The Energy Entrepreneur: A Remedy for Africa’s Energy Deficit
Africa’s energy needs can be met through vigorous STEM-driven entrepreneurship. To this end, a thriving entrepreneurial ecosystem is a precondition. To successfully create a thriving ecosystem, Africa needs short- and long-term strategic plans.
The short-term strategy must focus on the roles of national governments, regional economic alliances, and ultimately, a realignment of current educational systems. Addressing these variables should help foster the right climate for entrepreneurship success. The long-term strategic focus should be aligned to big ideas—dramatic and where practical collective continental undertakings to solve pressing economics needs buttressed by strong STEM education.
The African entrepreneur has survived on hacking nebulous networks of inefficiencies and regulatory hurdles. What is required now is a concerted effort supported by a new dynamic class of entrepreneurs committed to addressing the underlying causes and providing solutions to this enigma of energy deficit. And of course, a true commitment from governments to help level the undulating planes of African entrepreneurship.
Additionally, the current energy infrastructure or the lack of it thereof offers Africa unique opportunities to revamp to her energy sector. The current state of energy resources, akin to the pre-cellphone technology era which altered by the telecommunication landscape, presents Africa with a unique opportunity to develop a strong renewable energy basis. This state of affair offers Africa a clear advantage over the developed world where exorbitant switching costs and special-interests driven regulatory frameworks could stonewall adaptation of new energy technologies.
African entrepreneurs stand a good chance to develop basic power electronic systems that would augment current solar technologies. The continent enjoys copious amount of heat, persistent irradiance, and insolation which offers excellent opportunities for the development of thermos-and photovoltaic based technologies.
These advantages, if harnessed, could resolve the energy quagmire that continuously bedevils the African economic landscape. Figure 1 shows the key players in the energy independence landscape. It only in coalescing these divergent stakeholders around the entrepreneur that a successful ecosystem becomes practical.
Figure 1: The enablers of a viable entrepreneurial ecosystems for energy independence
Africa has severe energy deficits. Over 600 million people cannot access electricity. Small businesses heavily hit by rampant power outages are folding up. Industries are transitioning to gensets as operational utilities, while those who can afford a mix of renewable and grid-electricity are considering it or have switched. GDPs are taking a hit, while incumbent governments face electoral challenges and outright electoral defeat. It is a debilitating economic reality.
At the current rate of electricity installations, it will be 2080 before all Africans can enjoy energy access. The desperate quest for energy sufficiency unabatedly continuous. Industrial operational costs are being ceded to overburden consumers, trade imbalances have worsened, small business are folding up while frustrated electorates, polarized by conflicting energy policies, are challenging incumbency.
Despite these seemingly daunting energy deficits, Africa has the potential to satisfy her own energy needs. The Democratic Republic of Congo (DRC) alone possess 50% of the known hydro-electricity potential on the continent and could inject 300 gigawatts into the energy mix.
Between Mozambique, Nigeria, and Tanzania, an additional 400 gigawatts of gas-generated power (60% of total capacity) can be added to the energy mix. Botswana, Mozambique, and South Africa could add 300 gigawatts of coal capacity to the mix. Geothermal power from Kenya and Ethiopia could add 15 gigawatts while wind could add another 109 gigawatts.
The potential capacity for Solar PV on the continent is over 8 tetrawatts and remains largely unexploited but that is beginning to change. So why does Africa still experience persistent nights of darkness, energy-induced political polarization, and industrial meltdowns? The truth of the matter is that availability does not necessarily mean unfettered access. The origins of these paralyzing challenges perhaps lie in policy more than the wherewithal, or an interplay between these variables.
Africa’s ambitious industrial goals, teeming and youthful population with increasingly sophisticated tastes for the trappings of modernity, have driven the energy quest into political polarization. For instance, the politics of energy was core to the recent elections in Ghana.
To address her energy challenges and to transition away from over-reliance on fossil-fuel, there is need for immediate action. This action must have both short- and long-term strategic dispositions.
Doing business in Africa is a daunting task. Besides Mauritius, no other African country makes it to the top 20 slots on the World Bank Index on doing business. This must change. Such changes, however, occurring within individual African nations defeat the purpose of ensuring free flow of goods and ideas across boundaries. The short-term strategies must be multi-facetted. The role of national governments, regional economic alliances, financial institutions and effective STEM-driven education policies must be the pivots.
The Role of National Governments
African national governments must create a business-friendly regulatory environment for businesses to thrive. They must provide tax-incentives, grants, and entrepreneurship-friendly credits to enable a thriving entrepreneurial ecosystem. Currently, registering a business in most African countries is a nightmare.
Access to credit is an additional challenge that entrepreneurs must confront. Prevailing legal frameworks are not conducive to investors. These challenges are further compounded by intermittent electricity supplies that push operational costs up. Apart from Mauritius that performs in the first world tier, in terms of the business-friendly indexes, it is abysmal for most African countries.
Second, national governments must re-orient their educational institutions to address national imperatives. One of the major problem on the continent is that educational systems are not aligned to the real practical challenges at hand. African universities are churning out unemployable graduates.
The Role of Regional Economic Alliances
Fostering an entrepreneurial climate should not end within national boundaries. Africa’s teeming population is on the move, escaping economic scourge, political polarization or simply seeking greener pastures. There is, therefore, an opportunity to turn regional economic alliances into economic facilitators.
The continent’s numerous economic alliances, such as Economic Community of West African States (ECOWAS), Southern Africa Development Community (SADC), African Union (AU) and East African Community (EAC) should become practical avenues for strategic rethinking of African energy imperatives and enablers of policies that help entrepreneurs thrive.
Second, cross-border arrangements in term of co-investments and co-creation of solutions around energy-sharing opportunities should be explored. For instance, Ethiopia and Egypt can explore opportunities for strategic energy alliances in terms of joint investments, and co-creation of alternative energy resources both in hydro-electricity and geothermal along the Atbara and Nile rivers.
DRC and its neighbours could transition from belligerents into economic partners by tapping into the enormous hydro-electricity potential of the DRC. Ethiopia and Djibouti co-financed a hydro-electricity project that currently provides significant financial returns for Ethiopia while easing energy demands on Djibouti.
The Role of Pan-African Financial Institutions
African financial institutions are risk-averse. But they must do more. The African Development Bank can work in conjunction with financial institutions such as the World Bank to serve as guarantor for entrepreneurs to develop and market new energy technologies or to revamp strategic business models around renewable energy.
The Moroccan Agency for Solar Energy (MASEN) has recently undertaken a major investment in solar PV and would soon harness 38% per annum of its electricity needs from solar. This project and the successes it has chalked so far, can serve as a model for private-public partnerships in the energy sector for Africa.
Co-financing mechanisms between countries, or under auspices of existing economic alliances and frameworks, would lend itself readily to providing alternative entrepreneurial mechanisms. This approach would work by substantially reducing the financial burdens on already economically depressed African nations and help re-energize the entrepreneurial ecosystem.
In the medium-to-long-term, Africa needs a plan. That plan must be encapsulated within the umbrella of Africa’s “Big Idea.” In its totality, this idea must focus on solving the energy quagmire. Rallying resources both intellectual and financial around this locus perhaps could be the true beginning of the African industrial Revolution.
Throughout human history challenging times have often called for extraordinary measures to counter. For instance, the Manhattan Project marshalled trans-continental resources to address a real and imminent threat to the very foundations of Western civilizations. The response to this challenge not only ultimately preserved a civilization but also pushed the boundaries of knowledge in every field of human endeavour.
Perhaps, the first real movement of intellectual migrant labor was precipitated by this singular event. The likes of Leo Szilard, Enrico Fermi, Albert Einstein, and Niels Bohr, converged in a desperate quest to eliminate the Nazi war machine. The Post-war years also saw the movement of the likes of Wernher von Braum and Hans von Ohain and many others, who set the stage for America’s ultimate trip to the moon.
It is evident from the foregoing discussions that extraordinary measures often require extraordinary solutions. Africa needs a rally point and energy appears to be it. Collaborations across boundaries, aggregation of both continental and diasporeans intellectual horsepower, modernization of regulatory frameworks, incentivization of entrepreneurs could offer a new dawn for Africa’s quest for energy independence.