Ethiopia: Power Africa in Focus

Recently, I was sitting in a hotel boardroom in Addis Ababa, Ethiopia, with a team of executives from a major pharmaceutical company who were seeking to gain a better understanding of local challenges and opportunities. Over the course of 20 minutes, the power came and went five times. Each time, a momentary pause and a nervous chuckle would follow, and then the hotel generator would quickly kick on and we would continue. The disruption, while frustrating, was minimal. As we had spent much of the day in parts of Addis where a generator is a major luxury item, the stuttering lights made me think about the impact this type of interruption has on daily life. From the student who can’t finish her homework, to the entrepreneur unable to generate product, to hospitals and clinics unable to maintain life-saving drugs at a constant temperature, the challenges associated with unreliable power have a ripple effect that undermine economic growth.

When two-thirds of those living in sub-Saharan Africa, including 85 percent of those living in rural areas, lack access to power, the negative impact isn’t just a ripple effect; it’s a tidal wave. As I sat in the flickering light, I wondered how a country like Ethiopia, which has made dramatic development gains over the past several years, can be expected to reach its full potential until this critical issue is addressed. The answer is simple—it can’t.

“Access to electricity is fundamental to opportunity in this age. It’s the light that children study by, the energy that allows an idea to be transformed into a real business. It’s the lifeline for families to meet their most basic needs, and it’s the connection that is needed to plug Africa into the grid of the global economy.”

With these words, President Barack Obama launched the initiative to “Power Africa” in 2013 at Cape Town University, with the intent to double access to power in sub-Saharan Africa over the next five years.

To fulfill this commitment, the U.S. government has pledged more than $7 billion in financial support through USAID, OPIC, U.S. Export-Import Bank, The Millennium Challenge Corporation, The U.S. African Development Foundation, and the U.S. Trade and Development Agency—a rare level of collaboration and commitment across agencies. This pledge includes significant funding for U.S. exports that will support the development of power projects across Africa, as well as the financing, insurance, and technical assistance needed to help African governments attract additional private-sector investment. Power Africa is, to date, one of the farthest reaching publicprivate partnerships the United States has ever initiated. In addition to the $7 billion from the U.S. government, almost $15 billion in added private-sector funds have been secured, supporting smaller or off-grid projects.

Less than 50 percent of Ethiopia’s population of over 90 million consistent access to electricity and just over 80 percent live in rural areas. Yet, its economic growth rate hovers just above seven percent per year and its government is hungry for investment to drive much needed infrastructure growth. Within these realities, it is no mystery why Ethiopia was so eager to support the first Power Africa agreement, signed in September of 2013. The project, which will cost an estimated $4 billion and take eight to 10 years to reach completion, is the first independent power project in Ethiopia’s history. Once complete, it will be the largest geo-thermal plant in Africa. Because so much of Ethiopia’s population lives in rural areas, the opportunities for off-grid generation are equally significant; the Global Off-Grid Lighting Association reports the market potential at nearly $9 billion. A number of initiatives are seeking to fill the market, including the construction of solar villages, training for solar technicians, distribution of solar lanterns, and the establishment of rural solar centers to support generation unit installation, maintenance, and servicing. As of September 2013, Clean Technica reported that Ethiopia had funded the installation of more than 13,000 off-grid solar power systems in a 10-month period.

As more Power Africa projects get underway, investors and governments can seize the opportunity to engineer such investment to deliver a parallel return: jobs. Power Africa has the potential to not just turn on the lights, but ignite an engine of much greater economic growth spurred by enterprise and employment. The private sector can and should play an equally active role in building local capacity as do donors like USAID.

A neighborhood in Addis Ababa, Ethiopia makes do without access to the grid.

Such efforts can be modeled on the lessons learned by the extractive industry in engaging with and building the capacity of locally-owned businesses in their supply chains. Too often, extractive operators wait until a project has entered the operations phase before considering local employment, missing an opportunity to employee 15,000 or more people in the construction phase. Determined not to miss such an opportunity, one operator in Mozambique has taken an innovative approach as it builds out its liquid natural gas plant, investing in building the capacity of local firms before construction even begins. A similar model is possible for the power generation sector—ensuring local catering, transport, and engineering services firms alike are all well-prepared to bid on, win, and successfully implement power-related contracts.

While the above approach is probably most appropriate for more traditional power generation sites with significant physical infrastructure, an enormous amount of electricity will need to be generated, at least in the medium term, to meet the mostly rural needs of much of the continent. Much of this off-grid power generation will be driven by small-scale operators and social entrepreneurs—many of whom benefit from the skills and expertise of the global private sector.

“Increasing access to and reliability of electricity will improve learning conditions, modes of communication, and access to health care, while fostering greater productivity in essentially every pocket of African industry.”

Large corporations, whose product or industry may not in any way relate to power, have the opportunity to support these efforts by leveraging their greatest asset—their human capital—through global pro bono programs, providing opportunities for employees to use their skills and expertise to enhance the capacity of local power-generating organizations through deliverable-driven assignments. Such programs are a relatively low-cost way to support economic growth while also discovering new insights into local markets.

Companies like The Dow Chemical Company and IBM—both of which see significant investment opportunity in the country—are already bringing their talent to bear, partnering to build the capacity of organizations through their respective Leadership in Action and Corporate Service Corps activities taking place in Ethiopia this summer.

Increasing access to and reliability of electricity will improve learning conditions, modes of communication, and access to healthcare, while fostering greater productivity in essentially every pocket of African industry. The Power Africa initiative is an important step towards creating this type of meaningful and sustainable growth, but it depends on a mutual commitment from governments of African nations, the private sector, and international development organizations to be truly successful.

Back in the board room, the lights continued to flicker and the generator continued to kick on and off, but glancing out the window, the energy and entrepreneurial spirit on the street below was palpable. Ethiopia, as much of the rest of sub-Saharan Africa, is a country on the rise. Bridging the energy gap will only provide greater momentum as it powers toward a brighter future.

Feature photo: “The Earth at Night” | NASA Earth Observatory/NOAA NGDC

Amanda MacArthur

Amanda MacArthur is the Vice President of Global Pro Bono and Engagement at PYXERA Global where she leads the organization’s Global Pro Bono and MBAs Without Borders programs, as well as the Center for Citizen Diplomacy. In this capacity, Amanda designs and implements corporate social responsibility programs for the public and private sector focused on skills-based volunteerism in emerging markets, leadership development, and sustainable economic impact. Most recently, Amanda played a key role in designing IBM’s Corporate Service Corps, while overseeing Global Pro Bono programs for PepsiCo, Pfizer, FedEx, and several others.

Leave a Reply

Your email address will not be published. Required fields are marked *