Africa: How Increased Energy Demand Can Grow Africa's Economy - Report

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12 November 2019

The African economy has the potential to grow fourfold, with energy demands expanding by only 50 per cent, a new report by the International Energy Agency (IEA) said on Tuesday.

The report was unveiled as part of activities to mark the first day of the second African Investment Forum in Johannesburg, South Africa.

The report, Africa Energy Outlook 2019, said the continent's future energy prospects look bright, but only if governments can shift to more renewable energy sources.

The new IEA report identified three factors that will determine Africa's future energy consumption pattern. They are Africa's growing population, the rapid increase in urbanization and industrialisation.

An analyst at IEA, Kieran McNamara, said in a statement that these would have "profound effects on Africa's energy mix and how the economy develops."

For the first time, the IEA conducted detailed modelling of the energy mix for 11 countries in Sub-Saharan Africa, namely Nigeria, Angola, South Africa, Democratic Republic of Congo, Kenya, Tanzania, Ethiopia, Côte d'Ivoire, Mozambique, and Senegal.

The projected energy mix needed for Africa, the report said will be very different from the current one, with countries moving away from biomass and fossil fuels to renewable sources of energy.

The IEA's analysis said about 600-million Africans have no access to electricity, although this has since 2013 improved.

"In order to start addressing the problem, we have to realise the scale of the emergency. And that data is extremely important. We have to be able to define the problem before we can actually address it," Acting Vice President of Power, Energy, Climate and Green Growth of the agency, Wale Shonibare, said.

Another IEA analyst, Tae-Yoon Kim, is quoted in the report as saying Africa also needs to radically increase its investment in power generation from the current $30 billion to $120 billion by 2040 if it is to achieve universal access to electricity.

"If countries on the continent do not change current policies on energy use, Africa will not achieve the African Development Bank's target of universal electricity by 2030," the report said.

The report was optimistic that with improved policies, Africa can see the continental economy expand four times with matching energy demand that is only 50 per cent greater than the current demand.

The African Development Bank and the IEA are participating in a high-level side event during the ongoing three-day African Investment Forum 2019 in Johannesburg, South Africa.

.Other participants included the European Commission, the African Union Commission and the African Energy Commission.

Discussions were based on the AfDB's "Light Up and Power Africa" strategy, through which the bank hopes to build knowledge of the African energy sector and assist in achieving universal access to electricity on the continent.

Governments, utilities, regulators and investors are expected to use knowledge garnered during the event to help grow energy sectors while reducing costs.

The availability of quality data will improve African countries' abilities to make informed energy policy decisions and to provide private investors with valuable market analysis.

Through the New Deal on Energy for Africa (NDEA), the Bank has positioned itself to lead Africa's energy transformation.

The NDEA is a partnership-driven effort launched in 2016, which aims to achieve universal access to electricity in Africa by 2025.

The Africa Investment Forum (AIF) provides a forum for projects sponsors and investors, borrowers, lenders, policymakers and public and private sector investors, to promote Africa's investment opportunities.

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