Power Africa is a plan whose goal is to double access to electricity in six African nations that the White House considers to have displayed significant efforts towards good governance: Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.
But whatever the reality underlying those attempts to establish good governance, there is undeniably a geopolitical subtext to Power Africa. It is well-known that the Chinese government has built a significant head-start on investment in the continent while the US has been mostly preoccupied with costly adventures in the Middle East and Central/Southeast Asia over the past decade. During this period, Chinese business and government interests have been cultivating working relationships with a multitude of African countries while remaining at a distance from the region’s often brutal politics, and the formula so far seems to have paid off for both sides.
But there is also what could be called a corporate subtext to the visit, as the $7 billion that the president offered in government assistance will be accompanied by an additional $9 billion of initial investment from private investment firms.
According to a White House press release from Sunday, General Electric (GE) has committed to making 5,000 megawatts of affordable energy available to the citizens of Tanzania and Ghana. But a larger portion of the $9 billion will come from private investment firms.
So far, the private investment firms putting money into the Power Africa project include Heirs Holdings, whose portfolio counts businesses from across the continent, and has said it would invest up $2.5 billion to finance energy projects and add some 2,000 megawatts of electricity capacity within 5 years. Heirs is the majority shareholder of Tenoil Petroleum & Energy Services, a multinational oil exploration, drilling, and marketing company.
Symbion Power, an international firm that participates in complex electricity projects, will inject $1.8 billion to create 1,500 megawatts in the same time period. In Tanzania, Symbion contracts with US power transmission and distribution company Pike Electric Inc. (PIKE).
Aldwych International, established in 2004 “for the purpose of developing, owning and operating power generation, transmission and distribution projects in emerging economies, primarily Africa” with substantial help from Royal Dutch Shell’s (RDS) Shell Foundation, has committed to spend $1.1 billion to create 400 megawatts of wind-powered energy in Kenya and Tanzania.
Harith General Partners manages the Pan African Infrastructure Fund, and has offered $70 million for wind energy in Kenya, along with another $500 million for power-sector projects in other African countries.
Husk Power Systems focuses on connecting rural communities in Sub-Saharan Africa to the power grid, and is also counts the Shell Foundation, as well as Cisco Systems (CSCO) as investors. Husk will seek to give 60,000 households in Tanzania affordable lighting via the installation of some 200 “biomass-based” power plants throughout the country.
Finally, the African Finance Corporation will be investing $250 million for the power sectors in Ghana, Kenya, and Nigeria that the White House hopes will bring in up to $1 billion in eventual investments in Sub-Saharan energy projects.
It is hoped that investments from these private firms will create an opening for the growing list of US companies that are starting to see Africa as an opportunity rather than a liability. The Office of the US Trade Representative reported American merchandise exports to Africa grew 23 percent between 2010 and 2011, while the $74 billion of imports from the sub-continent represented a 14 percent increase on the previous year. $60 billion of those imports were from crude oil, and that number could increase with, among other developments, Nigeria’s having recently discovered massive offshore reserves.
Overall, the Power Africa project to bring more than 10,000 megawatts of cleaner and more efficient electricity to over 20 million homes and businesses across the six designated countries, in an attempt to “plug Africa into the grid of the global economy,” as the President stated on Sunday. While the initiative itself offers promise, both political and economic, it remains to be seen how far behind China the US is on the continent.