UNRELIABLE ELECTRICITY SUPPLY HOLDING BACK AFRICA

Madam,

Africa’s regional integration has long been crucial to the continent’s economic development and prosperity. However, one of the significant challenges to this integration is the inadequate access to electricity in many African countries. Several reasons make unreliable and low electrification rates a significant impediment to Africa’s regional integration. First, electricity is a critical input for industrial production and economic growth. Without access to reliable electricity, businesses cannot operate at full capacity, which curtails productivity and competitiveness. Energy-intensive industries such as manufacturing, mining and agriculture are the hardest hit without electricity or energy. Two of the largest economies in Africa, South Africa and Nigeria, have the potential to lead the way in regional economic integration. The lack of access to reliable electricity has significantly hindered economic growth in Nigeria. In South Africa, the energy crisis has led to frequent power outages, which have disrupted industrial production and economic activity. With limited electricity access, it is difficult for African countries to compete with other regions to attract investment and trade.

Inadequate access to electricity has also hindered cross-border trade and investment in Africa. For example, the lack of reliable electricity supply has made it difficult for African countries to develop regional value chains essential for economic integration. One study found that, on average, it takes 50 per cent longer for goods to cross borders in Africa than in other regions. The unreliable energy infrastructure partially contributes to difficulties in establishing cross-border supply chains and transporting goods. In contrast, countries with high levels of electricity access have been able to attract significant investment and drive economic growth. For example, Rwanda has made tremendous progress in expanding access to electricity from 9.6 per cent in 2010 to 46 per cent in 2020. The goal of Rwanda’s National Strategy for Transformation is to achieve universal access to dependable electricity by 2024.

The above-mentioned development has facilitated investment in the country’s energy sector and enticed foreign investment in the manufacturing and services industries. As a result, Rwanda is the fastest-growing economy in Africa in recent years. According to the World Bank, Ethiopia has recently made significant progress in expanding access to electricity, with access increasing from 30.1 per cent in 2013 to 51.1 per cent in 2020.

Investment

The manufacturing sector has experienced considerable investment from domestic and foreign firms, contributing to overall economic growth. Helped to drive investment in the country’s energy sector, including in renewable energy, Ghana has the potential to become a net exporter of electricity in the region. The inadequate access to electricity in many African countries poses a significant challenge to successfully implementing the African Continental Free Trade Agreement (AfCFTA). AfCFTA aspires to forge a singular market for commodities and amenities in Africa, the success of which is hinged on efficient and steadfast energy infrastructure to buttress cross-border trade and investment. Without adequate access to electricity, it will be difficult for African countries to take full advantage of the trade opportunities provided by AfCFTA. Therefore, expanding access to electricity is crucial for the successful implementation of the AfCFTA and the continent’s overall economic development and prosperity. Prioritising the expansion of electricity infrastructure will position countries to better benefit from the trade opportunities created by the AfCFTA and drive economic growth and integration in the region. South Africa and Nigeria’s unreliable and low electricity access levels impede Africa’s regional integration.

African governments must prioritise the development of energy infrastructure and increase access to electricity, to unlock the continent’s economic potential and improve the lives of millions of Africans. The inadequate access to electricity in many African countries is not only a hindrance to their economic growth and regional integration but also poses a significant challenge to the successful implementation of the AfCFTA. The lack of reliable and affordable energy infrastructure hinders the development of regional value chains, which are essential for economic integration. Moreover, it limits the potential for cross-border trade and investment. Therefore, increasing access to reliable electricity must be a priority for African countries to achieve sustainable economic development and regional integration.

Johannes and Adunimay

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