The leaders of more than half of African countries gathered this week in Dar es Salaam, Tanzania’s vast coastal metropolis, to commit to the largest spending on electricity generation in African history.
The World Bank, African Development Bank and others have pledged at least $35 billion to expand electricity across the continent, where more than 5 billion people still don’t have it. Approximately half of the money will go toward solar “mini-gurdos” that serve individual communities. Loans come at below-market interest rates. This is an important provision as global lenders typically charge much higher interest rates in Africa, citing higher risks.
In an interview, World Bank President Ajay Banga issued an initiative on the cleaning front where economic development meets social stability and basic human rights. “If you don’t have electricity, you don’t have jobs, you don’t have health care, you don’t have skills,” he said. Successful electrification is “the basis of everything,” he said.
The summit’s promise is to capture half of Africa’s 600 million unrestrained people in just six years. That averages out to 5 million people a month. Banga said the World Bank itself has not yet passed the one million mark.
Despite an unusually strong statement of political will, many people, particularly in Africa’s troubled power sector, expressed deep skepticism. In fact, some have pointed out that you don’t have to look further than the host nation of Tanzania to find a cautionary tale.
Recently, the world’s largest developer of Solar Minigrids, Colorado-based Husk Power Systems, shopped in Tanzania because the government insisted it would sell at the same price as heavily subsidized government-run power companies. .
Unable to make money at that price, Husk said the company sold its assets and spent millions of dollars in losses in a hurry. Some remain, but are obsolete. Others have been dismantled and sold for spare parts.
This is despite the fact that Tanzania seemed like an ideal market for shells when they arrived there in 2015, when the country’s new president, John Magufuli, decided to build a road. and his efforts to curb corruption had earned him the nickname “Bulldozer.” Only a third of Tanzanians were connected to the grid.
Husk’s departure left thousands of people helpless and frustrated because they were willing to pay Husk’s higher price. Among them is Mwajuma Mohamed and her family in Matipwili. Matipwili has temporarily gained power from the Minigurd of the Shell Sun, whose approximately 200 homes and businesses are now covered in dust.
“When we got electricity, it was like we were suddenly normal people,” she said. The first thing she bought was a television, she said. I feel like I wasted my money. ”
Without naming Husk, Doto Biteko, Tanzania’s energy minister, said in an interview that some MIGRID operators charged artificially high prices, leading to inflation. “We’re not trying to give anyone a hard time,” he said. “But it is the government’s role to decide what is reasonable.”
Lenders are trying to tackle this issue head-on. Loans from the World Bank and African Development Bank this week are often conditional on regulatory overhauls that will allow private power providers to compete more freely with state-run utilities. Tanzania is one of 12 countries to sign such a “compact” at the summit meeting. Another 18 are expected in the coming months.
In addition to solar mini-grids, an approximately equal amount will be directed towards expanding traditional existing power grids, which are primarily supplied by hydropower and fossil fuels.
But the mission’s main potential driver is the plummeting cost of building solar power, driven by China’s breakneck growth as a producer of cheap, high-quality solar panels. Not only is solar power more affordable, it also takes much less time to deploy than building dams or power plants, and has the advantage of not emitting greenhouse gases.
“It’s technology and price. That’s why this is finally happening,” said Raj Shah, who heads the Rockefeller Foundation, which invests tens of millions of dollars in renewable energy projects in developing countries. . “The reason almost 30 of the state’s chiefs are here is that they now believe this is the quickest, most cost-effective way to create jobs and prevent the kind of instability they see growing in their countries. Because I think it is.”
After the closure of Matipwili’s Minigurud, a pole carrying power from the state-run utility Tanesco arrived in the village. But they only serve a quarter of the lot, and the service is poor, customers say. Like all but four of Africa’s dozens of power utilities, Tanzania runs with steep losses and lack of maintenance, leading to frequent and long power outages.
“People like me got into business because Husk allowed us to buy packages at a set price and use more power,” he says. said Gesenda Mwise Gesenda, the village chairman who uses Tanesco connections to refrigerate drinks. “At Tanesco, it actually costs three times as much for the same amount of electricity. That’s my meter going up and down or days and even hours of power outage saved.”
The Matipwili experience explains why lenders are increasingly supporting decentralized electrification. “What we’re seeing here is that in many places where the grid doesn’t currently exist, extending it may not be cost-effective or beneficial to the end user, at least compared to solar mines. That’s the realization,” Ashvin said. Dayal heads the Rockefeller Foundation’s Power and Climate Program.
Mission funders make clear to government that money alone cannot solve problems and regulatory changes could attract even more investment beyond this week’s $35 billion I say that I am doing it.
Banga said he attended the Climate and Energy Summit in Kenya last year and met a group of African leaders. “I told them, ‘Hey guys, do you want to stay at your job for a few more years? You have to commit to work and quality of life. I can help you. But you have to step up to the plate.”
Multilateral funding is never 100% guaranteed, as well as due to concerns regarding the country receiving aid. The new administration in Washington, which is openly hostile to both renewable energy and foreign aid, is the World Bank’s largest contributor because it retains a large number of shakers over the people who run the institution. alone caused uncertainty over the World Bank’s core funding. For now, the bank has enough money in its development aid pot to fund its electrification mission due to last-minute decisions made by the outgoing Biden administration.
Although Mr Banga was cautious about the possibility of achieving banking electrification targets in such a short period of time, he hoped that the investments being deployed in Dar es Salaam would encourage private equity, sovereign wealth funds and local banks to follow them. I said that there is.
“It’s a huge mountain to climb.” William Brent, Husk’s chief marketing officer, said: “Husk is building one mini-grid a day, which is the lowest in the industry. It’s the fastest. Even if you add 10 more shells, you still only get a fraction of that.”
Husk has built 70 mini lidos in Nigeria. There, we found a receptive regulatory environment. And it said on Monday that it will enter the Democratic Republic of Congo this year.
But while lenders and presidents rubbed shoulders in Dar es Salaam, Congo also provided a reminder of the volatility that threatens progress. Rwandan-backed rebels visited the Congolese city of Goma on Monday. There, some of the same funders that support new initiatives supported the Minigurd project.
Cities are falling and governments are piling up commitments and debt. Lenders know that investment in Africa’s infrastructure is very limited and is still experiencing the same fundamental problems that have hampered many countries economically.
But the lack of electricity is more than just an economic drag. Not having electricity in the world where over 90% of people do is a drag.
That means no internet, no speakers playing music, no cold beer from the fridge, no kids doing their homework.
When Husk came to Matipwili, Mashab Ali, 45, a mother of eight, was excited about her daughter, who had achieved one of the highest grades in the village’s secondary school. She imagined that she would study late at night.
Since they lost power access, their daughter has fallen to third place. Ali currently rents a small rooftop solar panel for about 20 cents a day, but the light it provides is dim, he doesn’t store batteries, and it doesn’t work on cloudy days. Her children go to bed right after the sun goes down. And she puts aside her own dreams about how to help them with just a little bit of her strength.
“My plan was to open an ice cream business,” Ali said, sitting outside his home surrounded by his family. It was already dark and the one outdoor light bulb with a rental panel started flickering. “What should I say, huh? It’s just an idea.”