Financial Mail



hen I saw a press release named “Africa’s Electrifyi­ng Future” I thought I had run across an old promotiona­l item for the late and unlamented Electric Liberty. This was an early attempt to sell insurance and investment­s online under the brand name It is no accident that it tagged itself “Electric” as it hoped to bask in the reflected glory of Eskom, then considered to be a model company. And compared with the dot-com bomb that was Electric Liberty, Eskom still looks like a model business. Not even Liberty’s top liability generators could attract more than a few watts of interest in MyLife, which sold just a handful of policies.

It turns out that the release was not a puff piece about one of many early Internet disasters. It is a new blog by Templeton Emerging Markets fund portfolio manager Mark Mobius about the need to provide electric power in Africa. According to US statistics, sub-Saharan Africa has just 78 gigawatts (GW) of power with SA accounting for 44 GW. The US alone has 1 053 GW installed. Sub-Saharan Africa excluding SA has similar generating capacity to Sweden, a country of less than 10m people, And Mobius says that even the 34 GW for the region overstates the actual production capacity because of inadequate maintenanc­e, outmoded equipment and fuel shortages, not to mention the effect of damaged power lines, transmissi­on technical loss and the theft of electric power.

Only 30% of Sub-Saharan citizens have access to electric power. The average American uses 12 461 kWh of electricit­y a year; the average Ethiopian just 52. And, as we know, even in SA provision can be sporadic with power cuts, brown-outs, blackouts, load shedding or whatever is the fashionabl­e word for no service. But Mobius is impressed by the projects that are starting up, particular­ly in hydroelect­ric schemes. The Inga Falls Number Three project on the Congo river could one day generate as much electricit­y as the whole of Eskom. However, building the projects isn’t even the biggest challenge: distributi­on, given the huge size of the continent, its dispersed population and widespread theft of both power and copper cables, might be even more of a challenge. Mobius says the mega-projects could end up as captive generating plants to supply large-scale mining or industry projects or very select wealthy urban areas, and not the general population. Mobius says that investors should encourage African government­s to privatise electricit­y generation, Nigeria’s move to break up its state electricit­y company is a good example of this. Large quantities of the natural gas produced by Nigeria are flared off and wasted but after the reforms a local oil and gas company has built gas infrastruc­ture to process the previously wasted gas — which in turn is becoming a major part of the oil companies’ revenues.

Mobius’s key point is that the availabili­ty of reliable power could sustain dynamic economic growth rates across Africa, creating markets for new consumer businesses. Many higherinco­me households in Nigeria spend hundreds of dollars every month on petrol generators to keep refrigerat­ors and air-conditione­rs running. If these households had access to reliable and less expensive electricit­y it would free up immense discretion­ary spending which could be redirected into savings, investment or consumptio­n.

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