Leaders from over half of Africa’s nations met in Dar es Salaam, Tanzania this week to commit to a historic investment in electric-power generation on the continent. The World Bank, African Development Bank, and other organizations are pledging at least $35 billion to expand electricity access to over half a billion people in Africa who currently lack it. This initiative includes funding for solar “minigrids” that serve individual communities, with loans offered at below-market interest rates to mitigate risks.
Ajay Banga, president of the World Bank, emphasized the importance of electrification for economic development, societal stability, and basic human rights. The goal of the summit is to provide electricity to half of Africa’s unelectrified population within six years, with plans to power up to five million people per month.
Despite the ambitious goals, there is skepticism within Africa’s power sector, with concerns raised about regulatory challenges and government interference. The departure of solar minigrid developer Husk Power Systems from Tanzania due to pricing disputes with the government serves as a cautionary tale.
The funding from the World Bank and African Development Bank is contingent on regulatory reforms that allow for private electricity providers to compete with state-run utilities. In addition to solar minigrids, funds will also be allocated to extend traditional power grids supplied by hydropower and fossil fuels.
The decreasing costs of solar power, driven by advancements in technology and production, are seen as a key factor in enabling this electrification initiative. This shift towards decentralized electrification is favored by lenders due to its cost-effectiveness and benefits to end-users.
While the electrification goals are ambitious, challenges remain, including political uncertainties and the need for regulatory reforms. Multilateral funding faces risks due to changing political landscapes, but there is hope that private investment will follow the initial commitments.
Despite the obstacles, the importance of electrification for economic growth, quality of life, and societal well-being cannot be overstated. Lack of electricity affects all aspects of daily life, from education to business opportunities, highlighting the urgency of increasing access to power in Africa.