AfDB Puts Energy on the Front Burner of Africa's Development Agenda
Energy is the central theme of the African Development Bank's 2016 Annual Meetings as well as its 2015 Annual Report. The theme “Energy and Climate Change” underscores the importance the Bank attaches to energy, which the AfDB President, Akinwumi Adesina, describes as “the lifeblood of any society and the passport to economic transformation.”
Energy is at the top of the Bank's High 5 priorities – Light up and power Africa, Feed Africa, Industrialise Africa, Integrate Africa and Improve the quality of life for Africans.
Generally, there is a consensus that the availability of quality energy serves as a barometer for measuring living conditions in a given place. Available data indicates that over 640 million people in Africa, more than half of the continent's population, do not have access to electricity. This situation persists despite the fact that the continent is endowed with inexhaustible raw energy potential.
Africa's energy needs are so huge that efforts being made in the sector often appear like drops of water sprinkled in the Sahara Desert. The AfDB's current energy portfolio hovers around US $11 billion, with lending to energy sector projects (public and private) exceeding an annual US $1 billion in recent years. Over three-quarters of the energy portfolio supports public sector projects. The portfolio is composed largely of generation projects, as well as distribution projects, and support for regional energy interconnections.
In addition, the Bank is leading and hosting many energy-related initiatives and organizations such as the Sustainable Energy for All (SE4ALL) Africa Hub in partnership with the African Union Commission, the New Partnership for Africa's Development (NEPAD) Agency, and United Nations Development Programme (UNDP). It also hosts the Secretariat to the African Energy Leaders Group (AELG). It is one of the architects and a key financier of the Programme for Infrastructure Development in Africa (PIDA). The Bank is actively engaged in the new Africa Renewable Energy Initiative, and is expected to play a key implementation role. It cooperates with key stakeholders in the energy sector, such as the World Bank Group, European Commission, bilateral donors including the US (especially through the Power Africa Initiative), the UK, France, Germany, and the International Renewable Agency (IRENA), among others.
The AfDB is also financing large energy projects across the continent. These include the first phase of Morocco's Noor-Ouarzazate concentrated solar power (CSP) complex with over 500 megawatts (MW) installed capacity, which received US $400 million in funding. The Bank is also investing €1.86 billion in South Africa's Medupi Power Station Project, which has a total capacity of 4 800 MW, and considered to fourth-largest coal plant in the southern hemisphere.
In Central Africa, there are ongoing efforts to add a third dam (Inga III) of 4.8GW. Under the Grand Inga continental flagship project, a multi-phase hydro power station is to be built on the Congo River, with the potential to generate approximately 44 GW – half of Africa's current installed electricity capacity. In East Africa, Ethiopia has invested in large-scale hydropower public investments in the Beles II (460 MW), Gilgel Gibe II (420 MW), Gilgel Gibe III (1.87 GW) and the Grand Renaissance (6GW) dams. The Lake Turkana Wind Power Project, which will be one of the largest wind farms in Africa, is constructing a 428-km publicly-owned transmission line needed to put 300 MW of power on the Kenyan grid.
President Adesina believes that a lot more needs to be done given Africa's energy potential and the huge needs to be met. “Africa is blessed with limitless potential for solar, wind, hydropower and geothermal energy resources. We must unlock Africa's energy potential – both conventional and renewable. Unlocking the huge energy potential of Africa, for Africa, will be a major focus of the Bank,” he said.
Thus, in September 2015 the Bank articulated a New Deal on Energy for Africa and launched a Transformative Partnership on Energy for Africa to light up and power Africa by 2025. The goal is to add 160 GW of new generation capacity through the existing grid, deliver 130 million new grid and 75 million off-grid connections.
It believes that the new deal will play a catalytic role in accelerating the pace of structural transformation in the energy sector. This would also enhance inclusive green growth in Africa, unlock the potential for industrialization and wealth creation. It will drive agricultural transformation and regional power pooling to integrate Africa, create jobs and ultimately improve the quality of life for Africans.
President Adesina put all of these in perspective when he presented the New Deal on Energy for Africa, and launched a Transformative Partnership on Energy at the World Economic Forum in Davos, Switzerland, on January 20, 2016.
In his address on the occasion, he cited the inclusion of energy in the United Nations sustainable Development Goals in 2015, to underscore the importance of energy to society and a key priority for the bank.
The New Deal, he said, sets the ambitious target of universal access to energy by 2025. This means bringing modern energy to 900 million people in Sub-Saharan Africa, including those who do not have access as well provide for anticipated population growth. It also implies a step change in the way that the Bank, African countries, development partners and the private sector approach the energy sector on the continent.
“To succeed, we must work together. As the African proverb says: ‘If you want to go fast, go alone. If you want to go far, go together.' Hence, the African Development Bank is working with governments, the private sector, bilateral and multilateral agencies – several of whom are represented here – to develop a Transformative Partnership on Energy for Africa. This will provide a platform for public private partnerships for innovative financing for Africa's energy sector,” Adesina emphasized.
