in a competitive prices. So far, auctions have
Africa Power Pool (WAPP). Electricity transformation towards renewable energy taken place in 16 countries across the
production and consumption is highest and in ‘last mile connectivity’, that is, continent. Seven countries have a policy
in COMELEC, followed by SAPP, EAPP and connecting every household within 600 in place but no bids yet. Some auctions,
WAPP. CAPP produces the least electric- meters of distribution transformers. Re- such as those in Senegal and Zambia,
ity. COMELEC is linked to the Middle East newable energy – wind, solar, hydro and have resulted in large-scale renewables
and Europe. Cross-border power trade in geothermal energy – now accounts for projects with some of the world’s lowest
the power pools is still very limited and 70 per cent of the installed electricity prices (BNEF, 2020).
mainly takes place within SAPP. In 2014 generation capacity in the country (Re-
EAPP and SAPP launched a regional ini- s4Africa, 2018). ***
tiative, the Africa Clean Energy Corridor, The majority of African countries have
which promotes renewable energy poten- not separated electricity generation, Among the most important supporters
tial and cross-border electricity trade be- transmission and distribution into sep- of Africa’s energy and electricity sectors
tween the two pools. arate operating units. However, different are China, the US, the EU and multilat-
Were energy integration to deepen, national constellations vary. In a study eral development banks. Other countries,
Africa could save significantly in invest- by the World Bank in 2016, 19 countries such as India and Russia, remain mar-
ments and the cost of electricity. The IEA had complete state monopoly of all three ginal but have increased their presence
has estimated that full integration would utilities. Only four countries – Ghana, Ni- in the continent’s energy markets. Indian
mean a US$43 billion per year or a 21 geria, Uganda and Sudan – had unbun- companies are, for example, operating in
per cent saving in the cost of electricity dled the sector into separate units and solar energy and Russia is promoting its
(World Energy Outlook, 2019). However, had the most developed energy markets. nuclear industry in order to gain invest-
there are a number of constraints that However, these markets were not compet- ments in Africa.
hinder power pool development and oper- itive. The same study estimated that, out China is the largest bilateral for-
ation in Africa. These include inadequate of a sample of 39 countries, only Uganda eign financier of the African power sec-
capacity and reserve margins, difficul- and the Seychelles had financially via- tor, mainly through loans. China has a
ties in mobilising investment, low levels ble electricity sectors. Only 19 countries Global Interconnectedness Initiative,
of public and private funding, policies covered operating expenditures and sev- which aims at creating the world’s first
that constrain or fail to incentivise in- eral countries lost, on average, US$0.25 global electricity grid (Kynge & Hornby,
vestment, regulation that distorts the per KWh sold. The main reasons for these 2018). In 2017 China committed more
market, a lack of human resources and losses were found to be under-pricing, than US$9 billion to the African power
a lack of information and data about the transmission and distribution costs, bill sector while the World Bank, the Interna-
energy situation. Regions lack harmo- collection inefficiencies and overstaffing tional Finance Corporation, the EC, the
nised legislation and compatible grids (Trimble et al., 2016). European Investment Bank, the Islamic
(UNEP, 2017). Ultimately, it is a question Many countries have made long-term Investment Bank and Afreximbank, to-
about national priorities and interests. power purchase agreements (PPAs) with gether with all the G8 countries, made
In many countries, power supply plans fossil fuel–based independent power pro- commitments of about US$5.8 billion
are nation-centric and state monopo- ducers (IPPs). These can heavily limit to the sector (ICA, 2018). The extension
lies dominate them. In some cases, re- governments’ ability to diversify their of national grids is likely to receive the
gional energy projects can even lead to power supply in the short term, increase most foreign investments during 2018–
disputes, as is the case with Ethiopia, sovereign debt and hence keep the retail 2030. Micro-grids will receive the sec-
Egypt and Sudan in regard to the Grand price of power high. Some governments, ond largest share, followed by solar home
Renaissance Dam on the Nile. such as those of Ghana and South Africa, systems (BNEF, 2020).
are trying to renegotiate long-term PPAs In addition to lending, Chinese com-
*** (BNEF, 2020). panies have been awarded many infra-
In general, energy policies have been structure projects through public pro-
On a national level, a combination of changing slowly. Renewable energy is curement. In 2019 there were 242 power
enabling policies and investments has mainly supported with targets and tax projects in Africa for which contracts had
put some countries on track to reach exemptions. Net metering and carbon been awarded for stages ranging fromCONNECTING AFRICA – ENERGY CONNECTIVITY 19
planning to execution. Of these projects, such as the World Bank, the EU, the UN with Africa, companies from these coun-
63 had Chinese companies as the main and the AfDB. Most foreign direct invest- tries cooperate in different power proj-
contractors (Power Technology, 2019). ment into renewable energy comes from ects. For example, the US firm General
Chinese contractors operate in many European companies. The US is the larg- Electric and Power China have been work-
hydropower projects. More than half est bilateral financer through its Power ing together in several power projects in
of the new hydropower capacity will be Africa Initiative (BNEF, 2019, 2020). Al- Nigeria (Sun, 2018).
built by Chinese contractors, followed by though the country prioritises the devel- On the other hand, Africa has a role in
coal projects (29.3%) and gas projects opment of liquefied natural gas (LNG), fulfilling China’s, the US’s, Europe’s and
(10.7%) (Power Technology, 2019). No- it also funds solar, wind, biomass and other countries’ energy needs. Chinese in-
where else does China engage as much in geothermal projects in both grid and off- volvement in oil and gas exploration and
the hydropower sector as in Africa (Gal- grid settings. In addition to supporting production in Africa has increased heav-
lagher, 2019). renewable energy projects, OECD coun- ily during the 2000s. Currently China re-
While many international lenders are tries share an interest in developing en- ceives more than 25 per cent of its oil
turning away from coal due to climate ergy market regulation and in liberalising supply from Africa. China Petroleum &
change, Chinese banks continue to act as energy markets. Chemical Corporation Sinopec, China Na-
last resort lenders for coal plants, also in The EU has had an energy partnership tional Petroleum Corporation and China
Africa. China has new coal projects in 10 with Africa since 2007. The aim of the National Offshore Oil Corporation are
African countries. Some of these projects EU’s cooperation has been to enable ac- present in nearly 20 countries in Africa
involve coal mining in addition to plants cess to electricity for 30 million people and are estimated to invest over US$15
(IEEFA, 2019). Despite their engagement and to add the energy generation capac- billion in the continent during 2019–
in fossil energy, Chinese companies also ity of 5 GW (EU, 2018). In its recent strat- 2023. This is more than they invest in
invest in renewable energy and have been egy with Africa, the EC emphasises coop- any other region in the world (Africa Oil
awarded the construction a wind park in eration in renewable energy and plans to Week, 2019). In contrast, only Nigeria
Ethiopia, a solar farm in Ghana, a solar launch a Green Energy Initiative. The EU and Libya are among Europe’s top ten
power plant in Zimbabwe and the world’s wants to see Africa on a low-carbon green crude oil import countries, and sub-Sa-
largest solar farm in Egypt (Power Tech- growth trajectory that resists new invest- haran African oil exporters have a quite
nology, 2019). ment in coal power (EU/EEAS, 2020). marginal share of the total. Also, the US
Financing for renewable energy, ex- While European countries, the US and has shown a decline in Africa’s share of
cluding large hydro projects, comes China are pulling in somewhat different its total oil imports.
mainly from multilateral institutions directions in their energy cooperation
FIGURE 3: FOREIGN DIRECT INVESTMENT INFLOWS TO RENEWABLES
PROJECTS IN SUB-SAHARAN AFRICA BY REGION OF ORIGIN
SOURCE: BNEF, 2020.
$ billion
2.5 2.6
2.4
1.8
1.5 International & other
1.3
North America (excl. Mexico)
0.9 1.0
0.6 Africa (excl. North Africa)
Asia
0.0
EU Europe
2009 2012 2015 201820 CONNECTING AFRICA – ENERGY CONNECTIVITY
Recommendations
for Finland and the
EU for supporting
sustainable energy
connectivity
THE DEVELOPMENT IMPACTS of univer- investments affect and are affected by caused by climate change can also lead
sal access to sustainable and affordable climate change. On one hand, an en- to increased power shortages in regions
energy are extensive. Reliable electricity ergy transformation to renewable en- that depend on hydropower. The driest
generation would support Africa’s will to ergy would cut Africa’s CO2 emissions climate scenarios could entail losses of
industrialise and to be part of the fourth and put the continent on a path towards hydropower revenues of between 5–60
industrial revolution. The provision of sustainable economic development. per cent and increases in consumer ex-
reliable electricity could even spur gov- The continent’s vast solar resources penditure on energy of up to three times
ernment legitimacy to collect more tax equal 90–100 million tonnes of oil per (Cervigni et al., 2015). The Zambesi river
revenue and increase public funding by year (UNEP, 2017). On the other hand, is likely to be worst hit by droughts due
creating an implicit fiscal pact between the heavy energy dependence on fuel- to climate change and affect the power
citizens and their governments (Blimpo wood and charcoal, combined with cli- supply of Zambia and Zimbabwe (BNEF,
et al., 2018). mate change, creates a vicious circle for 2020).
Furthermore, energy is tightly con- households in sub-Saharan Africa. Both In light of the current and future un-
nected to climate change. Although Af- are connected to deforestation and veg- derstanding of energy connectivity in
rica’s global share of CO2 emissions is etation loss, which restrict the access to Africa, this report makes the following
only about three per cent, its energy more fuelwood and charcoal. Droughts recommendations:You can also read
