Akinwumi Adesina is the President of the African
Development Bank. He previously served as Nigeria's Minister of
Agriculture and Rural Development. (File photo)
That amounts to nearly 148 per cent of Tanzania’s gross domestic
product (GDP) and it is five times the current government’s budget. This
year’s budget of the ministry of Energy and Minerals is 537bn/-.
The former Nigerian minister of Agriculture and Cooperative
Development wants to accomplish the assignment in a decade. Akinwumi
Adesina, who was elected to lead the lender in September, is undaunted
by the scale of the challenge.
At least 620 million people have no access to power, including vast
populations in war-torn countries such as South Sudan, Somalia and the
Democratic Republic of Congo.
In Tanzania, about 30 per cent of the population has access to
electricity, whose generation and supply are yet to be stable and
reliable.
“I’m not bothered by that amount—that money is there,” Adesina told Bloomberg of the US in a phone interview late last week.
“Today, Africa generates US$540 billion (1,161.5trn/-) in tax
revenue per year. If you take 10 per cent of that and devote it to the
energy sector, the problem is solved. If we light up and power Africa,
we can have a GDP growth rate of double digits without any problem at
all.”
The target for Tanzania Revenue Authority in the current financial
year is 12.3trn/-. Devoting 10 per cent of that for the energy sector
would boost the ministry’s budget by 1.23trn/-, which is more than
double its 2015/16 financial plan.
‘The New Energy Deal for Africa’
The leader of the lender, who replaced Donald Kaberuka in
September, is implementing a programme dubbed The New Energy Deal for
Africa, which aims to extend electricity to the entire continent by
2025.
Adesina’s energy outlook suggests support for developers of both renewable and fossil-fuel generation plants in the continent.
He wants aid donors and African governments to scale up investment
in energy and will use the bank’s leverage to encourage financial flows
from private companies.
The development bank said this month that it will triple its
funding for climate-related projects to US$5 billion per year. It also
plans to reform the pricing of energy, utilities and subsidy programmes
in Africa’s energy industry.
The focus will be on renewables.
It doesn’t rule out coal, which the World Bank is prodding
development institutions to fund only in the most extraordinary
circumstances.
“The AfDB isn’t against coal,” Adesina said, maintaining the policy
of his predecessor, Donald Kaberuka. “We look at all sorts of energy.
Africa will develop with what is has. It needs green growth, and we will
move in that direction, but you cannot make the shift overnight.”
About US$527 billion invested in Africa’s power industry between
2014 and 2025, with nearly 30 per cent in renewables and over half in
transmission and distribution, according to the International Energy
Agency in Paris.
About US$93 billion of that will be for fossil fuel plants.
The AfDB will focus on big regional projects such as the Inga Dam
in DR Congo. It has the potential to generate 44 gigawatts. It’s also
backing the 310-megawatt Lake Turkana wind project in Kenya and solar
plants in Morocco and South Africa.
The bank is working closely with public institutions such as the
World Bank, International Finance Corp. and the governments of the US,
the UK, Germany, Japan and China.
It is also trying to spur private investment by reducing the risk
of projects with partial risk guarantees and credit enhancement
instruments.
It has recently created Africa50, a platform to work on project
development, with the goal of leveraging US$10 billion of private
investment into the energy industry over the next 10 years.
“Africa has a lot of sovereign wealth funds and pension funds and
we want to leverage them into energy asset classes,” said Adesina. There
are also private equity funds investing in independent power projects,
he said.
SOURCE:
THE GUARDIAN
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