Dark times: South Africa, Ghana crises reveal how ‘Africa Rising’ will look like without power

SOUTH Africa’s central bank last month revised its 2015 growth forecast from 2.5% to 2.2%, explicitly blaming the country’s electricity woes for the cut.

Until last year the continent’s biggest economy, South Africa had already been struggling to keep up with the rest of sub-Saharan Africa, whose sustained growth spurt in recent years gave rise to the popular “Africa Rising” reference.

Ghana, an African economic success story which has run into headwinds, also cut its growth forecast for this year to 3.9%, from the 4.2% chalked up last year, as the lack of reliable power supply dented investor confidence.

The Ghanaian opposition Wednesday led a protest against what are the worst blackouts in a decade, hoping to politically cash in on the discontent.

But they may not need to—Ghanaians are already extremely frustrated, as manufacturers shed output and retailers make losses on almost everything from spoiled food to having to purchase unbudgeted-for generators.

The load shedder’s knife

Homes have not been spared. The Electricity Company of Ghana has a particularly tough load shedding programme: it cuts power to residences in the capital Accra for 24 hours, then restores it for 12 hours.

South Africans would richly identify. Eskom began rolling blackouts in 2008, as its crumbling infrastructure has battled to meet ballooning demand since the end of apartheid in 1994.

With key sectors of the South African economy like manufacturing contracting, the debilitating power crisis would be unlikely to alleviate unemployment, which stands at 24.5%.

The recurring themes for both South African and Ghana have, according to analysts, been mismanagement. Ghana’s largest power producer, Volta River Authority, doesn’t have enough natural gas to fuel its plants and the water level at the nation’s largest hydropower facility is near the minimum necessary to function.

With key sectors of the South African economy like manufacturing contracting, the debilitating power crisis would be unlikely to alleviate unemployment, which stands at 24.5%.

The recurring themes for both South African and Ghana have, according to analysts, been mismanagement. Ghana’s largest power producer, Volta River Authority, doesn’t have enough natural gas to fuel its plants and the water level at the nation’s largest hydropower facility is near the minimum necessary to function.

“There’s a lack of sympathy for the government as the power outages are widely seen as the result of poor governance,” Kissy Agyeman-Togobo, an Accra-based analyst with Songhai Advisory LLP, said in an interview with Bloomberg news agency on February 3. “Average Ghanaians feel that they’ve been failed by the system.”

Oppositon leader Nana Akufo-Addo echoed this, saying the current state was due to “mismanagement and corruption”.

In South Africa, the government was as far back as 1998 warned about a possible system collapse, but work on a new power station, the first in 20 years, only begun nine years later.

The first unit of the 4,764-megawatt facility was initially expected to deliver power in 2012, but numerous delays have since pushed that deadline to June this year.

Another facility under construction near the eastern town of Witbank is not expected to start delivering power until December 2016. The country is also looking at nuclear, a $50 billion plan which has seen both supporters and detractors out in force, while the sourcing has already landed president Jacob Zuma in trouble over what are seen as opaque deals with countries such as Russia.

620m people without electricity

The electricity challenges of Nigeria, the continent’s biggest economy, are well known.

The three countries’ woes amplify the crisis facing the continent. Two of every three people in sub-Saharan Africa, or an estimated 620 million people, remain unable to access electricity. For those who do, the supply is many times either insufficient, unreliable or costly compared to other regions.

Data shows sub-Saharan Africa accounts for 13% of the world’s population, but only 4% of its energy demand.

There are bright spots however in what is a grim regional situation. Major initiatives such as the US Power Africa plan, which has raised an estimated $15 billion so far have helped cast a spotlight on the situation.

But the continent also has the internal resources to fix its energy problem.

Nearly a third of all the global oil and gas discoveries that have been made in the last five years have been in the region, with countries such as Mozambique and Tanzania at the cusp of rich finds.

The continent is also endowed with huge resources of renewable energy, from solar to wind and geothermal, with projects such as the Lake Turkana Wind Farm increasingly visible.

To show how big energy will be on the continent’s growth, the International Energy Agency in its World Energy Outlook report released late last year drew up scenarios until 2040.

The Paris-based IEA, energy watchdog to the world’s industrialised nations, forecast a quadrupling of the economy, a near-doubling of the population, and the growth of energy demand by almost 80%.

The region would also have expanded its power generation capacity four times, with half of this from renewable energy, while nearly one billion people would have had access to electricity.

But more than half a billion Africans would still be without electricity. To change this, and help grow the regional economy by an additional 30% by 2040, the IEA says the continent must upgrade its power sector including reducing outages by half.

Regional cooperation would also help expand markets, but another key recommendation was the better management of energy resources and revenue—more efficiency and transparency in financing essential improvements to power infrastructure.

Accra and Pretoria, and a host of other capitals where energy policy is made should not need a second invitation, if not to grow the regional economy then at the very least to avert an even bigger crisis.

The reform bill is not however cheap—at least $450 billion in investment—but worth it given it is generally accepted the continent’s biggest growth challenge is energy.

Source: Mgafrica.com

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