How the US can engage donors, partners on Power Africa

Employees of the Liberia Electricity Corporation install new power lines in the Mamba Point neighborhood in Monrovia. On June 30, U.S. President Barack Obama announced a new initiative called Power Africa to double sub-Saharan Africa's access to electricity. Photo by: Travis Lupick / CC BY-NC-SA

One by one, firms are lining up to join U.S. President Barack Obama’s Power Africa, a grand initiative to close the electricity access gap in the continent’s sub-Saharan region.

The newest company on the list is Standard Chartered Bank, which has committed $2 billion to finance energy projects to be selected by U.S. government agencies, six African countries and the bank itself.

“The next steps will be for us to work closely with the six African governments and the US agencies to identify critical projects needing financing support,” a bank representative told Devex. “As we agree on the projects to support, we will announce these individually.”

Power Africa aims to encourage the private sector to double energy access initially in Nigeria, Ghana, Kenya, Tanzania, Ethiopia and Liberia with the ultimate goal of delivering up to 10,000 megawatts of electricity where it is most needed.

The United States will initially provide $7 billion, mostly through subsidizing the export of specific products through a $5 billion commitment from the U.S. Export-Import Bank. The Overseas Private Investment Corp. is also setting aside $1.5 billion, while about $1 billion will come from the Millennium Challenge Corp. The U.S. Agency for International Development has pledged $285 million.

The mix of financing schemes illustrates the U.S. government’s changing view on the economic story of Africa. Obama now sees the once desperate charity case of a continent as a booming trade partner, and thus Power Africa reflects America’s shifting relationship with Africa: from aid and assistance dependency to trade partnership.

However, although the initiative is gathering steam just days after it was announced, lighting up two-thirds of sub-Saharan Africa calls for greater legwork in the coming months, and its success will depend on whether the United States will be able to rally the rest of the world to join its cause for Africa.

The U.S. government should use its influence to convince big donors like the World Bank to step up their efforts in sub-Saharan Africa, where at least $19 billion needs to be invested in the energy sector each year, said Tom Wallace from anti-poverty group ONE.

Washington, added Wallace, should also embrace more countries like Botswana, Senegal and the Ivory Coast for Power Africa to succeed in bringing electricity to the region, which is currently suffering from a severe power crisis.

The ONE spokesman also suggested raising OPIC’s profile in the initiative: Since OPIC makes investments, utilizes loans and provides more risk guarantees, it can fund wider energy projects and finance riskier projects in countries where returns may be lower but need is the greatest.

Todd Moss from the Washington, D.C.-based think tank Center for Global Development wrote in his blog that the initiative should have the “healthy combination of policy interventions, limited use of concessional finance and lots of private investors.”

Time will tell whether Power Africa proves to be the solution to sub-Saharan Africa’s acute energy shortfall and if initiatives like this can truly change the dynamics of the relationship between the continent and the United States.

Read more on U.S. aid reform online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.

About the author

  • Alliage profile

    John Alliage Morales

    As a staff writer, John Alliage Morales covers the Americas, focusing on the world's top donor hub, Washington, and its aid community - from Capitol Hill to Dupont Circle, Foggy Bottom to the downtown headquarters of USAID, the World Bank and Millennium Challenge Corp. Prior to joining Devex, Alliage worked for a variety of news outlets including GMA, the Philippine TV network, where he conducted interviews, analyzed data and produced in-depth stories on development and other topics.