'Managing expectations' on Power Africa

Six months after U.S. President Barack Obama launched Power Africa, the interagency team is still defining roles and creating strategies. Will its leaders find a strategy that balances quick wins with long-term results?

U.S. government leaders involved in the Obama administration initiative to increase energy access sub-Saharan Africa shared their thoughts on what they have learned so far about the ambitious energy access and investment push.

The clearest message to emerge from last week’s panel discussion was that the key is “managing expectations.”

Officials from the U.S. Agency for International Development, the Overseas Private Investment Corp., the Millennium Challenge Corp. and Capitol Hill discussed at the Center for Global Development how their agencies’ unique mandates and perspectives are contributing to a coordinated approach to combat energy poverty on the continent.

The big idea behind Power Africa is that it can draw on the entire U.S. government “toolbox” when it looks at high-potential power deals that have become road-blocked by political, regulatory, or business-related obstacles, and what can be done to move them forward.

But while supporters say the inter-agency “transactional” approach is the initiative’s greatest strength, it also means it is subject to a wide range of expectations, since each agency involved — not too mention the variety of private investors and foreign government institutions — has a different mandate and different set of constituents to please.

In particular, Power Africa could face potential interagency conflicts between those who want a lot of transactions to happen quickly and those who favor a more long-term, systemic approach to power development.

Common strategy

Power Africa’s agency representatives will have to be clear with each other about an inter-agency strategy for balancing individual power deals that keep Power Africa’s public and private partners engaged with deeper structural changes and reforms that take time, patience, and a willingness to wade through the slow, political process of institutional capacity building.

USAID’s Power Africa Coordinator Andy Herscowitz reported mostly positive progress in the first six months, including what the agency calls a “landmark” deal last September between the government of Ethiopia and Reykjavik Geothermal, a US-Icelandic private developer, to construct the Corbetti geothermal plant, the “first independent power project in Ethiopia’s history.”

But Herscowitz also suggested the initiative’s first stage has seen the various agencies continue to grapple with how to better “define their roles” with respect to their fellow public and private partners.

USAID has been criticized for a perceived overdependence on one-off initiatives. At the same time, lack of access to energy is seen as a fundamental roadblock to a wide array of development, education, and economic growth goals, which many of the agencies involved in Power Africa have in common.

It was evident from the panel that finding that balance will be important if the initiative is going to ensure continued buy-in from its stakeholders. For example, OPIC might be more interested in securing large, individual power purchasing agreements quickly, since they were created with the “core mandate” to facilitate U.S. investment abroad, said OPIC Executive Vice President Mimi Alemayehou.

OPIC measures success in part by the amount of investment leveraged across its portfolio in a given year, and the agency has been singled out as one most capable of actually delivering the transactions to reach Power Africa’s energy access targets.

MCC on the other hand says it is most concerned with establishing the longer-term foundation for African governments to structure and complete their own power deals after the initiative ends.

Kamran Khan, MCC’s vice president for compact operations, noted that individual transactions and infrastructure projects are “helpful,” but more because of their positive incentives for regulatory and institutional changes than their individual wattage achievements. Herscowitz likewise lauded the “demonstration effect” individual transaction can have, noting the goals is, “not flipping the switch but opening up the market.”

Coordination a challenge

Ben Leo, a long-time energy poverty advocate who moderated last week’s panel at the Center for Global Development, expressed similar concerns that an overemphasis on individual deals could make it hard to transition from the “transactional” to the “structural.”

USAID meanwhile has a challenging role to play by ensuring that each agency feels its investments in powering Africa are achieving their expected results — especially when those expected results vary between participants.

While sometimes portrayed as a silver bullet, interagency coordination is never easy and can get stalled or sidelined by competing mandates and rivalries — just ask the Global Health Initiative. But the credibility of the U.S. aid enterprise depends on the ability of an administration to name goals and coordinate its resources to achieve them — as Obama promised to do with Power Africa.

If the Electrify Africa Act passes through Congress this year, as some expect it might, the number of spectators, voices, opinions and targets will only increase.

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.