Africa is poised to overtake highly populated continents like Asia in terms of population growth. Along with rapid urbanization, the burgeoning population creates an urgent need to find solutions for growing energy demands. As the population grows, demand for fuel and energy to power movement, urban lifestyles, cooking, heating, and refrigeration will catapult in tandem.
This positions the continent as a significant demand hub for energy solutions like gas, oil, and electricity, which has answered the needs and demands of home use. In addition to the demand for energy use in the home, there is a growing need for industrial and manufacturing energy solutions. The advent of Africa’s free trade area is set to propel industrial output by creating synergies and opening up the broader market.
Additionally, the free trade area is expected to facilitate the modernization of industrial processes through the transfer of technologies and ideas to improve efficiencies. This will, in turn, increase energy demand. Also, the expected scope and scale at which African businesses are projected to grow under the AfCFTA should see energy demand growth.
This demand not only speaks to the need for African governments to act on finding solutions to the provision of power, but it also creates a potential business opportunity for private players. The energy infrastructure may not entirely fall into the hands of the private sector for reasons (real or perceived) that include the need to protect the poor as well as certain levels of security risk. However, the private sector maintains a vast potential to benefit from the extensive scale provision of energy.
Besides Covid-19, Africa was already in dire need of investment in the energy sector. Despite the aforementioned demand metrics, there is high energy poverty characterized by a lack of power and electricity in the rural areas of most African countries. In addition, lack of access to clean energy for cooking creates health and economic hazards.
It is not only the rural areas that stand affected by this energy poverty. Urban areas across the continent face challenges related to energy, from load shedding, power cuts, and in some cases, the prohibitive cost of electricity. Additionally, most urban dwellers still use unclean sources of electricity.
The African Union is pushing towards an agenda that focuses on economic development that poses to place Africa head and shoulders with other economic giants by 2063. As such, there is a huge funding gap in this regard. The continent is responsible for only 4 percent of energy investment, despite its growing populace. To reach a significant investment level capable of meeting demand, there is a need to grow energy investment to over 90 billion, which is the projected funding gap.
Renewable energy will play a significant role in closing this demand gap. Africa is among the richest in natural solar energy. However, this arena remains severely underutilized. There is, therefore, capacity within the solar sector to create solutions that help deal with the crisis. Mass solar grids, home solutions, community solar interconnectivity are just a few examples of supply-side interventions to fill the demand gap.
With this in mind, a key player in the energy sector is in the advanced stages of planning an investor forum. Tabled for June 17-18, 2021 in Paris, Africa Oil, and Power (AOP), a platform that promotes energy investment in Africa, is set to bring together key stakeholders in the energy sector. The gathering—the first of its kind—intends to bring European investors to sit across the table from African governments together with private sector companies within the energy sector to discuss deals and come out with signed agreements and commitments. The AOP Investor Forum will help promote co-operation between funders and players in Africa’s energy sector to create relationships and improve energy sector growth for both renewable and petroleum-based products.
Big oil-exporting countries like Nigeria and Angola will be present at the event. Gas rich Mozambique will also grace the event. Other expected countries include Senegal, Ghana, Cote d’Ivoire, Niger, Equatorial Guinea, Gabon, Uganda, and South Sudan.
The event comes at a time when there is a need to re-strategize and rebuilds economies to offset the effects of the global pandemic. The pandemic triggered a drop in prices and demand for energy owing to lockdown measures. This was a significant problem, especially for oil-dependent economies.
Further, natural gas which is also in abundance can be harnessed to produce safe and efficient energy solutions. The reduction in the cost of technology will help to facilitate large scale exploitation and distribution of renewable energy across the continent. There have been discoveries of natural gas beds across Africa, a positive indicator for alternative and renewable solutions.
An additional possibility is the harnessing of wind-based solutions for energy provision at a significant scale.
The interplay between the private sector, governments, and investors is necessary to help bring solutions in this regard. Integrated solutions that involve powering national grids as well and providing maintenance solutions, and simultaneously improving the private sector and off-grid power solutions will provide for the sustainable growth of the energy sector.
Another key priority will be reducing energy losses from the grid and maintaining a minimum carbon dioxide footprint. With the vast natural resources that can be exploited regarding energy production, achieving energy goals in a clean, environmentally friendly manner is possible.
The energy players’ forum geared towards crucial interaction with potential partners in Europe is a welcome move amid the need to rebuild and reposition Africa post-Covid-19 and beyond. There is an essential need to rebuild the continent. Further, the plan to bring Africa to global levels of empowerment through Agenda 2063 is crucial in meeting the needs of the continent’s growing population and energy demand.
More groundwork must be laid to increase investor, government, and private sector participation in this regard. An increase in forums such as these is necessary to shorten the funding cycle for both the private and government sectors. Finally, governments’ commitment to dealing with corruption and mismanagement is of utmost urgency if at all these forums are to bear fruit.