Addis Abeba 6th African Economic Conference, A Personal Follow Up
As promised, here is a more thorough analysis of what has been said at the conference and some personal view about the issues raised in Addis.
Firstly, Africa presents a rare opportunity or if you like a twist of events that is quite remarkable. Because Africa is not a poor continent but one where its resources have been mismanaged we find countries that would be rich on paper considering their vast mineral or oil wealth and that are in reality lagging far behind better managed countries with fewer resources.
As a consequence the continent's energy infrastructure is not up to what it should be, the article by the Rural Electrification Alliance untitled 'The Black Out Continent' that has been featured in the Genesis Morocco blog is compelling.
Now would you ask how does that constitute an opportunity ? Well because the energy sector is under developed there is a one in a lifetime chance to go green, indeed to orient all future development inasmuch as possible towards lasting, sustainable solutions, ie Cleantech.
There is an anecdote that is quite telling, from China actually, and surely you will see how that applies here. In its effort to bring up to par its communication network, China invested heavily in the early 90's in massive copper wiring running across its vast expenses of land. They were soon to discover that miles and miles of it were unearthed during night by cunning thieves who sold the copper on the black market.
So, the Chinese used optical fiber instead. It was costlier, more challenging technologically but of no use to thieves. And now they have an advanced optical fiber network way superior in its capacity to what copper could have achieved
For Africa, renewable energy presents the same challenges, its more expensive for now, it requires cutting edge technology but it is the solution for the future of the continent's energy security.
How can it be done ? For starters, nothing should be considered without an eye on the bigger picture. Renewable present the tremendous advantage of being more efficient as a pool, through load balancing. When one's country peak demand corresponds to another's low consumption bracket, load balancing allows for energy transfer and lowers the investment threshold as there is no need to duplicate capacity, all whats needed is to share it.
I very much appreciate the efforts conducted in Addis, they are a step in the right direction. But key to success is an African Supergrid. And we need to see in the foreseeable future, no more then 5 years, African energy ministers sitting on a table and charting the way ahead for the continent's countries grid interoperability as well as the creation of an African Energy Commission whose scope will be to implement the Supergrid and manage it in the future.
The African Supergrid once achieved will be able to connect Africa from its southernmost region to North Africa and beyond through MEDGRID that will link Southern Mediterranean countries to Europe's existing Supergrid, as well as to the East, to the Arabian peninsula and beyond to China itself. Indeed the vision of Buckminster Fuller, that of the Global Energy Grid is edging more and more each day towards reality and we have to be part of it.
Secondly, in energy, and energy has become equivalent to development, united we stand, divided we fall. Closer at home, the Arab spring will hopefully allow UMA (Union of the Arab Maghreb) to proceed diligently along this line. Already Morocco and Algeria have engaged talks for a unified Maghreb electricity market and are working on interoperability of their grid as a necessary ground work for the region's integration and possible future electricity exports to the European Union.
Bear in mind as well is that energy is one of the very few sectors that are politics blind, countries will cooperate in that sector, even if they are at odds with one another for other issues. I believe the very reason of that is that their energy ministries and electricity offices are maned by engineers, whose inclination to engage in politics is low. A blessing in disguise.
The financing part is always a thorny issue for Africa, ADB (African Development Bank) is on this as are other international institutions. If we are to extrapolate what has happened with energy investments in Morocco we find that most major banks were willing to sit a the table to finance energy ventures. In this global context of economic uncertainty, energy and specifically renewable energy is one of the very few sectors that have demonstrated an ability to continue to attract investments. At any rate, its better then putting your money in financial derivatives, these are after all fixed assets.
ADB should be able to pool with other major funds, as it has done in the past, for investments not aid, and I do need to stress that fact, investment not aid. Aid only skews the financial framework and aid is not sustainable nor will it be forthcoming in these difficult times. The renewable energy sector is one that has to be presented as an opportunity of investments and not otherwise.
Why ? Because Africa has a card to play in this industry of the future. DESERTEC, the giant program who's aim is to make of North Africa and the Middle East a powerhouse for Europe is not a disinterested affair as you would expect.
The facts are that a solar panel installed in south Germany has a yield of 800Kw yearly, the same panel installed in Morocco has a yield of 2200Kw yearly. Germany is scrapping its nuclear generation capacity, and so it has to replace it with something else, thus the 400 billion Euros DESERTEC initiative that was a pipe dream by the Club of Rome has become mainstream and is taking shape as we speak.
The same applies for Africa as a whole. Its vast potential in renewable constitute an opportunity for energy exports, and that will become more and more relevant as we witness the damages caused to the environment by carbon based energies, but more pragmatically, it will be the dawn of the oil era soon, and that will be undoubtedly followed by the dawn of another era, that of nuclear power. What will left standing ? Renewable energy. And that is why there are investments even if it is costly to do so presently, it is because there is already a position game being played to be significant players in the future of the global energy game.
So investment will be available, from Europe, the Middle East, China, the U.S to name a few. Whats in it for them is a win win deal. They get a share of the market, both local and international, are able to put substance in their efforts to bring the African continent out of its unmerited woes and are also investing in the future of close to 1 billion customers market whose revenues will increase as they are able to produce and consume their energy locally and export it globally.
God Bless Africa, a continent that will overcome, and that will find its prosperity and deserved rank amongst the world's nations. A matter of time.
African Visual by Duncan Walker © fair use terms.