Africa has the fastest growing human population in the world, untapped energy resources and vast, undeveloped agricultural potential, but struggles to feed its people, spurring unrest and discontent that contribute to growing flows of African refugees into Europe, and increasingly into the US. The key to prosperity and food access for all Africans is affordable energy access.
As Chinese and Russian energy market interventions make inroads in Africa, American risks rise.
Energy security will unlock Africa’s latent economic potential and lay a path to prosperity with the right policies enabling investment in electricity infrastructure and leveraging cheap African energy sources. By enabling direct investments in affordable African energy security, the US would advance its national interest after years of decline.
The African Energy Crisis
Energy in Africa is a contested arena because climate-change policies in the industrialized West are often in conflict with the economic growth and development imperatives of African countries, particularly in benefiting from cheap, locally available fossil fuels.
Africans want to benefit as much from their domestic energy resources as the US has done already, leading Africans to ask why a continent that has never been carbonized must now be de-carbonized at their cost when their continent has not benefited from fossil fuel production. They notice that Western help comes with climate policy demands, but Eastern help does not. In both cases the cost for Africa is too high.
No wonder then that in 2023 the RAND Corporation concluded that US influence on the continent had waned, while Chinese and Russian influence had grown. American military decline may be eroding even faster in reality, witnessed by the Niger military regime forcing the American military out after also ousting its long-standing colonial master, France, and handing the American-built base over to Russia.
China is now Africa’s largest trading partner with its long-standing Belt and Road Initiative (BRI), while Russia has renewed interest in the continent in the wake of sanctions following its Ukraine invasion.
Trade relations between Africa and America have cooled remarkably despite the African Growth and Opportunity Act (AGOA). The value of trade between the US and Africa between 2008 and 2021 decreased by 55% to $64 billion. The continent’s trade with China in 2021 alone was valued at $254 billion. China is estimated to be active in key infrastructure projects — including energy — in 33 African countries. Like China, Russia promotes its state-linked businesses involved in nuclear and other energy areas. For instance, South Africa had announced Russia’s Gazprombank as its partner to refurbish a gas-to-liquids refinery. Gazprombank is under Western sanctions.
Agriculture
By contrast, Power Africa, an American initiative, was launched in 2013 to expand electricity generation and access, yet its target of 30,000 new connections by 2030 will have negligible impact. The US Development Finance Corporation (DFC) climate mandate since April 2021, which incentivizes the agency to prioritize clean energy infrastructure, may have something to do with it. Significantly, South Africa is fighting the EU carbon tax on trade from Africa. Western energy prescriptions have so far failed Africa, particularly in growing jobs and ending hunger through agriculture.
Food and agriculture production in Africa could grow from its current $280 billion a year (2023) to $1 trillion by 2030. Yet, about 80 percent of the continent’s food is still produced by small-scale, often subsistence farmers, and more than 200 million Africans still go hungry every day.
While European farmers stage dramatic protests over harm to them from green policies, China is ramping up to support agriculture in Africa, with the aim of increasing agricultural imports from Africa to $300 billion by 2025. The increase in Chinese market access and potential slowdown in agricultural production in Europe and possibly the US, due to environmental regulations, provide opportunity for Africa.
Understanding the Energy Problem
Some 600 million Africans — of an estimated population of 1.4 billon — lack access to electricity. Universal access to affordable energy electricity will require additional annual connections to 90 million people — or triple the existing rate of growth. Although increasing access to electricity has already led to improvements in education, economic growth, and development, the challenges of energy access leave the average African with an energy diet that would be unimaginable to the average Westerner.
The average annual per capita electricity consumption in sub-Saharan Africa is only 488 kilowatt-hours — equivalent to about 5 percent of the consumption in America. If South Africa’s consumption is removed from the equation, annual per capita consumption in sub-Saharan Africa drops to 150kWh.
This is only enough to run a refrigerator for 6.5 hours a day.
Inadequate energy grid expansion and investment lead to extremely high network losses, averaging 15% — almost twice the global average of 8% — across the continent in 2020.
For example, Nigeria, with a population of 206 million, has a power generation capacity of around 12 gigawatts, whereas Brazil (with a similar population) has a generation capacity of 181GW. Nigeria’s grid infrastructure cannot handle more than around 5GW generation capacity at any given time, which results in 43 percent of the population effectively lacking electricity access. No wonder Nigeria already suffered catastrophic grid blackouts in April and July of this year
Energy poverty exacts a price. South Africa’s well-documented energy crisis has crippled economic growth, contributing to rising crime and record unemployment and dangerously eroding social stability.
The Renewable Wave is a Mere Ripple
According to the IEA, energy investment in Africa has been declining due to the Covid-19 pandemic; global disruptions, including Russia’s Ukraine invasion; and rising borrowing and debt servicing costs.
Clean energy investment in Africa accounts for less than two percent of the global total despite the continent representing some 20 percent of the world’s population. Energy investment will need to rise to $200 billion a year by 2030 for African countries to meet their energy-related goals.
This is likely a pipedream, because Africa cannot afford the debt burden, even if the money can be raised. Practically, even if the African governments somehow raise the money required, these investments will come to naught without an expansion of power grids.
Despite plentiful solar and wind opportunities, grid expansion is a significant challenge to the use of renewables to alleviate South Africa’s energy crisis. Grid capacity must be expanded with an extra 1430 miles per year against the 186 miles currently available.
Southern African regional grid expansion is also vital for sharing electricity resources among countries. The Southern Africa Power Pool (SAPP) represents regional electricity companies who have created a common market and grid in the Southern African Development region, but capacity and transmission constraints have resulted in a deficit of 2154MW, which undermine SAPP ambitions.
These challenges are replicated across other regional grids and power pools on the continent.
Options for the Future
With enough investment and determination to solve the other challenges, the continent has options to improve energy access for hundreds of millions of people.
For example, solar mini grids are being rolled out in sub-Saharan Africa, rising from about 500 installed in 2010 to 3,000 installed today with a further 9,000 planned. Some estimates predict that these grids can produce electricity for as low as $0.20/kWh, the most cost-effective solution for deep-rural Africa.
Initiatives are under way to make mini-grid investments attractive for the private sector, but at the current pace only some 12,000 mini grids will be implemented by 2030, far off the 160,000 that are needed to provide power to 380 million people.
Gas offers a significant transitional energy source. Africa’s natural gas resources are abundant and are estimated at 800 trillion cubic feet, with half the continent’s countries having proven gas reserves. But, like many of the other opportunities for Africa, inadequate infrastructure, lack of financial resources and regulatory frameworks hinder progress.
Progress depends on finding a new financing model for these energy projects.
Mega-farming
African agricultural production must shift from peasant farming toward large-scale commercial farming, with the ultimate aim of multiplying successful mega-farms in Africa in order to feed its fast-growing population and to export.
This requires reliable, affordable base load.
In addition to the normal requirements for agriculture, mega-farming becomes feasible through the rule of law, secure land tenure, adequate infrastructure, well-functioning banking and financial markets, and affordable energy access.
The benefits of mega-farming are legion. Mega-farms provide employment for educated people and unskilled labour, a pathway to development and economic growth in rural areas that predictably lag behind fast-growing urban areas. Mega-farms encourage stability and food security.
South African mega-farms illustrate the point. The country’s sophisticated poultry industry is more competitive than all European poultry producers. Nearly 47,000 South African small-scale farmers left poultry production through dumping of chicken by foreign producers, including Brazil, the US, and Europe, as well as the collapse of electricity supply, infrastructure, municipal services, and the effect of Covid restrictions and Avian influenza. But mega-poultry producers remained competitive and helped South Africa avoid chicken shortages despite these problems.
The Sernick Group in South Africa is another example of a successful single mega-farmer. Founder Nick Serfontein built an integrated livestock value chain farming business and then created a privately owned development company called Serdev, for developing emerging livestock farmers. As a mega-farming operation, the Sernick value chain provides support for African farming development through its practical experience of managing a complex value chain and by providing markets and supplies for emerging farmers. The system empowers emerging African livestock farmers to grow from subsistence to commercial status, enabling them to meaningfully participate and benefit from livestock value chains.
Malawi, the fourth-poorest country in the world, relies on agriculture, particularly tobacco production, for most of its foreign exchange earnings. It now aims to encourage mega-farming to boost economic growth and employment, and to combat food shortages. It hopes mega-farming will attract private agricultural investment.
Zimbabwe is an example of the cost of destroying privately owned large-scale commercial agriculture. Once called the “breadbasket of Africa,” and one of the largest tobacco producers in the world, along with Guinea and Sudan. Zimbabwe now spends 100 percent of its foreign currency receipts on food imports. The key to this destruction was the suspension of the rule of law, enabling government to confiscate large-scale commercial farms for little or no compensation. Twinned with endemic corruption (157th of 180 countries in 2022), Zimbabwe is mired in poverty, with little hope for the future and fast becoming a Chinese client state.
If Europe and the US want to contain illegal immigration due to hunger and poverty from the poorest continent with the fastest growing population, they should assist the development of cheap fossil energy in Africa, invest in infrastructure, support rule-of-law institutions, and encourage privately-owned large scale commercial farming, especially mega-farming.
Security, Stability and Prosperity Demands Affordable Energy
Universal and affordable energy access across Africa is essential for prosperity and economic growth on a continent which remains a largely unrealized market for developed nations. Affordable energy access and security will unlock Africa’s economic potential and pave the way to prosperity and food access for its 1.4 billion citizens. Policies enabling investment in affordable electricity infrastructure and African energy resources will help hundreds of millions in Africa to participate in the modern economy, driving development and economic growth.
However, current energy generation and infrastructure are inadequate, expensive, and limit progress. It is a problem that can be solved with flexibility, targeting affordable resources, and focusing on adding value to African resources.
America must re-establish a relationship with Africa, which is increasingly looking to Moscow and Beijing rather than to Washington. At the heart of this relationship lies realistic energy diplomacy. Affordable local energy will enable efficient large-scale commercial farming and mega-farms to feed Africa’s fast-growing population and grow African economies and jobs.
If America won’t, China and Russia will.
François Baird is an Africa expert, and a founder of the FairPlay trade movement and international consulting firm, Baird’s CMC.
