Power Africa

President Obama promoted his new, multi-billion dollar “Power Africa” initiative to expand electricity access in Africa during his recent visit to Africa, calling it a benefit to Africans and the U.S. alike.

The President said it is a win for the United States because the investments made in Africa, including in cleaner energy, means more exports for the U.S. and more jobs in the U.S

According to reports, Power Africa has identified six initial partner countries – Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania – all of which “have set ambitious goals in electric power generation and are making the utility and energy sector reforms to pave the way for investment and growth. 


Power Africa will bring to bear a wide range of U.S. government tools to support investment in Africa’s energy sector. From policy and regulatory best practices, to pre-feasibility support and capacity building, to long-term financing, insurance, guarantees, credit enhancements and technical assistance Power Africa will provide coordinated support to help African partners expand their generation capacity and access.

The United States will commit more than $7 billion in financial support over the next five years to this effort, and will partner with the private sector, who themselves have committed more than $9 billion in investment. 

See more here

The Africa-China Engagement

There has been considerable debate about the merits of China’s engagement in Africa, often with divergent views.  However the practical benefits for Africa are often welcome. 

For instance, according to the Africa Progress Report, recently presented by the Chair of the Africa Progress Panel, Mr Kofi Annan, China’s investment in Africa has doubled in the last decade (see chart) from about US$2billion in 2003 to over US$4billion in 2008. In addition Africa-China trade was estimated at US$6.5billion in 1999 but in 2008 was valued at US$107 billion, making China the second largest single country trading partner following the US. 
However China remains the regions largest source of imports and reportedly over 1600 Chinese companies are in operation in Africa, with the Chinese Government also investing in low cost industrial zones (e,g, Egypt) and in the agricultural sector (e.g. Ethiopia). 


Additionally, China also has targeted practical areas in which to focus its aid to Africa.  At 4th Ministerial Conference of the Forum on China-Africa Cooperation, Chinese Premier Wen Jiabao, announced eight (8) new measures to promote practical cooperation with Africa. The selected economic measures include:  Support to strengthen agricultural exchanges and cooperation in order to help Africa to increase food production capacity and increase the number of agricultural technology demonstration centers built by China in Africa to 20, and send 50 agricultural technology teams to Africa.

China has also pledged support to strengthen cooperation in education and human resources development; to build 50 China-Africa friendship schools; to train 20,000 personnel for Africa, including 1,500 school headmasters and teachers, 2,000 agricultural technology personnel, 3,000 doctors and nurses and to provide 1.5 million U.S. dollars in support of human resources training under New Partnership for Africa's Development (NEPAD).

Additionally, there will be support to strengthen cooperation in clean energy development and utilization, in clean drinking water technologies and to help Africa enhance capacity to adapt to climate change.

China will further advance the sound development of China-Africa trade by phasing in zero-tariff treatment for 95 percent of the products from the Least Developed African countries (LDCs) having diplomatic relations with China. This will starting with 60 percent of the products within 2010. China has also pledged to set up African commodities trade center in China and adopt preferential policies such as fees reduction for participating African enterprises to promote export of African commodities to China. China will also establish three to five logistic centers in Africa and improve business facilities in African countries.

To address the financial crisis, China will provide Africa with 10 billion U.S. dollars in concessional loans, mainly for infrastructure and social development projects.  The government will also support Chinese financial institutions in setting up a 1 billion U.S. dollar special loan to grow African small and medium enterprises.

China will also continue to support poverty reduction efforts and cancel due debts of interest-free government loans that matured by the end of 2009 owed by all heavily-indebted poor countries and the LDCs in Africa having diplomatic relations with China.

Finally, China has promised to further fulfill the pledges made at the Beijing Summit and to increase the size of China-Africa Development Fund to 3 billion U.S. dollars and support Chinese enterprises to expand investment in Africa.

My view is that there is a lot we can learn from China.  For instance on average, China's economy grew 10 percent per year between 1980 and 2008, compared with only three percent in sub-Saharan Africa during the same period. These divergences in economic growth in general, and in agricultural development in particular, have led to noticeably different patterns in poverty reduction in both regions.

According to a study by the International Food Policy Research Institute (IFPRI), between 1980 and 2005, the number of poor people decreased in China by more than four times, from 835 million to 208 million. The researchers found that China's strong initial emphasis on agricultural growth was essential in reducing poverty in that country. Growth in agriculture in China is estimated to have contributed to poverty reduction four times more than growth in manufacturing and services. Meanwhile according to World Bank figures, the role of agriculture in Sub-Saharan Africa has fallen from 19 percent of the gross domestic product (GDP) in 1980 to 14 percent in 2008.

Is Sub Saharan Africa Positioned to be the Fifth BRIC-A?

Inspiring remarks by Ngozi Okonjo-Iweala, Managing Director of The World Bank can be found here .

new ideas include:

1. Infrastructure remains a major constraint in Africa and to finance infrastructure development projects, Africa should securitize development aid. Hence instead of donors disbursing small amounts of aid cyclically, they could  issue African Development Bonds in New York, with a yield that matches the US 30-year treasury bond rate, currently averaging around 4.5% per year.  excerpt "Infrastructure spending needs for Sub-Saharan Africa (capital plus operations and maintenance) are estimated at $93 billion per year; deducting the amount governments actually spend and raising efficiency leaves a net funding gap $31 billion a year, mostly in the power sector. Therefore, a $100 billion bond could go a long way in filling the gap for a few years. Most importantly, issuing a bond like this could change perceptions overnight about Africa as a place to do business. Faced with secure financing of $100 billion, private firms across the world would line up to provide infrastructure in Africa".

2. Volatility: Sub Saharan Africa suffers from domestic and external volatility with the former requiring rigorous internal governance systems in order to manage volatility emanating from bad policies, social conflict, institutional weaknesses in fiscal, financial, terms of trade and judicial sectors. excerpt" Two things can be done to cushion Africa against the harmful effects of externally-driven volatility. First, donor resources can be used more aggressively as countercyclical instruments—as indeed was done with IDA and IBRD resources during the global financial crisis, with IDA front-loading country allocations to help low-income countries. Second, steps can be taken to eliminate the costs associated with aid volatility".

3. Skills: Progress has been made in primary education however gross tertiary education has fallen short hence affecting the cognitive skills necessary for innovation and technology diffusion. excerpt "The finding on the importance of cognitive skills for long-run growth should be a wake-up call for Africa, with questions being raised about the quality of the education now being provided. New tests show that in Mali, 94 percent of Grade 2 students cannot read a single word; in Uganda, half of grade 3 students fail this simple test.  The good news is that rate of return to skills is high in Africa. What is therefore needed is a big push on quality education and skills, as Korea and other East Asian countries did to underpin their growth miracles. For this, partnerships among industry, government and perhaps even civil society in vocational and tertiary education should be formed".

In conclusion- Africa is one of the youngest continents with a population of 820 million in 2008, that will soon rival that of China and India. Therefore the youth especially need to seize the opportunity to change the destiny of this rapidly growing continent.  Hence its only a matter of time before Africa  will position itself as the fifth BRIC alongside Brazil, Russia, India and China.


My take: while the title sounds ambitious, there is concrete evidence that Africa has made great strides in recent years. However some of the proposed solutions are centred largely on donor funds, an aspect which is outside of the continent's control especially with the current financial crisis- most recently in Europe. According to Africa Economic Outlook, in the OECD/DAC report of February 2010,  expected overseas development aid levels to developing countries will reach record levels in 2010, in dollar terms, increasing by 35% since 2004.  Africa, however is likely to get only about USD 12 billion of the USD 25 billion increase envisaged at Gleneagles Summit in 2005. This shortfall is due in large part to the under-performance of some European donors who give large shares of ODA to Africa