Power Africa Wins Big At U.S.-Africa Leaders Summit
The goal of the U.S.-Africa leaders Summit was to strengthen America’s financial foothold in Africa by shifting U.S. ties with Africa beyond humanitarian aid toward more economic partnerships.
President Barack Obama announced $33 billion in new commitments during the Business Forum on Tuesday, Aug. 5 with the bulk of the commitments from private-sector companies. That figure rose to $37 billion when Obama announced last minute additional funding at a press conference on Aug. 6.
And the big winner was Africa’s energy sector with $14 billion in new pledges from the private sector and government institutions – amounting to $300 million per year – to help expand Africa’s electric power infrastructure through the Power Africa initiative, which currently combines the efforts of 12 U.S. government agencies and 40 private companies.
The new announcements during the Summit brings the total funding of the program to more than $26 billion in direct financing and investment guarantees, according to the White House.
Power Africa’s initial goal was to add more than 10,000 megawatts of new, cleaner electricity generation capacity and increasing electricity access to 20 million household and business connections.
On the opening day of the Summit, the first-ever Power Africa annual report was released which notes that during the first year the initiative had already reached 25 percent of its overall megawatt goals and the $7 billion public investment has so far leveraged $18 billion in private capital.
“The private sector has shown tangible support for Power Africa through more than $18 billion in commitments by 39 companies, including $1 billion in commitments to the Beyond the Grid initiative by an additional 27 impact investors, developers and distributors of off-grid and small-scale energy solutions,” states the annual report.
Now, one year later,the Power Africa goal has increased to add 30,000 megawatts of additional electricity capacity and expand access to 60 million households and businesses.
And, a year later, those projects are reaching beyond the six focus countries -Tanzania, Liberia, Ethiopia, Ghana, Nigeria and Kenya – normally associated with Power Africa.
“There are the six focus countries, but there has always been an interest to support Power Africa broadly throughout Africa, even though there may not be the same level of attention,” Shari Berenbach, President and CEO of the U.S. African Development Foundation told AFKInsider.
“I think the choice of six countries was primarily strategic in a lot of ways,” Stephen Hayes, President and CEO of the Corporate Council on Africa told AFKInsider. “I think from the administration’s point of view it would like to focus on certain countries and make it successful and then move on to other countries.”
The Corporate Council on Africa is the designated private sector facilitator for both the U.S. Power Africa and Trade Africa initiatives.
“I think every one of the companies that are looking at power in Africa, are looking at where the opportunity exists beyond the six countries. If Power Africa is really going to be done by the private sector, it’s only limited by the amount of investment that the power sector wants to put in,” Hayes told AFKInsider.
“The administration doesn’t limit where you invest and, in fact, that’s why we had Cote d’Ivoire on the panel of the Power Africa lunch.”
That Power Africa lunch panel took place Monday, Aug. 4, during the Corporate Council on Africa’s all-day Business Forum and included a keynote speech by Elizabeth L. Littlefield, Overseas Private Investment Corporation’s (OPIC) President and CEO.
As an example of working outside the six Power Africa focus countries, the U.S. Export-Import Bank announced a $17 million loan guarantee for the West African Development Bank, to support long-term financing for the expansion of the Azito Power project in Cote d’Ivoire from 290 to 420 megawatts.
The Overseas Private Investment Corporation also works outside the six Power Africa focus countries.
“To be clear, the Power Africa countries – those six countries that U.S. Agency for International Development (USAID) has special focus for regulatory advisory capacity – those are the focus countries, they’re not the Power Africa countries,” Overseas Private Investment Corporation spokesperson Charles Stadtlander told AFKInsider. “OPIC’s work is definitely across sub-Saharan Africa in supporting Power Africa.”
OPIC did announce projects for the core Power Africa countries, including $50 million to support construction and operation of the 459-megawatt gas-fired Azura-Edo power plant in Edo State, Nigeria.
The project represents the first phase of a potential 1,000-megawatt power plant and is the first independent power producer in Nigeria in 10 years following recent power sector reforms. American Capital Energy & Infrastructure committed $130 million for the project, as well as future projects in Nigeria.
OPIC had also approved $250 million in financing to support the development, construction, and operation of a 310-megawatt wind power project near Lake Turkana, Kenya. When completed, it will be the largest wind energy project in Africa.
But during the Summit, OPIC also announced the second round of funding worth $10 million for the Africa Clean Energy Finance Initiative,a partnership launched two years ago by OPIC, the State Department, and U.S. Trade and Development Agency to provide early-stage funding to leverage larger private sector investment in clean energy projects across all of Sub-Saharan Africa.
In the first round last year, the Africa Clean Energy Finance Initiative supported more than 25 projects across ten African countries – beyond the six Power Africa countries, including Rwanda, Namibia and Senegal.
Summit Energy Announcements
During the U.S.-Africa leaders Summit’s various events, a number of other new and recent Power Africa transactions were highlighted, though some had been previously announced:
- Standard Bank, Africa’s largest lending institution, and General Electric reaffirmed their commitment to Africa.Both companies had already committed $350 million in financing to improve the power infrastructure in Africa, and General Electric announced an additional $2 billion investment toward infrastructure, as well as skills training and supply-chain development through 2018.
- U.S. private equity group Blackstoneand industrialist Aliko Dangote, “Africa’s richest businessman,” committed $5 billion towards energy infrastructure projects across sub-Saharan Africa.
- The World Bank committed $5 billion in new technical and financial support, building on the Bank’s existing $3.3 billion commitment in the six focus Power Africa countries and its broader commitment to developing the energy sector across all of sub-Saharan Africa.
- As had been anticipated, Ghana President John Dramani Mahama signed a new $498 million contract with the Millennium Challenge Corporation to continue Ghana’s overhaul of its power sector and boost private investments over the next five years. This was the largest U.S. funding through the Power Africa initiative to date.
- One surprise came from the Government of Sweden,which formally announced a commitment to catalyze investments of $1 billion that includes grants for power distribution projects and guarantees and loans for Power Africa projects. In effect, Sweden’s commitment of credit guarantees will help mitigate the risks to private sector investors in African energy projects.
- Prior to the Summit, the U.S. Trade and Development Agency hosted a “reverse trade mission” to Houston July 30-Aug. 1 for oil and gas ministers from Ghana, Kenya, Tanzania, and Mozambique – all countries developing offshore natural gas – to learn about U.S. natural gas technology. Just days before that trip, the World Bank announced approval of $50 million to the Government of Kenya to help manage the country’s oil and gas sector.