By Paul Callaghan
Partner, Moore Oman
The transformation in Africa’s economic prospects is staggering. After decades of stagnation, many nations are now powering ahead with impressive GDP figures – the question now is how to ensure rapid growth improves people’s lives.
The African Development Bank predicts 3.8% GDP growth this year for the continent and 4.2% in 2025. This is significantly higher than the global average, making Africa the second-fastest growing region after Asia.
Of course, that scale of economic development requires vast amounts of energy: think of the huge quantities of fossil fuels China and India have burned over the past 30 years to become superpowers. However, an oil and gas fuelled industrial revolution in Africa, a continent of 1.4 billion people, would be disastrous for wider attempts to control global warming.
It need not be this way because there are sufficient – and largely untapped – sources of sustainable and renewable energy to offset the carbon emissions of fossil fuels that will continue play an important role in many large-scale infrastructure projects.
Some incredible opportunities exist with renewables and liquefied natural gas (LNG) to bring cleaner power to remote areas where there is still a huge tranche of the population cooking on unpleasant, unhealthy charcoal. They will probably use kerosene to provide light or the village might have diesel generators, which are again expensive, dirty and harmful to their own environment.
Renewables could be an easier option to expand access to electricity without the need to rely on traditional transmission grids. Meanwhile, the widespread adoption of mobile money has enabled innovative financing models for off-grid solar systems.
Various renewable energy projects, including solar and wind, are being implemented across East Africa to diversify the energy mix and boost sustainability. Countries like Rwanda, Kenya and Tanzania have been investing in solar and wind farms to harness their abundant natural energy resources.
In South Africa there was an estimated 7.8GW of solar capacity at the end of 2023, representing nearly 50% of all installed capacity on the continent. The amount of generating capacity installed on homes and commercial premises is soon expected to surpass the total the government has procured in solar energy over the past decade.
Regional integration can unlock the potential for cross-border energy trade and infrastructure development. Regional power pools and interconnectors can optimise resource utilisation, improve energy security, and foster economic development.
The Grand Ethiopian Renaissance Dam exemplifies the transformative power of cross-border collaboration. It will be the largest hydroelectric power plant in Africa when it is completed, with a capacity of over 6,000 megawatts supplying Ethiopia and its neighbours.
Kenya has been focusing on expanding its electricity generation capacity. It is also involved in a power interconnection project with Tanzania to enhance electricity trade between the two countries and improve energy security.
Renewables cannot do all the heavy lifting – nor should they. There are vast oil and gas reserves in Africa that could provide cheaper power at home and valuable export income from resource-constrained overseas markets like Europe.
Nigeria, responsible for two million barrels of crude oil per day, is the largest oil producer in Africa and one of the top oil exporters globally. However, there are also big deposits in Angola, Algeria, Egypt and Libya that have not been fully optimised.
With up-to-date equipment, they could exploit growing demand for LNG, which is seen as a cleaner alternative to petrol and diesel. In fact, a highly efficient plant would make enough LNG to satisfy the host country’s household energy needs as well as generating enough to sell – at higher profits – to petrochemical and animal feed producers. Equally energy-intensive industries like steel-making and large-scale manufacturing would also benefit using from cleaner electricity sources.
The right approach could deliver a win-win for Africa – it could turbocharge industrialisation, boost export income and deliver cheap and secure sources of energy that will transform the lives of families and the growth prospects for business.