China has been investing heavily in Africa and not to be left behind, President Obama announced a huge new initiative, Power Africa.
The goal is to bring 10 gigawatts (GW) of electricity to sub-Saharan Africa, bringing energy to 20 million households and businesses for the first time. Over the next five years, it would double the people who have access to energy. The US is chipping in $7 billion and seven companies that stand to benefit are investing an initial $9 billion.
It will initially focus on Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania, and will partner with Uganda and Mozambique on "responsible" oil and gas resources management.
More than two-thirds of people living in sub-Saharan Africa lack access to electricity, rising to 85% in rural areas. It will cost more than $300 billion to reach universal access by 2030, the International Energy Agency says.
"Our primary interest when it comes to working with Africa on energy issues has to do with how do we power Africa so that it can be an effective market creating jobs and opportunity," Obama said at a news conference in South Africa, Reuters reports. "We also then have somebody to trade with and sell iPods to, and airplanes, and all kinds of good stuff."
Much of the support provided by the US government will be in the form of export credits and insurance.
The US effort is dwarfed by Chinese money that is flooding into the continent for energy development. In March, Chinese President Xi Jinping offered $20 billion in loans to “help African countries turn resource endowment into development strength."
US government support includes policy and regulatory best practices, pre-feasibility support and capacity building, long-term financing, insurance, guarantees, credit enhancements and technical assistance.
It breaks down like this:
- US Agency for International Development (USAID): $285 million in technical assistance, grants and risk mitigation
- Overseas Private Investment Corporation (OPIC): up to $1.5 billion in financing and insurance to energy projects
- U.S. Export-Import Bank (Ex-Im): up to $5 billion to support US exports that develop power projects
- Millennium Challenge Corporation (MCC): up to $1 billion for African power systems.
- OPIC and US Trade and Development Agency (USTDA): up to $20 million in project preparation, feasibility and technical assistance grants to develop renewable energy projects
- U.S. African Development Foundation (USADF): $2 million Off-Grid Energy Challenge will provide grants of up to $100,000 to African-owned and operated enterprises to develop or expand the use of proven technologies for off-grid electricity benefitting rural and marginal populations.
Private sector commitments are:
- General Electric will help bring 5 GW of capacity online in Tanzania and Ghana
- Heirs Holdings will invest and finance $2.5 billion for 2 GW of energy development
- Symbion Power will catalyze $1.8 billion in investments for 1.5 GW of energy projects
- Aldwych International will develop 400 MW of wind power in Kenya and Tanzania –the first large-scale wind projects in each of these countries, for an investment of $1.1 billion
- Harith General Partners commits $70 million for wind energy in Kenya and $500 million across Africa via a new fund.
- Husk Power Systems will install 200 decentralized biomass-based mini power plants in Tanzania, providing affordable lighting for 60,000 households
- African Finance Corporation will invest $250 million in Ghana, Kenya and Nigeria, catalyzing $1 billion in investment.
Read the White House fact sheet here: