Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation

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Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
Eva Nilsson, Obert Hodzi,
Erkki Sutinen, Mika Kautonen,
Neema Komba & Liisa Laakso

Connecting
Africa
Perspectives for Energy,
Transport, Digitalisation
and Research &
Innovation

Ministry for Foreign
Affairs of Finland
Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
E.Nilsson, O.Hodzi, E.Sutinen, M.Kautonen,
N.Komba & L.Laakso, 2020.
Connecting Africa, 77 p. Ministry for Foreign
Affairs of Finland.

@Ministry for Foreign Affairs of Finland 2020.
This report can be downloaded through the home page
of the Ministry for Foreign Affairs:
https://um.fi

Contact: ALI-20@formin.fi

ISBN 978-952-281-673-3 (PDF)
ISBN 978-952-281-674-0 (Print)

Layout: Anna Kalso
Cover photo: Traffic and pedestrians, Lagos, Nigeria. Photo: Adedotun Ajibade, 2015.
Back cover photo: Internet available here, Nairobi, Kenya. Photo: Laura Rantanen, 2010.
Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
Preface
IN 2020, the Ministry for Foreign Affairs         These types of reports have an impor-
of Finland commissioned a development         tant role in strengthening evidence-ba-
policy related study on Africa’s connec-      sed decision-making. Last year the Mi-
tivity.                                       nistry for Foreign Affairs published two
    Development policy related studies        reports on Africa that sparked a lot of
are not academic research as such. The        interest in the wider public as well. The
authors are academically qualified re-        first deals with political and economic
searchers, however, and they base their       integration in Africa, and the second dis-
findings on academic studies. The Mi-         cusses megatrends in Africa. Similarly to
nistry for Foreign Affairs chooses aut-       them, the Ministry decided to publish on-
hors through a call for proposals orga-       line the current report, Connecting Africa
nized by UniPID, the Finnish University       - Perspectives for Digitalization, Energy,
Partnership for International Develop-        Transport and Research & Innovation.
ment, of the University of Jyväskylä.             The current Covid-19 pandemic crisis
    The group of researchers chosen to        highlights the importance of connecting
author the current report consisted of        Africa.
Ms. Eva Nilsson, PhD candidate at the             On behalf of the Ministry for Foreign
Hanken School of Economics, Dr. Obert         Affairs, I would like to thank the research
Hodzi at the University of Liverpool, Ms.     team and UniPID for an excellent report
Neema Komba, PhD candidate at the             and commendable cooperation. I hope
Hanken School of Economics, Professor         that this publication on Africa’s connec-
Erkki Sutinen at the University of Turku,     tivity finds its way into the hands of an
Dr. Mika Kautonen at Tampere University       interested readership that can put it to
and Dr. Liisa Laakso at the Nordic Africa     good use.
Institute.
    The report focuses on Africa’s connec-
tivity in the sectors of energy, transport,
digitalization and research & innovation.     At the Ministry for Foreign Affairs
Each chapter includes a summary, an           on 24 July 2020
overview of the sector, an overview of the
policy and investment environment, and        Martti Eirola
recommendations for Finland and the EU.       Senior Adviser on Africa Policy
Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
Contents
Introduction.................................................................................................4
  References..............................................................................................................9

ENERGY CONNECTIVITY..................................................................................10
  Summary................................................................................................................11
  Current understanding of energy connectivity in Africa.........................................12
  Policy and investment environment of energy connectivity...................................17
  Recommendations for Finland and the EU for supporting sustainable
  energy connectivity................................................................................................20
  References..............................................................................................................22

TRANSPORT CONNECTIVITY............................................................................24
  Summary................................................................................................................25
  Current understanding of transport connectivity in Africa.....................................26
    Road transport....................................................................................................28
    Rail transport......................................................................................................29
    Air transport.......................................................................................................30
    Sea transport......................................................................................................32
  The policy and investment environment of transport connectivity........................36
  Recommendations for Finland and the EU related to supporting
  transport connectivity............................................................................................38
  References..............................................................................................................40

DIGITAL CONNECTIVITY..................................................................................42
  Summary................................................................................................................43
  Current understanding of digital connectivity in Africa.........................................44
  The policy and investment environment of digital connectivity.............................49
  Recommendations for Finland and the EU related to supporting
  digital connectivity................................................................................................52
  References..............................................................................................................56

RESEARCH AND INNOVATION CONNECTIVITY...................................................58
  Summary................................................................................................................59
  Current understanding of research and innovation connectivity in Africa.............60
    Higher education................................................................................................61
    Research and innovation.....................................................................................63
  Policy and investment environment of research and innovation connectivity.......66
  Recommendations for Finland and the EU to support research and
  innovation connectivity..........................................................................................68
  References..............................................................................................................70

Concluding words..........................................................................................72
  The Covid-19 pandemic and connectivity...............................................................74
  References..............................................................................................................75

Author Bios...................................................................................................76
Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
4   CONNECTING AFRICA – INTRODUCTION

                                 Introduction
                                                                 Obert Hodzi & Eva Nilsson

    THIS STUDY ANALYSES the potential of                    its Belt and Road Initiative (BRI). Eu-                     The levels of connectivity in Africa
    improving connectivity, both in Africa                  rope and Asia have agreed on a common                    vary. Although some areas – mostly ci-
    and between Africa and Europe. As so-                   understanding of connectivity which                      ties such as Johannesburg, Lagos and
    cieties across the globe depend on flows                emphasises mutual interests in bringing                  Mombasa – are globally connected, the
    of goods, services, people and capital,                 countries, people and societies closer                   overall picture is that, based on global
    networks that enable these flows – tran-                while narrowing varying gaps in levels of                measures, connectivity in sub-Saharan
    sport, logistics, communications, and                   access, development and capacities. In                   Africa is still low. As the African popu-
    electricity networks – have become cru-                 Europe–Asia engagement, the principles                   lation is growing quickly, the need for
    cial for the global economy and an essen-               of free and open trade, free markets, in-                investments to improve connectivity
    tial part of world politics. In addition to             clusiveness, fairness, transparency, fi-                 is even more pressing. However, as it
    physical infrastructure, regulatory fra-                nancial viability, cost-effectiveness and                stands, current investment levels lag be-
    meworks, standards and policies related                 sustainability underpin connectivity                     hind population growth. Because of that,
    to connectivity are constantly in the ma-               (ASEM, 2017).                                            for instance, even though internet speed
    king in all parts of the world, including                   In this study, we seek to unders-                    has increased and the cost of access to
    Africa.                                                 tand how connectivity within Africa and                  the internet has decreased, the propor-
       In social science research, conne-                   between Africa and the rest of the world                 tion of people connected to a fixed broad-
    ctivity has become synonymous with                      has progressed and how it can further                    band connection has decreased in Africa.
    networks and a common proxy for                         improve in an environmentally, economi-                  Only about 40 per cent of the population
    measuring the intensity of globalisation.               cally, fiscally and socially just and sus-               in Africa have access to 4G networks, and
    Broadly, connectivity describes how dif-                tainable manner. No region can improve                   the mobile internet penetration was, as
    ferent nodes – such as cities, ports and                its connectivity alone – connectivity en-                of 2018, merely 24 per cent. However,
    people – are networked physically and                   capsulates cooperation and mutual ef-                    while mobile subscriptions are showing
    virtually (Castells, 2010). Connectivity                fort, thus, we provide recommendations                   a stabilising trend, fixed connections are
    can be ‘formal’ or ‘informal’, the latter               regarding the role that Finland and Eu-                  on the increase. Undersea cable connec-
    encompassing common activities in the                   rope can play alongside African countries                tions are developing fast and terrestrial
    informal sector and illegal forms of con-               to enhance their connectivity. We focus                  cables connect countries to each other
    nectivity, such as illicit financial flows              on connectivity in the sectors of energy,                better.
    or drug trade (e.g. the Organisation for                transport, digitalization, and research                     Essential to enhancing connectivity
    Economic Co-operation and Development                   and innovation. Our underlying assump-                   is energy supply. In Africa, per capita
    [OECD], 2018). Connectivity, except in                  tion is that greater connectivity is a pre-              electricity consumption is rising by 4–6
    its illegal and illicit forms, potentially              requisite for enhancing Africa’s role in                 per cent annually. However, 645 million
    fosters integration, peace and prosperity.              the fourth industrial revolution,1 as well               people still lack access to electricity, and
       Connectivity has become a common                     as leading to economic development and                   80 per cent rely on fuelwood and charcoal
    concept in world politics, especially in                prosperity on the continent.                             for domestic heating and cooking. The
    relation to Chinese foreign policy and                                                                           implication is that Africa is behind other

    1 The fourth industrial revolution refers to technology-driven change in which new digital technologies, such as artificial intelligence, become embedded within
    societies and create entirely new capabilities for people and machines.
Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
CONNECTING AFRICA – INTRODUCTION          5

regions and, by 2040, an estimated 90
per cent of the global population without
access to electricity will be concentrated
in sub-Saharan Africa (IEA, 2019). Based
on the current levels, it will take sub-Sa-                     We focus on connectivity in the
haran Africa until 2080 for its entire
population to have universal access – it                          sectors of transport, energy,
would mean considerable investments in
energy infrastructure (of about US$43–                            digitalisation, and research
55 billion annually) to reach universal
access by 2040 (UNEP, 2017). Currently,                           and innovation. Our under-
Africa relies heavily on fossil fuels for
its energy needs. However, a push to in-                       lying assumption is that greater
crease Africa’s energy connectivity offers
great potential to transform the conti-                        connectivity is a prerequisite for
nent’s countries into low-carbon econo-
mies.                                                        enhancing Africa’s role in the fourth
    Transport infrastructure is crucial to
realising regional integration and the                          industrial revolution, as well as
meaningful engagement of Africa within
the global production chain. Despite sig-                     leading to economic development
nificant investments in road infrastruc-
ture, more than half of Africa’s roads are                     and prosperity on the continent.
unpaved and less than half of the rural
population has access to an all-seasons
road. In addition, the rail network is eit-
her dilapidated or non-existent while Af-
rica’s air transport industry is the smal-              Domestic Product (GDP) stands at only                   innovation hubs. For these, affordable
lest in the world. The effects of COVID-19              about 0.5 per cent compared with the                    shared office space, fast internet conne-
have extinguished prospects of growth                   world average of 2.2 per cent. Fortuna-                 ctions and reliable electricity, which are
in the aviation industry, as had been                   tely, the number of higher education                    still in short supply in Africa, are crucial.
projected by PricewaterhouseCoopers.                    institutions (HEIs) has grown rapidly.                      The pressure to develop the infra-
Furthermore, reflecting its participa-                  However, the quality of higher education                structure essential to enhancing Africa’s
tion level in the global production and                 has not grown in the same pace. The                     connectivity has resulted in some Afri-
supply chains, Africa has a two per cent                student-to-teacher ratio, research capa-                can countries being heavily indebted.
share of the global container port traffic.             city and basic infrastructure are serious               African governments have financed over
Nonetheless, growth in trade relations                  concerns all over the continent. While                  40 per cent of their own infrastructure
with China has led to the construction                  there are a number of graduates from                    needs. They have contracted debt from
and refurbishment of port facilities in                 HEIs that become unemployed, there are                  international debt markets (in particu-
Djibouti, Mombasa, Dar es Salaam and                    shortages of skilled labour in the fields               lar, Eurobond issuance), domestic mar-
other regions – significantly connecting                of engineering, science, agriculture and                kets, multilateral institutions and va-
Africa with its commodities markets in                  health in particular.                                   rious countries. According to the World
China and, to a lesser extent, India. In                   A positive trend is that there has been              Bank’s Global Economic Prospects, the
sum, Africa’s transport connectivity re-                a boom of the start-up culture in several               average debt-to-GDP ratio in Africa was
mains challenging due to the lack of inf-               entrepreneurial and innovative hotspots                 61.3 per cent as of 2019. Even with these
rastructure, and adequately harmonised                  in Africa. In 2010, there were altogether               huge debt burdens, the continent’s inf-
and standardised transport policies and                 only about USD 20 million venture ca-                   rastructure financing gap is approxima-
regulations.                                            pital (VC) investments to Africa – nine                 tely US$68–108 billion annually2 (ICA,
    Against this picture, Africa’s gross                years later the estimation is that this                 2017). The huge infrastructure gap in the
expenditure on research and develop-                    figure will be as high as USD 1.5 billion.              continent means that support from exter-
ment (R&D) as a proportion of Gross                     In parallel, there has been a boom of                   nal partners such as the Infrastructure

2 Calculations about the financing gap vary. The Infrastructure Consortium of Africa has estimated the gap to in the USD 53–93 billion range and the Brookings
Institution has pointed to research that argues that, if public spending on infrastructure was managed better and accompanied by policy and institutional reforms,
the financing needs would drop significantly (Devarajan, Gill, & Karakulah, 2019).
Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
6   CONNECTING AFRICA – INTRODUCTION

                                                                                                                                                             IHUB
             Youth working at the innovation space iHub in Nairobi, Kenya.

    Consortium for Africa members3 is im-                  & Senbet, 2019). In 2018, China com-                   Chinese embassy in Ethiopia posted on
    perative. For example, in 2019, exter-                 mitted US$25.7 billion, which constitutes              its website in July 2018 that ‘the intensi-
    nal partners funded 22.8 per cent of the               26 per cent of the total of US$100.8 bil-              fying repayment risks from the Ethiopian
    projects, while most of government-fun-                lion committed to Africa’s infrastructure              government’s debt reaching 59 percent of
    ded projects in Africa relate to transport             programmes in 2018. Although this is                   GDP is worrying investors’. Angola owes
    (55.3%) and energy (20.4%) (Deloitte,                  welcome, there are growing concerns over               China about US$21.5 billion, which is half
    2019, p. 6). In addition, emerging infra-              the increased indebtedness of some Afri-               of its external debt. Djibouti owes 59 per
    structure development partners, such as                can countries and their over-dependence                cent of its external debt to China. As a
    China and India, have increasingly pro-                on China. Already, Kenya and Ethiopia                  result, US senators warned that African
    vided considerable alternative financing               have had to request rescheduling of their              countries, such as Djibouti and Zambia,
    for Africa’s infrastructure development.               loans from China. Kenya got Chinese                    risk losing strategic national assets to
       In particular, China has been Africa’s              loans to fund the Mombasa–Nairobi Stan-                China over such un-serviced loans. Alt-
    major bilateral lender, external funder                dard Gauge Railway, which cost appro-                  hough, there is little evidence to suggest
    and constructor of key infrastructure                  ximately US$3.3 billion, while Ethiopia                that it would be the case, this is a wor-
    (such as railways, roads, power plants                 got US$4.3 billion for the Addis Ababa                 rying concern.
    and ports) in Africa (Coulibaly, Gandhi,               Railway. According to media reports, the

    3 Infrastructure Consortium for Africa members include: Canada, France, Germany, Italy, Japan, the UK, the US, South Africa, the AfDB, the EC, the European
    Investment Bank, the European Union and the World Bank Group.
Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
CONNECTING AFRICA – INTRODUCTION   7

                                                                                                                                   Grand Ethiopian Renaissance Dam, which
                                                                                                                                   will be the largest hydroelectric dam in
                                                                                                                                   Africa, have stalled due to disputes with
                                                                                                                                   Egypt.
                                                                                                                                      At the continental level, the AU is
     Within Africa, geopolitical consid-                                                                                           committed to improving connectivity as
                                                                                                                                   espoused in Agenda 2063 and through
     erations also affect integration and                                                                                          the Programme for Infrastructure Deve-
                                                                                                                                   lopment of Africa (PIDA). PIDA is focu-
      connectivity between countries.                                                                                              sed on improving African infrastructure
                                                                                                                                   and improving regional interconnecti-
                                                                                                                                   vity. In addition, the African Develop-
                                                                                                                                   ment Bank (AfDB) is hosting the Inf-
                                                                                                                                   rastructure Investment Consortium,
   In response to the debt-trap allega-        Failures to agree on funding and imple-                                             which aims to coordinate efforts made
tions, China announced that it would ad-       mentation mechanisms also derail criti-                                             towards improving infrastructure in Af-
just its overseas development lending in       cal infrastructure projects, particularly                                           rica, and the AFRICA50 investment fund.
order that will be more sustainable. Howe-     the Trans-African Highway network, a                                                AFRICA50 funds national and regional
ver, at the core of this crisis of bilateral   network of transcontinental highway inf-                                            projects, mostly energy and transport
debt in Africa is the absence of standard      rastructure development projects conne-                                             projects. On the sub-regional level, Af-
lending practices, particularly between        cting African cities, which still has mis-                                          rica’s Regional Economic Communities
OECD countries and emerging actors like        sing links. In addition, despite Africa’s                                           (RECs) have some parts of key regional
China. Trilateral cooperation between, for     energy needs, projects such as Ethiopia’s                                           transport and energy corridors missing,
instance, the European Union (EU), China
and Africa may go a long way in creating
uniform working conditions.
   Although, both the traditional and
emerging development partners agree
on the need to enhance Africa’s conne-
ctivity, their motivations and strategies                                           FIGURE 1: REGIONAL AND CONTINENTAL
for achieving that connectivity vary. The                                           INFRASTRUCTURE PROJECTS BY THE AU 2012–2019.
World Bank (2019) noted that ‘while there
                                                                                    ECCAS=Economic Community of Central African States, COMESA=Common
is little controversy over the resources                                            Market for Eastern and Southern Africa, EAC=East African Community, ECO-
that need to be invested in connectivity,                                           WAS=Economic Community of West African States, IGAD=Intergovernmental
there are varying expectations of what                                              Authority on Development, SADC=Southern African Development Community,
                                                                                    AMU/UMA=Arab Maghreb Union
connectivity is intended to achieve’. This
is partly because connectivity ‘influen-
                                                                                    SOURCE: AU-PIDA (2019).
ces the distribution of power between
the connected parties, be it regions, ci-
ties, firms or communities’ (World Bank,
                                                                                    100
2019). The African Union (AU) regards
                                                   Number of projects implemented

connectivity as essential to continental
                                                                                     75
political and economic integration, and a
necessary step to enhancing Africa’s role
in global governance. On the other hand,                                             50
China’s BRI aims at enhancing China’s
connection with the rest of the world –                                              25
to its advantage. Thus, geopolitical and
strategic considerations within Africa                                                0
and between Africa’s external partners
                                                                                             Continental

                                                                                                           ECCAS

                                                                                                                   COMESA

                                                                                                                             EAC

                                                                                                                                      ECOWAS

                                                                                                                                                  IGAD

                                                                                                                                                              SADC

                                                                                                                                                                       AMU/UMA

often underpin connectivity in Africa.
   Within Africa, geopolitical conside-
rations also affect integration and con-
nectivity between countries. Support for
continental and regional projects seems                                                    Energy Subtotal                  ICT Subtotal                 Transport Subtotal
to be dependent on national interests.
Connecting Africa Perspectives for Energy, Transport, Digitalisation and Research & Innovation
8   CONNECTING AFRICA – INTRODUCTION

                                 Improved connectivity could have
                                   huge development impacts.

    hence cross-border energy trade is still      wind energy to meet its energy needs.            Furthermore, most of the loans from
    very limited. In addition, there are a lack   Large hydro dams, prioritised across Af-     China have economic conditions tied
    of policies that aim to increase regional     rica as a source of electrification, have    to them – especially that the materials
    connectivity and remove obstacles (such       proven to have massive negative environ-     should be procured in China. Some of the
    as visa restrictions) in order to enable      mental and social impacts. As a result,      loan conditions attached to Chinese loans
    unhindered cross-border movements by          due to limited sources of energy, Africa     are secretive, thus making it even more
    people and goods. Largely, the harmoni-       lags behind the global move toward ele-      difficult for open competitive bidding for
    sation of policies might remain unresol-      ctric vehicles.                              projects. Beyond the construction of new
    ved because the membership of most                The business environment in Africa       infrastructure, the focus should also be
    RECs, especially the Economic Commu-          is among the world’s most cumbersome.        on the maintenance of the existing infra-
    nity of Central African States (ECCAS),       Among the bottom 20 economies rated          structure. For that, Africa has to improve
    comprise of low-income and middle-in-         according to the ease of doing business,     its tax revenues, increase foreign equity
    come countries, as well as fragile states     12 are in sub-Saharan Africa (World Bank,    investments and improve the sustaina-
    and landlocked states – hence they face       2020). The investment and business en-       bility of existing infrastructure. This will
    challenges in accommodating the inte-         vironment related to connectivity varies     reduce the dependence of Africa on bila-
    rests of all parties.                         from country to country and region to        teral debt from gigantic projects that are
       Of all the continents, Africa will pro-    region. Renewable energy markets have,       unprofitable.
    bably be the one that is most affected        for example, been open to foreign inves-         Improved connectivity could have
    by climate change. Already, floods and        tors in Kenya whereas some countries,        huge development impacts. Access to
    droughts have left millions of Africans in    such as Ghana, have long-term power          reliable electricity would change the
    financial and food distress. That means       purchase agreements (PPAs) with fos-         lives of more than 600 million people
    transport, energy and digital infrastruc-     sil fuel–based independent power pro-        who currently lack such access. Better
    ture development projects require consi-      ducers. The bidding process of many inf-     transport infrastructure could improve
    derable environmental assessment. This        rastructure projects is less competitive     intra-African trade and lead to domestic
    has been a challenge for African states.      and, according to some analysts, favour      manufacturing and more diversified eco-
    Environmental and climate change con-         Chinese firms (Dezenski, 2020). State of-    nomies. The further development of di-
    sideration have often come second. For        ficials partly influence the projects from   gital services that also serve low-income
    instance, in Kenya, environmentalists         their inception stage. Thus, according to    earners could have immense impacts on
    have denounced the Mombasa-Nairobi            European International Contractors, Chi-     financial inclusion, access to electricity
    railway for endangering wildlife and their    nese firms undercut their competition by     and access to markets, to name but a few
    natural habitat. In addition, to meet its     at least 20 per cent. They are able to do    impacts. A more connected research and
    energy needs, some African countries re-      so because they get subsidies from the       education sector would increase people-
    main focused on fossil fuels, with limited    Chinese government and considerable          to-people exchanges of knowledge and
    transition to sustainable renewable           preferential treatment from African go-      assist mutual learning, equality and par-
    energy (such as solar, wind, thermal          vernments who are keen on maintaining        tnership building.
    and small hydro energy). Ethiopia is a        cordial bilateral relations with China.
    leading example of a country harnessing
CONNECTING AFRICA – INTRODUCTION    9

                             References
African Development Bank. (2020). African economic outlook 2020. Abidjan: African Development Bank.

Asia-Europe Meeting. (2017). ASEM foreign ministers’ meeting: Strengthening partnership for peace and development, Novem-
ber 2017, Myanmar. Annex I.

Castells, M. (2010). The rise of the network society. Cambridge: Massachusetts Blackwell Publishing.

Coulibaly, S. B., Gandhi, D, & Senbet, L. W. (2019). Is sub-Saharan Africa facing another systemic sovereign debt crisis? Africa
Growth Initiative. Washington DC: Brookings Institution.

Deloitte. (2019). Capital projects in a digital age: Africa construction trends report 2019. Johannesburg, South Africa: Deloitte.

Dezenski, E. K. (2020). Below the belt and road: Corruption and illicit dealings in China’s global infrastructure. Washington,
DC: FDD Press.

Infrastructure Consortium of Africa. (2017). Infrastructure financing trends in Africa – 2017. ICA, African Development Bank.

Organisation for Economic Cooperation and Development. (2018). Illicit financial flows: The economy of illicit trade in West
Africa. Paris: OECD Publishing.

United Nations Confederation on Trade and Development. (2020). World economic situation and prospects 2020. New York:
United Nations.

United Nations Economic Commission for Africa. (2020). Policy brief: Impact of COVID-19 in Africa. Addis Ababa, Ethiopia:
United Nations.

World Bank. (2019). Doing business 2020. Washington, DC: World Bank.
10   CONNECTING AFRICA – ENERGY CONNECTIVITY

     01

     ENERGY
     CONNECTIVITY
     Eva Nilsson1

     1 Eva Nilsson is a PhD candidate at the Hanken School of Economics, Finland. She wishes to thank Joni Karjalainen from Finland Futures Research Centre and
     Stephen Karekezi, Director of the Energy, Environment and Development Network for Africa, for their insightful comments and suggestions for this chapter.
CONNECTING AFRICA – ENERGY CONNECTIVITY      11

          Summary

THIS CHAPTER DESCRIBES how energy in            have had most growth in the past years.
Africa is generated and how people have         Despite its huge potential, renewable en-
access to energy and electricity. It anal-      ergy only covers slightly over 20 per cent
yses the possibilities for African coun-        of the total electricity generation capac-
tries to transform to zero-carbon econ-         ity. However, investment into renewable
omies and to reach universal access to          energy is growing fast, especially into
electricity.                                    solar photovoltaic (PV) energy. Small-
    Africa is rich in energy sources but        scale and off-grid solar solutions have
faces an energy crisis. It produces about       increased rapidly in East Africa and are
nine per cent of the world’s oil, six per       now expanding to West Africa, with pri-
cent of the world’s natural gas and four        vate investors playing a pivotal role. Most
per cent of the world’s coal. It also pro-      of the continent’s renewable energy in-
duces about 18 per cent of the world’s          vestments take place in South Africa. In
uranium for nuclear power. One country,         addition, Kenya is among the forerunners
the Democratic Republic of Congo (DRC),         in having both large-scale and small-
provides more than 70 per cent of the           scale renewable energy that powers the
world’s cobalt for batteries in electronic      grid and off-grid areas.
appliances that are needed for a green              African countries are the main inves-
energy transition.                              tors in their own infrastructure. The in-
    While Africa is an important exporter       vestments are normally financed by loans
to global energy markets, approximately         and, in past years, especially China has
half of the population in sub-Saharan           emerged as a key lender to African energy
Africa still lack access to electricity and     infrastructure markets. In addition, other
more than 80 per cent of the popula-            foreign actors – such as the US and mul-
tion rely on traditional uses of biomass,       tilateral institutions like the African De-
mainly fuelwood and charcoal, for cook-         velopment Bank (AfDB), the World Bank
ing. Businesses and households that are         and the EU – have increased their efforts
connected to the grid suffer from its un-       in building energy infrastructure and
reliability and regular power cuts.             reaching universal access to electricity.
    In all of Africa, fossil energy is by far   China operates in many large hydropower
the largest source for electricity gener-       projects, the US prioritises natural gas
ation and large hydro and natural gas           and the EU emphasises renewable energy.
12   CONNECTING AFRICA – ENERGY CONNECTIVITY

           Current
      understanding of
     energy connectivity
          in Africa

     THERE ARE LARGE variations in access to      and more than 80 per cent of the popu-       to electricity, while the respective per-
     electricity across the African continent,    lation rely on traditional uses of biomass   centage for urban communities is above
     between countries and between urban          (mainly fuelwood and charcoal) for cook-     70 per cent (IEA, 2019). Worst off are
     and rural areas. North African countries     ing, drying and heating (IEA, 2019b).        women living in rural areas as they are
     have achieved universal access to elec-      The average electricity consumption rate     usually the ones who provide households
     tricity and non-solid cooking fuel. South    of sub-Saharan Africa, excluding South       with energy through gathering fuelwood
     Africa is the only country in sub-Saharan    Africa, is only about 150 KWh/capita         or paying for energy for cooking, lighting
     Africa with rates close to those in North    per year compared to a global average        and heating. The poorest households are
     Africa. The lowest levels of access are in   of 7,000 KWh. Power is inaccessible, un-     estimated to spend USD 10 billion annu-
     rural communities in the Central African     affordable and unreliable for most peo-      ally on charcoal, candles, firewood and
     region (6%) and several countries across     ple. Only 34 per cent of hospitals have      kerosene (UNEP, 2017). In addition, the
     the continent, such as Zambia, Soma-         reliable electricity access and about        fuelwood or charcoal used for cooking is
     lia and Liberia, have a rural access rate    58 per cent of health facilities have no     unsafe and polluting, and has significant
     below five per cent (International Energy    electricity at all. Human muscle power is    health effects, especially on women. Each
     Agency [IEA], 2019b).                        the major energy source for agriculture      year approximately 600,000 Africans die
         In sub-Saharan Africa, more than 645     (UNEP, 2017). On average, only 26 per        of household air pollution (UNEP, 2017).
     million people lack access to electricity    cent of rural communities have access
CONNECTING AFRICA – ENERGY CONNECTIVITY                                          13

    According to estimates, 90 per cent

                                                                                                                                       RUSSELL WATKINS/DEPARTMENT FOR INTERNATIONAL DEVELOPMENT
of the global population without access
to electricity will be concentrated in
 sub-Saharan Africa by 2040 (IEA, 2019),
and it will take until 2080 before full ac-
cess is reached at the current pace (UNEP,
2017). Solving the energy crises there-
fore requires considerable investments
in energy infrastructure. Despite some
progress made, current and planned
efforts to provide access to energy ser-
vices barely outpace the fast population
growth on the continent. Reaching uni-
versal electricity access by 2040 would
require tripling the average number of
people gaining access every year from
around 20 million today to over 60 mil-
lion people. Against the current $8–9.2
billion, an estimated US$43–55 billion is
needed annually in new investment until
2030–2040 in order to meet the total            A shop called Off-grid electric near Arusha, Tanzania.
investment needs in the energy sector
(UNEP, 2017). The IEA estimates that
grid extension and densification would        generator power is a necessary cost of          Research also shows that where grid
be the least costly option for nearly 45      doing business in any sector, ranging       power is accessible, many low-income
per cent of the population gaining access     from heavy industries to banks and mo-      households still cannot afford to be con-
by 2030, mini-grids for 30 per cent and       bile-phone companies. Of the businesses     nected and pay for electricity. Because
stand-alone home systems for about 25         in Kenya and Tanzania, 57 and 42 per        of this, millions of people in Africa are
per cent (IEA, 2019a).                        cent respectively own their own genera-     living ‘under the grid’, meaning that they
    Where grid power is accessible, it is     tions. On average, generator power is at    could be connected to the main grid but
often unreliable. More than 30 coun-          least four times the price of grid power.   they are not. Only considering Nigeria,
tries in sub-Saharan Africa experience        Because of large energy costs, African      Kenya, Tanzania, Ghana and Liberia, 95
regular power shortages. Installed grid-      markets are uncompetitive with many         million people are estimated to live in
based capacity is around 90 GW and, at        businesses that operate in other parts of   under-the-grid areas (Leo et al., 2014).
any one time, as much as one quarter of       the world (McKinsey & Company, 2015).       Research shows that reasons behind
that capacity is not operational (UNEP,                                                   this are that connection charges are too
2017). Electricity is cut about six times                                                 high, the connection process is long and
per month for about 5.5 hours at a time                                                   complicated, poor households have too
(Trimble et al., 2016). These shortages            Where grid                             low-income levels to afford meaningful
could cost African economies 2–4 per                                                      electricity consumption, income flows
cent of GDP annually and more than 70            power is acces-                          are irregular, housing quality is poor
per cent of businesses in sub-Saharan Af-                                                 and the electricity service is unreliable
rica identify unreliable power as a major        sible, it is often                       (Blimpo & Cosgrove-Davies, 2019). Con-
constraint for growth (APP, 2015; AfDB,                                                   necting people living under the grid
2015). Due to unreliable electricity, busi-        unreliable.                            would be a low-hanging fruit in regard to
nesses and well-off households own die-                                                   reaching universal energy access.
sel fuel–powered generators. Paying for
14   CONNECTING AFRICA – ENERGY CONNECTIVITY

     FIGURE 1:
     ACCESS TO ELECTRICITY
     (% OF POPULATION) 2018
     SOURCE: WORLD BANK, SUSTAINABLE
     ENERGY FOR ALL (SE4ALL) DATABASE.

                           < 20

                           20 – 25

                           25 – 50

                           50 – 75

                           > 75

                           No Data

     Africa’s per capita energy consumption       gas have seen the most growth in recent         Political will for large hydropower
     is rising. A significant factor behind the   years (BNEF, 2020). Within the past dec-     seems evident despite rises in hydro-
     rise of energy consumption is Africa’s       ade, large liquefied natural gas discov-     power prices compared to solar and
     rapid population growth coupled with         eries have been made, for example, in        wind energy. The AU’s Programme for
     rapid urbanisation. Residential demand       Mozambique, Tanzania and Ghana. Coal         Infrastructure Development in Africa
     is growing at a 5.6 per cent annual rate     is heavily present in South Africa, but      has identified several dams as priority
     and industrial demand is growing at a 4.1    recently, new plants have been opened        projects for increasing continental con-
     per cent annual rate (McKinsey & Com-        in Niger and Senegal. Renewable sources      nectivity, of which some are underway
     pany, 2015). Fossil energy is by far the     account for about 23 per cent of total in-   and others are being planned. In addi-
     largest source for electricity generation    stalled electricity capacity (Res4Africa,    tion, the AU’s Agenda 2063 identified the
     (AFREC, 2019). There is steady invest-       2018). Calculations about the share of       Grand Inga Dam project on the Congo
     ment into numerous gas, coal and large       renewable energy vary depending on           River as one of its high priorities. This
     hydro projects that are being planned        whether large hydro projects are included    dam, if realised, will be the world’s larg-
     across the continent, and large hydro and    or not.                                      est hydro power plant.
CONNECTING AFRICA – ENERGY CONNECTIVITY       15

       FIGURE 2: POWER GENERATION CAPACITY ADDITIONS
       BY SOURCE IN SUB-SAHARAN AFRICA 2009–2018.
       SOURCE: BNEF, 2020.

       GW               8.0

                                                            6.5
                                                                          6.1

                                     4.7                                                            Geothermal
                                             4.3                   4.4
                                                                                                    Onshore wind
                                                                                 3.4                Solar thermal
                                                      2.7
               2.3                                                                                  PV

                                                                                                    Small hydro

                                                                                                    Biomass & waste
                              0.7
                                                                                                    Low carbon non-renewables

                                                                                                    Fossil Fuels
              2009                  2012                    2015                2018

According to research, a 100 per cent re-          also upward in other countries in sub-Sa-    wind energy is still very limited in Africa,
newable energy system is technically and           haran Africa (BNEF, 2020). Out of the        the use of solar energy has grown fast.
economically a possible and practical              different sources of renewable energy,       The IEA projected that the use of solar
solution for sub-Saharan Africa to meet            solar and wind energy have the most          PV will grow by more than 3000 per cent
its energy demands (Barasa et al., 2018).          potential due to their constantly falling    between 2018 and 2040 (IEA, 2019).
Despite the large potential of renewable           prices. Prices for solar PV have fallen by      Off-grid renewable energy capacity
energy – almost unlimited solar sources            around 80 per cent since 2009 while the      in Africa has increased by nearly 360
(10 TW), abundant hydro sources (350               respective figure for wind is 30–40 per      per cent, from 295 MW to 1.4 GW, dur-
GW), wind sources (110 GW) and geother-            cent (IRENA, 2020b). Whereas the use of      ing the past decade (IRENA, 2020a). As
mal energy sources (15 GW) – the use of
renewable energy other than traditional
biomass is still quite limited. In compar-
ison to other emerging markets, sub-Sa-
haran Africa has low levels of renewable               The declining costs of solar PV and
energy capacity and commissioning and
operating renewable energy is still more                 the simultaneous emergence of
costly in Africa than the global average.
Some reasons behind this are a lack of                 pay-as-you-go business models that
enabling environments, political will,
currency and default risk, and a lack of               tap into the widespread availability
access to finance.
    However, renewable energy capacity                   of mobile phones have been key
is increasing fast. Currently, South Af-
rica is attracting over 60 per cent of the                      drivers for growth.
renewable energy investments coming to
sub-Saharan Africa, but the trajectory is
16   CONNECTING AFRICA – ENERGY CONNECTIVITY

                                                                                                                                    EVA NILSSON
            The Ministry of Energy and Minerals in Dar es Salaam, Tanzania.

     off-grid power markets are more accessi-      from East Africa. Solar home systems          certification requirements. Micro-grids
     ble to companies than on-grid utilities,      can be the cheapest power option where        are still reliant on subsidies and differ-
     which are often state owned, the num-         power demand is low and households are        ent results-based financing schemes are
     ber of renewable energy businesses on         dispersed.                                    entering the field (BNEF, 2020).
     the continent has increased. Businesses           In addition to household systems,             Climate change does not only spur
     can make use of pay-as-you-go business        solar powered household appliances – es-      renewable energy markets it also has
     models that enable households to make         pecially TVs and fans – are becoming a        more diverse effects on Africa’s energy
     mobile phone–based payments. Pay-as-          major driver of the sector. Globally, most    economy. As a transition towards greener
     you-go business models in Africa exem-        solar powered TVs are sold in East Africa     energy production takes place globally,
     plify the technological convergence of        (Lighting Global, 2020). However, solar       demand for fossil fuels might decrease
     the global megatrends of electrification      powered agricultural and productive ap-       and cut revenues of African countries ex-
     and digitalisation. Where digital con-        pliances, such as pumps or refrigeration      porting oil and gas, such as Nigeria and
     nectivity is available, businesses can,       appliances, are still few. In addition, the   Angola. In contrast, the demand for min-
     for example, monitor how off-grid sys-        uptake of solar off-grid energy by indus-     erals that are needed for battery technol-
     tems function and whether payments are        trial parks, shopping malls, public insti-    ogy in power grids or electric cars, for
     made on time.                                 tutions and other commercial and indus-       example, is growing heavily. This means
        The declining costs of solar PV and        trial actors has remained slow despite its    that the cobalt-exporting DRC will see
     the simultaneous emergence of pay-as-         potential to substitute for the expensive     a steady flow of export revenue as the
     you-go business models that tap into the      diesel generators that are used as back-      country provides over 60 per cent of the
     widespread availability of mobile phones      ups for unreliable grids (Bhamidipati &       world’s cobalt. Other African countries
     have been key drivers for growth. Off-grid    Gregersen, 2020).                             that export minerals that are needed for
     solar energy capacity has rocketed from a         Furthermore, the number of mi-            battery technology are Guinea, Gabon,
     tiny 89 MW to 998 MW in ten years. Solar      cro-grids is increasing fast globally and     Mozambique and Madagascar. While cur-
     mini-grid capacity has increased, par-        research shows that they could now be         rent mineral sources will not be enough
     ticularly in North Africa (Algeria), whilst   the best scalable option to solar home        to cater for the needs in the global bat-
     solar lights and small solar home sys-        systems and grid extension. Currently,        tery technology market, the circular
     tem capacity has increased, especially        the largest share of the world’s planned      economy (i.e. the reuse and recycling
     in Eastern Africa, in countries such as       micro-grid investments are in Africa          of minerals) becomes ever more crucial
     Kenya, Tanzania, Uganda and Rwanda            (World Bank, 2019). Many countries re-        (Hund et al., 2020). These trends under-
     (IRENA, 2019, 2020a). In 2019, the fast-      quire some form of license to set up          score the need for African countries to
     est increase of solar pay-as-you-go unit      distributions systems and sell power          diversify their economies and to think
     sales was seen in West Africa, where many     to customers, but several countries are       strategically about the continent’s en-
     companies are expanding or licensing          excluding the smallest projects from          ergy future.
CONNECTING AFRICA – ENERGY CONNECTIVITY    17

     Policy and
    investment
  environment of
energy connectivity

THERE IS AMPLE political commitment                              of these are large hydro power projects.
to improve energy access in Africa. This                         The PIDA programme has identified 15
commitment is spelled out in continen-           China is        priority projects, mostly dams and re-
tal and Africa-led initiatives aiming for                        gional transmission lines. These are
improved energy access and achieving           the largest       estimated to cost about US$40 billion
interconnections between national grids.                         (PIDA energy vision, n.d.). In addition,
The Program for Infrastructure Devel-       bilateral for­eign   the AU’s Agenda 2063 defined the Grand
opment in Africa (PIDA, with its Africa                          Inga Dam project in the DRC as one of its
Power Vision (APV), the Africa Renewable    financier of the     high priorities.
Energy Initiative (AREI) by the AU and                              The AREI aims at increasing renew-
the New Deal on Energy for Africa (NDEA)     African power       able energy generation capacity by 2030
by the AfDB are the main drivers of Afri-                        to 300 GW through promoting socially
can energy policy and integration.           sector, mainly      and environmentally appropriate solar,
   The AU’s and AfDB’s energy visions                            wind, hydro, biomass, geothermal and
are largely connected around increasing      through loans.      marine power. The AfDB has, for exam-
regional energy integration and imple-                           ple, a Desert to Power Programme that
menting critical energy projects. Many                           aims to light up and power the Sahel
18   CONNECTING AFRICA – ENERGY CONNECTIVITY

     region by building 10 GW worth of solar       universal energy access by 2030. These        pricing are limited to just a few coun-
     systems via public, private, grid and off-    include, for example, Gabon, Ghana,           tries. In sub-Saharan Africa, 23 countries
     grid projects by 2025.                        Kenya and Ethiopia. South Africa, Cape        have implemented import duty and VAT
         There are five regional power pools in    Verde, Ghana, Kenya and Gabon have            exemptions. Renewable energy feed-in
     Africa. These are the Central Africa Power    made significant progress in rural elec-      tariffs, which have been popular globally,
     Pool (CAPP), the Comité Maghrebin de          trification. In these countries, on average   have been rare in Africa. The recently
     l’Electricite (COMELEC), the Eastern Af-      at least 40 per cent of rural populations     introduced renewable energy auctions
     rica Power Pool (EAPP), the Southern          are connected to the grid (UNEP, 2017).       have been more successful in reaching
     Africa Power Pool (SAPP) and the West         Kenya has made significant progress in a      competitive prices. So far, auctions have
     Africa Power Pool (WAPP). Electricity         transformation towards renewable energy       taken place in 16 countries across the
     production and consumption is highest         and in ‘last mile connectivity’, that is,     continent. Seven countries have a policy
     in COMELEC, followed by SAPP, EAPP and        connecting every household within 600         in place but no bids yet. Some auctions,
     WAPP. CAPP produces the least electric-       meters of distribution transformers. Re-      such as those in Senegal and Zambia,
     ity. COMELEC is linked to the Middle East     newable energy – wind, solar, hydro and       have resulted in large-scale renewables
     and Europe. Cross-border power trade in       geothermal energy – now accounts for          projects with some of the world’s lowest
     the power pools is still very limited and     70 per cent of the installed electricity      prices (BNEF, 2020).
     mainly takes place within SAPP. In 2014       generation capacity in the country (Re-
     EAPP and SAPP launched a regional ini-        s4Africa, 2018).                                                 ***
     tiative, the Africa Clean Energy Corridor,        The majority of African countries have
     which promotes renewable energy poten-        not separated electricity generation,         Among the most important supporters
     tial and cross-border electricity trade be-   transmission and distribution into sep-       of Africa’s energy and electricity sectors
     tween the two pools.                          arate operating units. However, different     are China, the US, the EU and multilat-
         Were energy integration to deepen,        national constellations vary. In a study      eral development banks. Other countries,
     Africa could save significantly in invest-    by the World Bank in 2016, 19 countries       such as India and Russia, remain mar-
     ments and the cost of electricity. The IEA    had complete state monopoly of all three      ginal but have increased their presence
     has estimated that full integration would     utilities. Only four countries – Ghana, Ni-   in the continent’s energy markets. Indian
     mean a US$43 billion per year or a 21         geria, Uganda and Sudan – had unbun-          companies are, for example, operating in
     per cent saving in the cost of electricity    dled the sector into separate units and       solar energy and Russia is promoting its
     (World Energy Outlook, 2019). However,        had the most developed energy markets.        nuclear industry in order to gain invest-
     there are a number of constraints that        However, these markets were not compet-       ments in Africa.
     hinder power pool development and oper-       itive. The same study estimated that, out         China is the largest bilateral for-
     ation in Africa. These include inadequate     of a sample of 39 countries, only Uganda      eign financier of the African power sec-
     capacity and reserve margins, difficul-       and the Seychelles had financially via-       tor, mainly through loans. China has a
     ties in mobilising investment, low levels     ble electricity sectors. Only 19 countries    Global Interconnectedness Initiative,
     of public and private funding, policies       covered operating expenditures and sev-       which aims at creating the world’s first
     that constrain or fail to incentivise in-     eral countries lost, on average, US$0.25      global electricity grid (Kynge & Hornby,
     vestment, regulation that distorts the        per KWh sold. The main reasons for these      2018). In 2017 China committed more
     market, a lack of human resources and         losses were found to be under-pricing,        than US$9 billion to the African power
     a lack of information and data about the      transmission and distribution costs, bill     sector while the World Bank, the Interna-
     energy situation. Regions lack harmo-         collection inefficiencies and overstaffing    tional Finance Corporation, the EC, the
     nised legislation and compatible grids        (Trimble et al., 2016).                       European Investment Bank, the Islamic
     (UNEP, 2017). Ultimately, it is a question        Many countries have made long-term        Investment Bank and Afreximbank, to-
     about national priorities and interests.      power purchase agreements (PPAs) with         gether with all the G8 countries, made
     In many countries, power supply plans         fossil fuel–based independent power pro-      commitments of about US$5.8 billion
     are nation-centric and state monopo-          ducers (IPPs). These can heavily limit        to the sector (ICA, 2018). The extension
     lies dominate them. In some cases, re-        governments’ ability to diversify their       of national grids is likely to receive the
     gional energy projects can even lead to       power supply in the short term, increase      most foreign investments during 2018–
     disputes, as is the case with Ethiopia,       sovereign debt and hence keep the retail      2030. Micro-grids will receive the sec-
     Egypt and Sudan in regard to the Grand        price of power high. Some governments,        ond largest share, followed by solar home
     Renaissance Dam on the Nile.                  such as those of Ghana and South Africa,      systems (BNEF, 2020).
                                                   are trying to renegotiate long-term PPAs          In addition to lending, Chinese com-
                        ***                        (BNEF, 2020).                                 panies have been awarded many infra-
                                                       In general, energy policies have been     structure projects through public pro-
     On a national level, a combination of         changing slowly. Renewable energy is          curement. In 2019 there were 242 power
     enabling policies and investments has         mainly supported with targets and tax         projects in Africa for which contracts had
     put some countries on track to reach          exemptions. Net metering and carbon           been awarded for stages ranging from
CONNECTING AFRICA – ENERGY CONNECTIVITY      19

planning to execution. Of these projects,      such as the World Bank, the EU, the UN         with Africa, companies from these coun-
63 had Chinese companies as the main           and the AfDB. Most foreign direct invest-      tries cooperate in different power proj-
contractors (Power Technology, 2019).          ment into renewable energy comes from          ects. For example, the US firm General
Chinese contractors operate in many            European companies. The US is the larg-        Electric and Power China have been work-
hydropower projects. More than half            est bilateral financer through its Power       ing together in several power projects in
of the new hydropower capacity will be         Africa Initiative (BNEF, 2019, 2020). Al-      Nigeria (Sun, 2018).
built by Chinese contractors, followed by      though the country prioritises the devel-          On the other hand, Africa has a role in
coal projects (29.3%) and gas projects         opment of liquefied natural gas (LNG),         fulfilling China’s, the US’s, Europe’s and
(10.7%) (Power Technology, 2019). No-          it also funds solar, wind, biomass and         other countries’ energy needs. Chinese in-
where else does China engage as much in        geothermal projects in both grid and off-      volvement in oil and gas exploration and
the hydropower sector as in Africa (Gal-       grid settings. In addition to supporting       production in Africa has increased heav-
lagher, 2019).                                 renewable energy projects, OECD coun-          ily during the 2000s. Currently China re-
   While many international lenders are        tries share an interest in developing en-      ceives more than 25 per cent of its oil
turning away from coal due to climate          ergy market regulation and in liberalising     supply from Africa. China Petroleum &
change, Chinese banks continue to act as       energy markets.                                Chemical Corporation Sinopec, China Na-
last resort lenders for coal plants, also in       The EU has had an energy partnership       tional Petroleum Corporation and China
Africa. China has new coal projects in 10      with Africa since 2007. The aim of the         National Offshore Oil Corporation are
African countries. Some of these projects      EU’s cooperation has been to enable ac-        present in nearly 20 countries in Africa
involve coal mining in addition to plants      cess to electricity for 30 million people      and are estimated to invest over US$15
(IEEFA, 2019). Despite their engagement        and to add the energy generation capac-        billion in the continent during 2019–
in fossil energy, Chinese companies also       ity of 5 GW (EU, 2018). In its recent strat-   2023. This is more than they invest in
invest in renewable energy and have been       egy with Africa, the EC emphasises coop-       any other region in the world (Africa Oil
awarded the construction a wind park in        eration in renewable energy and plans to       Week, 2019). In contrast, only Nigeria
Ethiopia, a solar farm in Ghana, a solar       launch a Green Energy Initiative. The EU       and Libya are among Europe’s top ten
power plant in Zimbabwe and the world’s        wants to see Africa on a low-carbon green      crude oil import countries, and sub-Sa-
largest solar farm in Egypt (Power Tech-       growth trajectory that resists new invest-     haran African oil exporters have a quite
nology, 2019).                                 ment in coal power (EU/EEAS, 2020).            marginal share of the total. Also, the US
   Financing for renewable energy, ex-             While European countries, the US and       has shown a decline in Africa’s share of
cluding large hydro projects, comes            China are pulling in somewhat different        its total oil imports.
mainly from multilateral institutions          directions in their energy cooperation

        FIGURE 3: FOREIGN DIRECT INVESTMENT INFLOWS TO RENEWABLES
        PROJECTS IN SUB-SAHARAN AFRICA BY REGION OF ORIGIN
        SOURCE: BNEF, 2020.

        $ billion

                                                2.5                                           2.6
                                       2.4

                                                                   1.8
                                                         1.5                                                 International & other
                                                                                      1.3
                                                                                                             North America (excl. Mexico)
                      0.9                                                   1.0
                              0.6                                                                            Africa (excl. North Africa)
                                                                                                             Asia
           0.0
                                                                                                             EU Europe
          2009                        2012                        2015                        2018
20   CONNECTING AFRICA – ENERGY CONNECTIVITY

      Recommendations
      for Finland and the
       EU for supporting
      sustainable energy
          connectivity
     THE DEVELOPMENT IMPACTS of univer-           investments affect and are affected by       caused by climate change can also lead
     sal access to sustainable and affordable     climate change. On one hand, an en-          to increased power shortages in regions
     energy are extensive. Reliable electricity   ergy transformation to renewable en-         that depend on hydropower. The driest
     generation would support Africa’s will to    ergy would cut Africa’s CO2 emissions        climate scenarios could entail losses of
     industrialise and to be part of the fourth   and put the continent on a path towards      hydropower revenues of between 5–60
     industrial revolution. The provision of      sustainable economic development.            per cent and increases in consumer ex-
     reliable electricity could even spur gov-    The continent’s vast solar resources         penditure on energy of up to three times
     ernment legitimacy to collect more tax       equal 90–100 million tonnes of oil per       (Cervigni et al., 2015). The Zambesi river
     revenue and increase public funding by       year (UNEP, 2017). On the other hand,        is likely to be worst hit by droughts due
     creating an implicit fiscal pact between     the heavy energy dependence on fuel-         to climate change and affect the power
     citizens and their governments (Blimpo       wood and charcoal, combined with cli-        supply of Zambia and Zimbabwe (BNEF,
     et al., 2018).                               mate change, creates a vicious circle for    2020).
         Furthermore, energy is tightly con-      households in sub-Saharan Africa. Both           In light of the current and future un-
     nected to climate change. Although Af-       are connected to deforestation and veg-      derstanding of energy connectivity in
     rica’s global share of CO2 emissions is      etation loss, which restrict the access to   Africa, this report makes the following
     only about three per cent, its energy        more fuelwood and charcoal. Droughts         recommendations:
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