Historically oil, gas and coal have been the mainstay of the economies of Europe, the US, Japan and other members of Organisation of Economic Cooperation and Development (OECD). These energy resources, particularly oil, enabled them to reach and maintain their current levels of development and lifestyle. Many countries wishing to transform their economies and societies have tended to follow the line of fossil fuels.
However, many energy economists agree that the current oil-driven development is unsustainable due to several factors including dwindling global reserves, the impact of fossil fuel consumption on the planet, and the costs and security associated with the production and transportation of fossil energy.
The transportation and industrial sectors of many African countries – from Ghana to Tanzania to Zambia – rely on oil imports, and these countries spend a large proportion of their GDPs on oil. This has led to trade imbalances and debt.
For example, the debt incurred by the Tema Oil Refinery (TOR) in Ghana made it difficult for the company to import crude oil, leading to several shutdowns which affected economic activities across the country. The government of Ghana was forced to settle the arrears before TOR could lift crude into the country again.
These debts are linked to high global oil prices. The high prices mean that African oil-importers have to use their limited foreign exchange to compete with the likes of the US and China.
China’s demand for oil – which is expected to grow from 8 million barrels a day in 2010 to 17.5 million barrels a day by 2030 – coupled with demand from the likes of Argentina, Brazil, India, Turkey, and the OECD, means that competition for access to global oil reserves will increase. The increase in demand is likely to push up world energy prices over the medium term making it even harder for many African economies to remain competitive.
Africa in general, and sub-Saharan Africa in particular, remains one of the most energy-poor regions in the world. The continent accounts for more than a quarter of the 2.5 billion people globally who are without access to convenient, reliable and modern cooking technologies that can help meet their basic needs and support their economic development. Africa also accounts for the biggest share of the 1.6 billion people globally who are without electricity.
In 2008, a report by energy expert Anton Eberhard noted that Africa’s electricity infrastructure capacity remains the lowest in the world. Eberhard noted that the 48 sub-Saharan African countries with a combined population of over 800 million produced around the same amount of electricity as Spain’s population of 45 million.
Another report, authored by Vivian Foster for Africa Infrastructure Country Diagnostic, which studied business activities and energy infrastructure in 26 countries in sub-Saharan Africa found that “for an important subset of countries, power emerges as by far the most limiting factor, being cited by more than half of firms in more than half of countries as a major business obstacle”. The firms reported losing 5% of their sales as a result of frequent power outages. The figure rose to 20% for informal sector firms unable to afford backup generators. TaTEDO, a Tanzanian NGO, points out that more than 40% of agricultural products go to waste due to post-harvest losses and lack of appropriate energy to process or preserve them.
However, it is not only businesses that face energy challenges, households are also confronted with electricity problems. Only 16 African countries have a national electricity coverage of 20% or more and there is a huge gap in electricity accessibility between rural and urban areas.
In Tanzania, for instance, while about 12% of households in the country have electricity coverage, only 2% of those in rural areas – who make up 75% of the population – have access to electricity.
The IEA’s 2010 Energy Development Index which tracks progress in a country or a region’s transition to the use of modern fuels shows that sub-Saharan countries are not moving fast enough to tackle energy poverty and increase the use of modern fuels. According to the World Bank the more than 580 million Africans who are without access to modern forms of energy spend more than $10 billion annually buying low quality energy services such as kerosene, candles and firewood. Available figures indicate that death associated with the use of these services in Sub Sahara Africa is 400,000 per annum - Cuvilas.
The lack of electricity and other forms of modern energy mean that firewood and charcoal for cooking, and kerosene and candles for lighting, remain the primary source of energy in many households, and there is every indication that the dependence on low forms of energy is growing.
For instance, in 1986 about 66% of Zambia’s energy use came from woodfuel; by 2010, this figure had risen to 76%. Elsewhere, 92% of energy used in the DRC, 65% of Ghana’s energy, and over 92% of Ethiopia’s energy derives from combustible biomass, mostly woodfuel.
The use of charcoal, firewood, candles and kerosene as the dominant source of energy effectively classifies Africa as one of the least energy intensive economic regions, heavily constrained by both low quality of fuel type and low per capita energy.
While global attention has focused on the development of renewable energy resources as a way to promote sustainable development and contain the threat posed by climate change, progress in developing the Africa’s abundant renewable energy resources has been slow. Eberhard et al, for example, estimate that 93% of Africa’s hydropower potential remains idle.
But given the global demand and competition for fossil fuels, coupled with the associated price increase and debt burden for oil importing African countries, it is obvious that Africa cannot take the development path driven by fossil energy. Renewable energy, on the other hand, has the potential to help African countries invigorate their economies, wean themselves from dependence on fossil fuels and reduce the debt burden associated with oil importation.
Renewable energy can also help increase household access to modern energy services, reduce energy poverty, improve quality of life, empower women, create jobs and bridge urban-rural inequality. It has the potential to protect the environment, reduce natural resource conflicts (e.g. around firewood collection); slow down rural-urban migration and the associated urbanisation; and reduce carbon emissions.
The influential global energy outlook report prepared by BP suggests that the contribution of renewables to global energy growth will increase from 5% up to 2010 to 18% by 2030. But Africa’s share in terms of production and consumption of this growth is calculated to be very small.
There is therefore the need for African governments to begin working seriously with the private sector and other relevant bodies to aggressively develop the necessary policies, institutions and infrastructures to take advantage of Africa’s huge renewable energy resources. Efforts must also focus on addressing the human, financial and management capacity challenges associated with the renewable energy sector so as to the make the sector a catalyst for achieving economic growth, development and prosperity in Africa.
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