Views
3 months ago

African Business 2021

  • Text
  • Africa
  • Markets
  • Resources
  • Minerals
  • Technology
  • Trade
  • Integration
  • Development
  • Investment
  • Business
  • Regional
  • Kenya
  • Global
  • Digital
  • Mobile
  • Infrastructure
  • Sector
  • Economic
  • Countries
  • African
The 2021 edition of African Business is the second issue of this useful guide to business and investment on the continent. The positive reception accorded the inaugural edition in 2020 was encouraging and we are optimistic that this publication and future issues will continue to meet the need for timely and relevant information in an exciting time for African business. African Business 2021 has articles on recent trends plus overviews of the key economic sectors on the continent and regional and country profiles. There is an in-depth analysis of the implications for trade on the continent of the introduction of the African Continental Free Trade Area agreement (AfCFTA) and an article on the growth and importance of exploration for minerals, gas and oil. Namibia and Botswana feature in an article on how cooperation can drive economic growth and an opinion piece focusses on the role that digital technology can play not only in the financial sector, but in the driving progress in a broader sense. Global African Network is a proudly African company which has been producing region-specific business and investment guides since 2004, including South African Business and Nigerian Business, in addition to its online investment promotion platform: https://www.globalafricanetwork.com

OVERVIEW Energy An ECCAS

OVERVIEW Energy An ECCAS interconnection project shows the way. SECTOR INSIGHT Wind and solar allow for quick diversification of energy sources. Credit: Africa Minigrid Developers Association The growth of African cities is happening quickly and many of the trends that will affect Africa in years to come are playing out in cities. One of these is the increasing uptake of small-scale renewable energy options such as rooftop solar. For this to be effective, decentralisation has to be embraced, something which the City of Cape Town in South Africa has gone to court to try to secure. In East Africa, Nairobi and Kigali are taking steps to promote renewable energy within their city limits, either through legislation insisting on new buildings embracing new technology or creating green zones. A reduced building permit fee acts as an incentive for installing renewable technology in Accra. Even countries that are already using renewable energy are looking for more sustainable solutions. Sudan relies heavily on hydropower but this is not always reliable so various solar projects are underway. These include a series of solar farms paid for with a grant from the United Nations Development Programme (UNDP) and a Solar Lab set up in Khartoum with funding from the same source. The lack of diversity in energy generation represents a real risk for African countries and regions. Consulting firm Frost & Sullivan points out that most Sub-Saharan economies generate the bulk of their electricity through three or fewer sources, whereas at least six types of power are used in other economies around the world. Relying on hydropower, as the Central African Power Pool (CAPP) and the bulk of the Southern African Power Pool (excluding South Africa) do, makes both regions susceptible to drought and other changes in climate. The East (EAPP) and West African Power Pools (WAPP) supplement hydropower with natural gas. There is a need to diversify into solar and wind, especially as renewable energy technologies will be costcompetitive with fossil fuel sources by 2030. The Global Wind Energy Council estimates that wind could supply 18GW to the SADC grid by 2030. That amounts to a third of the existing power pool in the region. The fact that such estimates are published is evidence of the ambitions of the promoters of renewable energy. A giant wind project at Lake Turkana in Kenya will supply 310MW from 365 turbines on 40 000ha. AFRICAN BUSINESS 2021 32

OVERVIEW The African Development Bank’s (AfDB’s) investment portfolio of -billion will not include any new coal projects. The bank has declared that it wants to help Africa move away from fossil fuels. AfDB has allocated -billion to solar and clean energy plans that will produce about 10 000MW for the Sahel’s rapidly increasing population. The European Bank for Reconstruction and Development (EBRD) is also funding renewable energy. A 2-million loan to the Egyptian Electricity Transmission Co will be used to integrate 1.3GW of new renewable energy generation capacity into the national grid. The Cameroon–Chad Power Interconnection Project will deliver the first transmission grid to the region, allowing for electricity trade between the two countries and the optimal use of infrastructure. The capital of Chad, N’Djamena, will have better access to electricity and Cameroon’s two regional power systems will be integrated. Both countries are members of the Economic Community of Central African States (ECCAS) and the project has received funding in the form of a 5-million loan from the International Development Association (IDA), a subsidiary of the World Bank Group. Microgrids Microgrid solutions are becoming more popular in sectors such as agriculture and mining. Financing for such projects can be problematic but there is an expectation that development financers such as the World Bank will provide solutions. Rapidly falling costs for solar photo-voltaic solutions are making the idea of power generation in remote areas more feasible. The Africa Minigrid Developers Association (AMDA), which was formed partly to address the funding issue, has 30 private-sector members operating mini-grids across 15 countries. In an interview conducted in 2020 by ESI Africa with the CEO of the AMDA, Aaron Leopold said, “Scale is our number one ONLINE RESOURCES Africa Minigrid Developers Association: www.africamda.org Alliance for Rural Electrification: www.ruralelec.org Global Wind Energy Council: www.gwec.net International Development Association: www.ida.worldbank.org International Renewable Energy Agency: www.irena.org Programme for Infrastructure Development in Africa: www.au-pida.org emphasis and focus and really helping governments know and trust the sector is at the core of our mandate and helping investors know and trust the sector too.” The largest company in AMDA’s portfolio is PowerGen which has mini-grids in four countries, Tanzania, Kenya, Nigeria and Sierra Leone, with Benin soon to be added to the portfolio. Africa had installed capacity of 96GW in 2015 and 600-million of its citizens do not have access to electricity. Sub-Saharan Africa’s electrification rate is 32% (AfDB). Although all infrastructure sectors need funding, the energy sector is where Africa has the most catching up to do. In response to this imperative, the AfDB planned to invest -billion in the energy sector in the period 2016-2021. Regulations, concessions and licences were some of the subjects to come up at the DRC Digital Mining Week held in June 2020, as reported by ESI Africa. The CEO of Tembo Power, Raphael Khalifa, said that the DRC’s lack of regulation and security for licences and concessions for power projects was a problem. The Mauritiusbased company runs 10 projects as an independent power producer in the DRC, Kenya and Burundi, totalling 0-million in investments. ■ 33 AFRICAN BUSINESS 2021

Other recent publications by Global Africa Network: