9 May 2014

Africa: Connected Solutions to Power, and Empower, Africa

Photo: World Economic Forum / Benedikt von Loebell
Africa Rising Discussion at the World Economic Forum on Africa in Abuja, Nigeria 2014.


Abuja — Roughly two out of three sub-Saharan Africans - around 600 million people - have no access to electricity. Incidentally, approximately the same number remain without a mobile subscription. What could this connote? That a majority of people remain underprivileged with no or minimal access to modern-day facilities, and this could prevent them from connecting with other African and global economies. Well, that's like saying the glass is half empty. Can we say that it's not even half full, so that so much more can be poured into this promising vessel called Africa?

According to the World Bank's Africa's Pulse survey, announced in April, economic growth in sub-Saharan Africa continues to rise from 4.7% in 2013 to a forecasted 5.2% in 2014, well above the projected global average of 3% in 2014. Makhtar Diop, the World Bank Group's vice-president for Africa, noted that many African countries now routinely figure among the world's fastest-growing countries. The World Bank estimated that net foreign direct investment (FDI) inflows to this region grew 16% to $43 billion in 2013. According to UNCTAD's 15th Global Investment Trends Monitor, published in January, global FDI inflows rose by 11% in 2013, to an estimated $1.46 trillion.

While this clearly shows that the increase in FDI inflow in the sub-Saharan region exceeded that of global FDI inflow, it constituted less than 3% of global FDI inflows in actual numbers. Developing Asia, attracting an estimated $406 billion in 2013, remained the largest host region in the world, hogging well over 27% of the world's FDI inflows.

So, what can sub-Saharan economies learn from these findings?

Taking into account all the aforementioned facts and findings, let's examine the potential for sub-Saharan economies. Firstly, it's a highly unsaturated market: improved supply and management of energy, plus better connectivity, have the potential to spur economic growth. The underdeveloped nature of the economy is part of what makes it so compelling.

Secondly, the sub-Saharan region may have a world-beating economic growth rate, but it still vies for a better share of FDI inflows.

Increased domestic consumption fuelled this growth, but more global investment should be attracted to “connect” with global players, and this means improving the existing set-up.

While sociopolitical factors can determine the economic attractiveness of a region, what really counts is the amount it invests in infrastructure. Besides advancing a physical framework for education, health, banking, roads, housing, sanitation and more, the sub-Saharan region needs to invest in powering (and empowering) itself.

In June last year, President Obama announced a new project called Power Africa, where he pledged more than $7 billion in financial support and promised to double the number of people with access to power in sub-Saharan Africa by adding more than 10,000 megawatts to its capacity for clean, efficient electricity generation. But adding capacity alone is not a sustainable power solution; management is important too.

We have seen developing nations such as India leapfrogging the technology trends. A similar jump is being observed in telecom preferences in Africa, and I believe something similar can happen in the case of power management, too. Conspicuous in developed economies, “smart grid” solutions have been successful in alleviating energy conservation woes. First-world technology companies will play an important role in the transformation of sub-Sahara - but only those with tried-and-tested knowledge of similar undertakings will be able to help.

The 48 countries in sub-Saharan Africa house roughly 900 million people.

The region's population growth outpaces any other in the world. It's time that adequate facilities and measures are built to support it. The partial telecommunications coverage needs to be addressed. Better connectivity would allow mobile payments, telemedicine, education through video-conferencing and, generally, better communications with the rest of the world.

A healthier, better educated and more connected population can generate the money needed to sustain and develop the infrastructure; they can contribute to sub-Sahara's economic growth, and keep Africa connected to the rest of the world.

Author: Prasad Kotikela is Head and Director of Telecom & BPO, Tech Mahindra.

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