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Power crunch undermining Africa investment, growth

Chronic power shortages across Africa are undermining investment, industrial development and economic growth and keeping the poorest continent poor, said ministers and bankers at a financial summit ending on Thursday.
Longstanding shortages are being compounded by high oil prices with some countries who import oil products to generate power facing rolling blackouts to curb spending.
"Go around Africa today and you see the energy crisis, the impact on business," African Development Bank President Donald Kaberuka said at the bank's annual meetings in Burkina Faso.
Several schemes aim to build regional power grids to ensure reliable supplies and a spread of sources like hydropower and coal and oil stations in case of drought or fuel shortages.
But progress is slow, with generating capacity struggling to meet demand and much of rural Africa without mains electricity.
"All our teams, when they come to Africa, they do hear the concerns that power is really a big bottleneck," Sanjeev Gupta, assistant director of the International Monetary Fund's Africa Department, told Reuters.
He said energy intensity -- a measure of the electric power used per unit of economic output -- was rising in Africa, contrary to the trend in the rest of the world where increasing industrial efficiency is reducing energy intensity.
Poor power supplies prevent factories and other enterprises from growing as they have in other regions, delegates said.
They said poor power, phone and road services contributed to the "missing middle" -- referring to the fact Africa has a number of large conglomerates and millions of tiny businesses owned by families or individuals, but little in between.
The lack of middle-level enterprise compounds chronic unemployment in Africa, where economic growth of over 5% is due in part to high oil and commodities prices rather than job-creating industry.
"If we can get the required investments then power supply can be changed, must be changed, in a short space of time," South African Finance Minister Trevor Manuel told Reuters.
He said some textile firms who moved operations from South Africa to Malawi in the 1990s to take advantage of cheaper labour there were forced back by power blackouts.
"You can't get away from the fact that low cost, reliable energy is vital," Manuel said.
South Africa boasts power infrastructure far more advanced than most of the continent, but has experienced acute problems in recent months due to a shutdown at its single nuclear power station as well as crumbling aging power networks in cities.
South Africa's power giant Eskom, which has long produced some of the world's lowest-cost electricity, is involved in ambitious plans to rehabilitate the Inga hydropower station at the mouth of the mighty Congo river and build a huge new power station there that could meet much of Africa' energy demand.
But in addition to the logistical problems of building power stations in countries with poor roads and communications, and difficulties attracting investment dollars, environmental concerns can be a hurdle to some power projects.
Manuel said two hydropower projects in Uganda had been thwarted after environmentalists lobbied the World Bank.
"There are battles. Environmentalists don't like hydro schemes, don't like coal-burning thermal and hate nuclear. But they don't live in the dark themselves," he said.

Additional information:
News date: 19/05/2006

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