En­ergy in­te­gra­tion key to East Africa

China Daily (USA) - - ANALYSIS - By DAVID BLAIR david­blair@chi­nadaily.com.cn

East Africa shows signs of start­ing the same kind of struc­tural eco­nomic trans­for­ma­tion that North­east Asia ac­com­plished over the past 50 years, as coun­tries in the re­gion be­gin to de­velop the low-skilled man­u­fac­tur­ing that many see as the key first step in the process. But Africa still has less than a 2 per­cent share of global man­u­fac­tur­ing.

The African De­vel­op­ment Bank re­ports that East Africa led the con­ti­nent by far with 5.3 per­cent growth in 2016, and it pre­dicts that high growth will con­tinue. The bank sees re­gional in­te­gra­tion as a key pri­or­ity if Africa is to trans­form in the com­ing decade. The African Re­gional In­te­gra­tion In­dex found East Africa to be the most in­te­grated re­gion on the con­ti­nent, with Kenya and Uganda lead­ing in­te­gra­tion. But Ethiopia and Tan­za­nia lagged in re­gional links.

At a Sept 21 meet­ing at the United Na­tions, Ethiopian Prime Min­is­ter Haile­mariam De­salegn said: “With an in­te­grated in­dus­trial strat­egy, African states will hope­fully mo­bi­lize funds, build the ca­pac­ity of lo­cal em­ploy­ment and pro­mote small (and) medium en­ter­prises with do­mes­tic de­vel­op­ment projects.”

The World Bank is fund­ing the East African Power Pool to link the elec­tri­cal grids of the re­gion. A larger grid is es­pe­cially im­por­tant for green en­ergy sources such as so­lar or wind power and also al­lows trade in hy­dropower through­out the re­gion.

Ethiopia gen­er­ates ex­cess elec­tric­ity, so in 2015 the coun­try con­tracted with China Elec­tric Power Equip­ment and Tech­nol­ogy, along with Ger­many’s Siemens, to build high­volt­age trans­mis­sion lines to Kenya. Sim­i­lar power lines to Dji­bouti and Su­dan are al­ready com­plete.

Wondimu Tekle Sigo, for­mer state min­is­ter at the Ethiopian Min­istry of Water, Ir­ri­ga­tion and Elec­tric­ity, and now a grad­u­ate stu­dent at Pek­ing Univer­sity, says that Ethiopia is the “water tower” of East Africa — able to ex­port hy­dropower through­out the re­gion.

“We are pro­mot­ing a green econ­omy,” he says. “We are in­te­grat­ing the re­gion in terms of green de­vel­op­ment.” He notes that the coun­try was able to use in­ter­nal sav­ings to fund the $4.5 bil­lion Re­nais­sance Dam on the Blue Nile River.

Tan­za­nia re­cently dis­cov­ered huge nat­u­ral gas de­posits. How­ever, cur­rent world en­ergy prices are low, so the dif­fi­cult process of ex­port­ing nat­u­ral gas by liq­ue­fy­ing it at very cold tem­per­a­tures may not be eco­nom­i­cal. Fur­ther­more, the “nat­u­ral re­source curse” shows that some na­tions that rely on pe­tro­leum ex­ports are vul­ner­a­ble to cor­rup­tion and few have suc­ceeded in in­dus­tri­al­iz­ing.

So Tan­za­nia plans to use its nat­u­ral gas to power do­mes­tic in­dus­try. Also, in 2016, the de­vel­op­ment of a pipe­line to Uganda that will al­low ef­fi­cient dis­tri­bu­tion through­out the re­gion was an­nounced. Cheaper elec­tri­cal power and nat­u­ral gas can help the re­gion to de­velop man­u­fac­tur­ing ca­pa­bil­ity.

Ac­cord­ing to a study by re­searchers at the Lon­don School of Eco­nomics, cheap nat­u­ral gas from frack­ing has boosted US man­u­fac­tur­ing ex­ports by around 10 per­cent.

Yao Yang, dean of the In­sti­tute for South-South Co­op­er­a­tion and De­vel­op­ment at Pek­ing Univer­sity, says: “Some of the East African coun­tries have the real po­ten­tial to be ex­tra­or­di­nary — Ethiopia, Uganda, Kenya, Tan­za­nia. One of the lessons they have learned from the 1990s is that they have had enough fight­ing. This time, Kenya just had an elec­tion, and the Supreme Court (an­nulled) the elec­tion, and both sides said, OK, let’s do it again. They know they have to co­ex­ist peace­fully. They have to fo­cus on eco­nomic growth.

“Some coun­tries have more dis­ci­pline, like Uganda,” says Yao. “Ethiopia is an an­cient coun­try that has been there for 2,000 years. I think the re­gion has the po­ten­tial to do re­ally well in the next 10 to 20 years.”


Work­ers at a nat­u­ral gas project construction site in Tan­za­nia.

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