BlogBy John Rice
I see huge promise for growth in sub-Saharan Africa. The region is home to six of the 10 fastest growing economies in the world. A majority of Africans will belong to the middle class within a generation. There is enormous potential for development to accelerate rapidly.
Despite this potential, I remain struck by the contradictions and counterforces that are working against growth. Without electricity, clean water and basic healthcare, the talented people who will facilitate responsible, sustainable economic growth cannot do their job and may seek opportunities elsewhere. Nairobi, for example, is home to booming tech communities like iHub, which provides a base for start-ups and entrepreneurs to collaborate. Still, 60% of Nairobi's population lives in slums, lacking access to basic sanitation and electricity.
African companies are tackling many of these challenges. Afrisol Energy, a four-year-old Kenyan company, is looking to turn waste into fuel that can power Nairobi's slums and rural neighbourhoods. The bio-digesters it is developing will both alleviate sanitation problems and generate the electricity that will allow school children to read after dusk or clinics to refrigerate vaccines.
Afrisol's work is symbolic of the inventiveness and entrepreneurial spirit that drives people to overcome structural barriers and unlock growth potential. The company was one of the winners of an innovation challenge launched by GE and the US-Africa Development Foundation that awarded funding to businesses working to bring sustainable, renewable energy technologies to underserved markets. Afrisol was one of more than 150 entries, a fact that showcases how many African companies are innovating to solve the region's challenges – and a gaping power deficit is one of the biggest of all.
There are challenges. In sub-Saharan Africa, 74% of the population have no access to electricity. Power inefficiencies cost the region $3.2 billion annually in lost productivity, while consumption is only one-tenth of that found elsewhere in the developing world. This means that it takes an Ethiopian two years to consume the amount of energy an American or European uses in a matter of days.
African countries can build sustained and inclusive economic growth by increasing access to, and the reliability and affordability of, power. The good news is that governments are working more and more with businesses to make universal access to electricity a reality; initiatives like the deregulation of the energy sector in Nigeria are paving the way for more partnerships and a market-based environment that will attract private capital to supplement government investment.
My company, GE, is involved in several of these initiatives, pledging to jointly develop 10 gigawatts of incremental power with the Nigerian government over the next decade. To put this in context, the entire country presently has about 15 gigawatts of power connected to the grid to serve its population – only four of which are actually produced. Our commitment would increase the installed base by more than 60%, making access to electricity possible for millions more Nigerians. We are also committing to support projects in Ghana that will provide 1.3 gigawatts of additional power, and as one of the founding partners for the Power Africa Initiative, we committed to help bring online 5 gigawatts of additional electric generation capacity, in cooperation with the initiative's government and other private sector partners.
The opportunities for Africa to lift itself out of energy poverty are right in front of us. While grid infrastructures, where they do exist, are burdened with enormous demand and still leave 600 million Africans unserved, distributed power offers a solution. Distributed power systems can bring electricity to off-grid communities while improving waste management practices and minimizing greenhouse gas emissions.
Gas-to-power initiatives are another way to make power available to people who need it. Despite the region's gaping power deficit, it is endowed with over 400 TCF of gas reserves; Nigeria has among the largest gas reserves in the world. Bringing these stranded assets "online" will help meet the urgent demand for electricity and provide an alternative to diesel in low-income countries.
The barriers to powering communities and cities across the continent are increasingly becoming less physical, but more procedural. Technology solutions like virtual pipelines – which use compression technology to transport "containers" of natural gas – make it possible to take advantage of stranded gas resources long before physical pipelines are in place. We need to solve how to finance energy projects, how to agree to contracts more efficiently, and how to properly price gas once it is brought to market.
All of this takes both financial and human capital. When financial investments are connected with the best entrepreneurial talent on the continent, the kilowatts will flow to places they have never been before. Conversations about sustainable growth models, improving standards of living, and reducing wealth disparity will take on a new meaning, with demonstrable results. Governments, companies and the confluence of public and private capital will all be part of an equation in which the whole can be greater than the sum of the parts. This is a future that will no longer be limited to our imaginations, but that becomes a reality.
John Rice is Vice-Chairman and President & CEO, GE Global Growth & Operations