The Energy Entrepreneur: A Remedy for Africa’s Energy Deficit

Prof. Fred McBagonluri LATEST

Africa’s energy needs can be met through vigorous STEM-driven (science, technology, engineering and mathematics) 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 lack thereof, offers Africa unique opportunities to revamp to its energy sector. The current state of energy resources, akin to the pre-mobile phone technology era which altered the telecommunication landscape, presents Africa with a unique opportunity to develop a strong renewable energy basis. This offers Africa a clear advantage over the developed world, where exorbitant switching costs and special interest-driven regulatory frameworks could stonewall the 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 amounts 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 is 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

The Problem

Africa has severe energy deficits. Over 600 million people cannot access electricity. Small businesses heavily hit by rampant power outages are closing down. Industries are transitioning to generators as operational utilities, while those who can afford a mix of renewable and grid electricity are considering or have switched to it. 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 installment, it would be 2080 before all Africans can enjoy energy access. The desperate quest for energy sufficiency is unabatedly continuous. Industrial operational costs are being ceded to overburdened consumers, trade imbalances have worsened, small businesses are closing down while frustrated electorates, polarized by conflicting energy policies, are challenging incumbent governments.

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 hydroelectricity 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 power could add another 109 gigawatts.

The potential capacity for solar photovoltaic (PV) power on the continent is over 8 terawatts 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 Africa’s energy challenges and to transition away from over-reliance on fossil fuel, there is a need for immediate action. This action must have both short- and long-term strategic dispositions.

Short-term Strategy

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. When such changes, however, occur within individual African nations, it defeats the purpose of ensuring the 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

Africa’s national governments must create a business-friendly regulatory environment so businesses can 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 which 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 problems 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 hydroelectricity and geothermal energy along the Atbara and Nile rivers.

DRC and its neighbours could transition from belligerents into economic partners by tapping into the enormous hydroelectricity potential of the DRC. Ethiopia and Djibouti co-financed a hydroelectricity 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 could soon harness 38% per annum of its electricity needs from solar power. This project, and the successes it has chalked up so far, can serve as a model for private-public partnerships in the energy sector for Africa.

Co-financing mechanisms between countries – or under the auspices of existing economic alliances and frameworks – could lend themselves 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.

Long-term Strategy

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 idea perhaps could be the true beginning of the African industrial revolution.

Throughout human history, challenging times have often called for extraordinary measures. For instance, the Manhattan Project marshalled transcontinental resources to address a real and imminent threat to the very foundations of western civilization. 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 labour 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, 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 diaspora intellectual manpower, modernization of regulatory frameworks and incentivization of entrepreneurs could offer a new dawn for Africa’s quest for energy independence.

Written by

Professor Fred McBagonluri is Dean of Engineering at Ashesi University College, Ghana. Prior to his appointment, he was Vice President of New Product Development at Joerns Healthcare, Arlington, Texas. He also held roles of increasing responsibilities for Fortune 500 companies in the US. He was Director of Research and Development and Director of IT at Siemens Healthcare. He was also World Wide Director Research and Development and subsequently Director of Market Development at Becton Dickinson and Co. Prof. McBagonluri holds MBA from the Massachusetts Institute of Technology and earned a PhD in Materials Engineering from the University of Dayton, Masters in Engineering Mechanics from Virginia Tech, and a Bachelors of Science in Manufacturing Engineering (Summa cum laude) from Central State University.