“Power Africa”: US Aid To Increase Electricity Production Finally Obama discovered that Africa needs electricity in order to have development. A long term commitment?

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By Paolo von Schirach

June 30, 2013

WASHINGTON – Back in 1998, while working on an export promotion project in Mozambique funded by the World Bank, I had a chat with a young US Embassy officer stationed in Maputo, the capital. When I asked her what she was working on, she told me that she was organizing exchanges of musical groups. I was frankly stunned.

Musical groups exchanges?

Mozambique, a truly poor country to begin with, at that time was barely emerging from years of a civil war between FRELIMO and RENAMO that resulted in the almost complete destruction of whatever economy and infrastructure had been left behind by the Portuguese, for centuries the colonial rulers. Beyond that, Mozambique was plagued by the legacy of its nasty civil war in the shape of untold numbers of land mines that made it almost impossible to use a large part of the land. With all that, the US Government  was using scarce aid resources to organize tours of musicians? Talk about having your priorities all wrong.

Electricity for Africa

Well, now it looks as if we may be doing a bit better. While in Africa, President Obama announced a new “Power Africa” initiative aimed at funnelling US Government investments up to $ 7 bln into electric power generation and distribution. This significant amount will be matched by $ 9 bln to be provided by American corporations such as Symbion Power and General Electric. The program will target Nigeria, Liberia, Ghana, Tanzania, Kenya and Ethiopia.  

This is very good news for Africa. While the Continent is growing, it is a well known fact that lack of access to reliable and affordable electric power is probably the single biggest obstacle to economic development. It is intuitively obvious that  very little can be done without electricity. Besides, in most of Africa electricity comes and goes, with interruptions that may last for several hours, or even days.  And do keep in mind that in most countries, whatever electricity there is, distribution is usually limited to cities, with almost nothing going to rural areas.

Try and run even a small workshop –let alone a factory– without electricity. For this reason, most businesses in Africa have to invest in their own diesel powered generators. But this means a significant addition to total production costs, in countries that have low labor productivity to begin with. On top of that, African companies face other hurdles in terms of inefficient public services and inadequate to horrible roads. More reliable and reasonably priced electricity would go a long way to improve all that.

America finally stepping in

That said, what took so long? While China for decades has been unloading billions into Africa, sending there its companies, its banks and its people, America has been essentially absent when it comes to assistance targeted to economic development.

In fairness, America is in the lead among donors when it comes to fighting HIV-AIDS and supporting other health care programs. This massive amount of aid coming from America saved lives. Still, being alive but condemned to a life of ignorance and poverty is not such a great prospect.

Of course, America has what it takes in terms of know how and sizable multinational corporations that can make and support the right investments. Still, this combined $ 16 bln pledge is not that much. In most African countries 80% of the rural population has no power at all, while cities –and this includes factories, offices, government services, schools, hospitals– usually have inadequate electricity. 

First step?

My hope is that this “Power Africa” initiative launched by President Obama is just a first step, to be followed by a continuous American commitment –both Government and private sector– to Africa’s economic development. It is true that Africa is the last frontier. There are hundreds of million of potential producers and consumers eager to join the global economy. Still, without adequate infrastructure this will be a very, very long  journey.

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