Obama’s Power Play

One look at satellite imagery of the world at night is all you need to realize that Africa simply does not have enough access to power.  A study by The World Bank states that “the region has adequate generation capacity, limited electrification, low power consumption, unreliable services, and high costs. It also faces a power sector financing gap on the order of $21 billion a year. It spends only about a quarter of what it needs to spend on power, much of this on operating expenditure required to run the continent’s high-cost power systems, leaving little for the huge investments needed to provide a long-term solution.” (Eberhard, Rosnes, Shkaratan, Vennemo)  While some question its motives, President Obama’s new initiative Power Africa is exactly that.  With $ billion dollars being pledged by the federal government and $9 billion coming from the private sector, this plan aims to double the power capacity of sub-Saharan Africa.

“Ultimately the goal here is for Africa to Africa for Africans.”  This is the tag line Obama used in Tanzania to sell this new project (BBC).  And by all accounts, it seems that is exactly what Power Africa looks to do.  Aside from billions allocated for the creation and operation of large scale coal and gas plants, there is also a portion of money being set aside for the development of mini and off grid energy solutions.  These include “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,” as well as the installation of small biomass generators the provide power for small communities (Power Africa).  These local power solutions are particularly helpful as they give the power over power to communities.  This in turn empowers the community to come together behind other projects and cuts out any potential governmental interference that could result in inefficiency.

While decentralized power solutions can provide massive relief to outlying communities, the focus should be on long term solutions.  The study by The World Bank goes on to say that “economic returns to investments in cross-border transmission are particularly high. But reaping the promise of regional trade depends on a handful of major exporting countries raising the large volumes of finance needed to develop generation capacity for export.” (Eberhard, Rosnes, Shkaratan, Vennemo)  Whats great is that African investors are starting to realize this.   Nigerian businessman Tony Elumelu is backing Power Africa with $2.5 billion.  He believes that the energy market has huge potential and is getting behind it.  This kind of African investment in Africa is exactly what Power Africa hopes to facilitate and is what needs to happen for sustainable long term development (Jorgic).

Now Power Africa is certainly not without critics.  Many have called this the new face of imperialism, citing a recent increase in Chinese aid to the region as the reason for Americas sudden push.  Others still accuse the government of trying to exploit Africa’s natural resources.  This all rests on the notion that any benefit gained from the aid providing country is wrong, that we must be completely altruistic.  But so what if we gain from creating a more stable Africa?  Obama has gone on record saying that “Frankly, we don’t need energy from Africa,” with many analysts saying he is going for a more Brazil style of investment.  By improving the economy in one area you create a new market for your own nations goods, in turn strengthening the global economy (Business Daily).  “We are looking at a new model that’s based not just on aid and assistance but on trade and partnership,” said the president during his Tanzania speech.  Traditional development efforts usually involve throwing money at a problem.  By taking this guided approach that looks to bring local governments into the fold we can see a new model of aid approaching that is far more sustainable in the long term.  The bottom line is that money makes the world go round.  By ensuring multiple sides gain from economic development we are ensuring that more aid will be provided in the future and that what is spent is spent effectively.  I have high hopes for Power Africa and think it will surely lead to a brighter future.