African governments and the private sector have critical roles to play in the energy market

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African governments and the private sector have important roles to play in the energy sector, especially in terms of investment resources and providing the appropriate regulatory environment.

Participants at a Thursday seminar on the theme “Lighting up Africa: Are Electricity Markets Fit for Purpose?” at the ongoing Annual Meetings of the African Development Bank in Lusaka, Zambia, agreed that public and private entities have a big role to play in the sector given the lamentable energy deficit on the continent.

Participants shared ideas on the financing and management of electricity systems in Africa, and how these could be leveraged to realise the objectives lighting up and powering the continent.

“Governments should be part of the regime of power pools. They should be involved in setting rules and providing a level-playing field,” said Mthuli Ncube, a public policy professor at Oxford University and former Chief Economist and Vice-President at the AfDB.

“There has to be a system that would manage the deficits and excesses in the power pools,” he added, underscoring the need for multiple players in energy generation and transmission.

Power trading in Africa dates back to the 1950s, following a bilateral agreement reached between the Democratic Republic of Congo and Zambia. Currently there are four power pools for Central, Eastern, Southern and Western Africa as well as the Maghreb electricity committee (COMELEC) which has been in existence since 1989. Zambia provided electricity generated from the Kariba dam to some its eight neighbours until the recent climate-induced drought and El Niño effect that have drained its power and mining sectors scuttled the deal.

These pools that currently operate intermittently on a low scale could play a critical role in the Bank’s “New Deal on Energy for Africa”, which aims to provide universal access to electricity to the continent in the next decade through the generation of 162 gigawatts along with over 130 million on-grid and 75 million off-grid connections.

The AfDB’s focus on electricity as the topmost priority of its High 5 priorities comes with the realization that more than 640 million Africans have no access to energy, corresponding to an electricity access rate for African countries at just over 40%, the lowest in the world.

Participants on the panel included the Managing Director of Zambia’s electricity utility, ZESCO Limited, Victor Mundende; the Deputy CEO of Millennium Challenge Corporation, Nancy Lee; and William Lyakurwa, a development economics professor at the University of Tanzania.