As someone interested in seeing African businesses rise beyond the epileptic level that it is today, and realizing that one major reason the status quo has been sustained is because of energy crisis, I think analyzing and coming up with credible suggestions will go a long way in proffering practicable solutions. My suggestions aren’t based on being an expert, but as an end user. Having tasted two worlds; Africa and Europe, I have come to see the junction of deviation where our leaders have made ideological and policy errors. And for these errors, we remain stuck to muddling and self-induced predicaments which have invariably hampered our developments. It is wrong to assume that corruption is Africa’s major problem, because ignorance in actuality takes the topmost position among a plethora of issues inundating us. When a government with the right intention doesn’t know what to do because of lack of vision, the little money in the treasury becomes excessive, and what comes next to mind is to embezzle it.
Businesses are crippled or die where there isn’t light and power to challenge it to drive. What makes the west is the old age platform of maintained institutions created to give momentum to every sector to self-propel. Because of this propensity, western businesses thrive and even extend beyond their native territories into regions where they were previously unknown. The big corporations in Africa began somewhere foreign to us, but are now known to us because they were given wings to fly by futuristic and visionary careful planning.
In reference to the energy sector, what do I think African leaders must do to help our businesses advance farther than their starting points?
There must be 100% policy change: in all developed worlds, especially in the west, the energy sector works because the governments aren’t responsible for managing it. True independence of the energy sector is the only way the energy crisis in Sub-Saharan Africa can be dealt with. It’s time African leaders realize that in spite of sovereignty, no nation is purely independent. One of the major energy suppliers in United Kingdom is EDF, yet, a French company.
Decentralization of the energy sector isn’t an only solution; privatization also, isn’t an only solution. The solution is enclosed in a combination of decentralization, privatization and competition. A monopolistic privatization will bring us back to the same quagmire as there wouldn’t be a chance for price wars. With competitions, the various companies involved will strive to provide the best services which will in turn be to customers’ advantage, while at the same time, ensuring constant supply. Anyone who provides interrupted supply or poor customer service is automatically knocked out by the forces of demand and supply. With this, the government will be at peace because her people are being taken care of.
The lack of the will to make good energy policy decisions is the number one cause of the asphyxiation of African businesses because in every economy, power is the generating factor.
Initiating energy regulatory authorities: in spite of the government taking its hands off the management of the energy sector, it must, if not already in existence, set up regulatory authorities with the mandate to issue licenses to energy firms, protect the interests of existing and future consumers, protect the public from dangers, look into outrageous pricing, and so much more as it concerns all stake holders. Federal Energy Regulatory Commission is the authority responsible for the United State’s transmission and wholesale of electricity and natural gas in interstate commerce, and regulates the transportation of oil by pipeline also in interstate commerce. In United Kingdom, the regulatory authority is OFGEM. With these types of institutions, the energy sector works valuably well without hitches.
The need for energy consumers protection agencies: beside regulatory authorities, there should be consumer rights and protection agencies backed up by legislations and made up of members of the public. These agencies should comprise of people who are professionals from different fields and non-professionals – the professionals will see from experts’ points of views while the non-professionals will perceive from end-users perspectives. With this, no one is taken advantage of by the companies that will manage the various energy strata. In advanced worlds, that is how it works and has always worked. If these are proven formulas, they can be replicated if the will to make it happen is existent.
Looking into renewable energy: renewable energy is obtained from natural sources such as the sun, wind, water and biomass. There are none of these resources that Africa doesn’t have in abundance, especially the sun. Why should we suffer in the dark and be recessive in development when we have in excess what should catalyze our growth? The benefits of using renewable energy are immense; apart from the technological installations which are a bit expensive, every other resource required is cheap and readily available. In spite of the installation costs, on a long run, it is far cheaper than using the national grid.
As the world laments over the speedy rate of natural degradation and global warming, using renewable energy is the answer. Carbon emission, evolution of carbon dioxide and greenhouse gases are sporadically cut down when there is an increase in the use of renewable energy. On top of it, jobs are created and income generated when individuals sell surplus energy produced. Using non-renewable energy involves the burning of hydrocarbons, and their emissions have been linked to air and water pollutions which are directly connected to neurological diseases, breathing problems, cancer and many other health challenges.
Provision of a network of energy infrastructural facilities: on 2 June 2016, Bloomberg published an article with the title, “Chile Has So Much Energy it’s Giving It Away for Free.” The article states that “while that may be good for consumers, its bad news for companies that own power plants struggling to generate revenue and developers seeking financing for new facilities.”
At least, they have good news and that is, the country’s ability to generate far more solar energy than they need, but where the government went wrong was in not being visionary enough to foresee the need for upfront infrastructural provisions. And for that, what should be a blessing is almost becoming a curse.
According to Bloomberg, “Chile has two main power networks, the central grid and the northern grid, which aren’t connected to each other. There are also areas within the grids that lack adequate transmission capacity.” As a result, one of the regions can have so much power beyond what is required which inadvertently drives down prices, but without the connectivity to deliver its excess production to the other region that is under-generating.
The Chilean agony should be a lesson for African leaders. Energy generating companies hardly provide a network of connective infrastructures; that should be the responsibility of the government. Where that responsibility is placed on the shoulders of energy generating companies, the weight ends up on the consumers because whatever they spend, they’ll take back in multiples from the end users.
How does sorting the energy problems in Sub-Sahara Africa boost African businesses?
It reduces the general cost of production: every business sector one way or the other uses energy to make its products. When there is no energy, there is no creativity. Every economy is crippled without power, and that is why Africa is about the least in terms of production in spite of having enormous natural resources. Nature saves no nation that hasn’t got the nurture for energy. The cost of running the generating plants where there are hardly fuels is annoyingly high, and that impudent cost adds up to production cost. This is detrimental to both producer and consumer for many reasons – the producer may not have the financial capacity to meet demand because a lot has gone into using generating plants, the cost of the product may be so high thereby discouraging purchase, or consumers may be forced to buy if it is an essentially needed commodity but this makes them suffer in other areas.
When challenges within the energy sector are dealt with, prices of goods and services are bound to drop naturally. If a supplier refuses to bring down its price, competition and the forces of demand will push it down compulsorily.
It will promote the doctrine of self sufficiency: when the GSM mobile communication was introduced into Nigeria, many Small and Medium Scale Enterprises emerged, and up till date, as the industry continues to advance, more SMEs are sprouting. The same or more will happen when the energy sector in Africa finds its stability, strength, will and drive. Imagine the amount that will go into the government coffers through tax when more people become self-sufficient.
It will attract world corporate organizations to pitch their head offices in Africa: you may think this is impossible, but have you ever asked yourself why Apple and most mega companies design their products in United States but produce them in China? Have you asked yourself why Google put its European head office in Dublin instead of London? Have you also asked yourself why the World Bank is in Switzerland? There is a combination of factors – availability of less expensive human capital, lower taxation, proximity to raw materials, nearness to nature, and a few more contributing factors. Africa has got a lot of these factors, but how can these organizations survive where the energy sector is a failure? If we fix our weakness, everyone who cherishes strength will run towards us. Africa can be the world capital if we have enough passion to deal with where we hurt; the energy sector!
Let’s talk about tourism: in 2015, Israel’s Travel and Tourism total contribution to the country’s GDP was 7%. In 2010, Egypt’s Travel and Tourism contributed 11% to the GDP and 14.4% to the foreign currency revenues; it also employed 12% of the country’s workforce. The Sub-Saharan Africa is the closest region to nature which the world is eager to see, but will they come and sleep in hotels with no lights or walk in dark streets because of power failures?
A fixed energy sector will initiate purposeful education: currently, our educational system is in shambles because there are no equipped industries where our young ones can have purposeful job placements. Without purposeful job placements, our educational products only have virtual knowledge. But when an enhanced energy sector attracts great corporate industries, they’ll come with their facilities, and with that, our young ones will have first hand information on up to date equipment; they’ll acquire skills that will be developmental tools in our continent.
Transformation of our agricultural sector: the improvement of the energy sector has a positive cascade effect on the agricultural sector. Most of the farming in Africa relies on subsistent approach till date. As technological advancement paces on, there are more affordable farm implements which would have been within the reach of African farmers, but the energy to propel those tools aren’t available in most rural Africa. How much food would these farmers produce if they’re given the platform? Based on physical energy, they still do their best to sustain the continent; they would do more if given the technological energy. I believe Africa can feed the world if we have the conscience to solve our problems.
In conclusion, I would like to reiterate the mention of the word, “conscience.” As a blessed continent, we shouldn’t be where we are if we as a people consider the state of one another, and the comfort of each other. If what is meant for development goes into development, we will stop accepting foreign aids like beggars. It saddens my heart when western leaders treat us like we aren’t part of the world because we hardly influence what goes on. When the Chinese economy gets shaken, it affects the whole world. When the European or American economy has hiccups, the world is threatened, but for long, Africa has been sick but it does nothing to the world because we aren’t a deciding factor. We can only be reckoned with if we build our infrastructures and put enduring and workable systems and institutions in place. We can if we want to, but we haven’t, and I hope very soon, we will.
Originally published in the July 2016 print edition of African Leadership Magazine