The Asian influence, especially of China, in the sub-Saharan African electricity industry will strengthen over the next five years due to the region's need for additional generation capabilities. The intense energy consumption of the Chinese economy, the need for China to build strategic political alliances and expand its export market, the need for sub-Saharan African governments to access low-interest capital, a growing emphasis on technology transfer and the perceived intransigence of Western Governments regarding loans are some of the factors driving this growth.

New analysis from Frost & Sullivan, the Asian Influence in the Sub-Saharan African Electricity Industry, estimates that the total value of Asian commitments in the sub-Saharan African electricity sector was $4.44 billion as of 2008 and projects that Asian companies could be involved in additional projects worth over $2.0 billion by 2014. The following regions are covered in this research: East Africa, West Africa, Southern Africa and Central Africa.

"Asian countries, notably China and Japan, are interested in several power projects across the African continent," says Frost & Sullivan Industry Analyst Jeannot Boussougouth. "The majority of these power projects are hydro-based because of China's vast experience in the construction of hydro-power projects."

The competitiveness of Asian project financing lies in their ability to offer a long payback period, coupled with low interest rates. For instance, the majority of Asian-funded energy projects are payable over 20 years at interest rates lower than 3.0 per cent.

Three projects, namely Sudan's Merowe dam, Ghana's Bui dam, and Mozambique's Mphanda Nkuwa Dam, have an estimated cost of between $400 million and $1.95 billion between them. As observed in other sub-Saharan African countries, Exim Bank is either the main financier or one of the key project financiers of these projects.

Some of the key challenges that could limit the number of energy projects funded by China in the future are complicated terms of contracts, the import of Chinese labour to sub-Saharan Africa and growing criticism of the resettlement procedures.

"Although China's funding is made available to willing sub-Saharan African public utilities, there are growing concerns on the contract terms," observes Boussougouth. "The challenge for sub-Saharan African governments is to obtain better terms during the contractor procurement process, while ensuring China's eagerness to continue providing these funds."

The Asian Influence in the Sub-Saharan African Electricity Industry is part of the Energy & Power Growth Partnership Services programme, which also includes research in the following markets: Key African Power Plant Service Markets, Key African Power Rental Market, Hydro Turbine Markets in Sub-Saharan Africa, Strategic Analysis of the Cameroonian Electricity Industry, Strategic Analysis of the Botswana Electricity Industry, and Investment Opportunities for Independent Power Producers in West Africa.