One in every six people on Earth is African. Despite that, the continent generates only 4% of the world's electricity.
Last year, South Africa produced 238-billion kilowatt hours (kWhs)of electricity. The next most energy productive country on the continent is Egypt, with 124-billion kWhs — about half the amount. Algeria comes in third with a mere 40-billion kWh.
Nigeria, which is seen as the new economic gold mine, produces a paltry 20-billion kWhs, or 4 000 megawatts, for its population of over 160-million people.
Twenty-four countries on the continent produce amounts so small that they are recorded as "zero billion kilowatt hours" according to the Central Intelligence Agency's fact book.
Against this backdrop, speaking to a packed auditorium at the University of Cape Town on June 30, United States President Barack Obama unveiled his much-anticipated pledge to "power Africa".
The five-year project, said Obama, would double access to power in sub-Saharan Africa by catalysing the production of 10 000MW of new energy.
US investment
With the new Medupi and Kusile power plants to generate 4 500MW each, the power generated by these two stations is roughly equal to what will be required to double power access for the entire remaining part of sub-Saharan Africa.
"We're going to start by investing $7-billion in United States government resources," said Obama.
"We're going to partner with the private sector, who themselves have committed more than $9-billion in investment. And in partnership with African nations, we're going to develop new sources of energy … That's what opportunity looks like."
The project is poised to increase electricity access to at least 20-million new households across six countries: Nigeria, Ghana, Ethiopia, Kenya, Liberia and Tanzania.
These states, hand-picked by the US, had set "ambitious goals in electric power generation" and were making the reforms needed to "pave the way for investment and growth", said the White House in a statement.
The plan has ushered in the participation of major American investors, as well as a few backers from other countries.
Standard Chartered's commitment
They include corporations such as Heirs Holdings, Symbion Power, Aldwych International, Harith General Partners and a biomass project committed by Husk Power Systems.
Most will participate through investment, while some will provide expertise and technical support as well.
On July 1, British-based bank Standard Chartered committed $2-billion of new financing to the scheme. This will constitute more than 20% of the initial private sector contribution to the campaign.
"We believe we have made the single largest private commitment so far," said Dan Mobley, Africa regional head of corporate affairs for the bank.
Joining it is power giant General Electric, which has undertaken to provide 5 000MW of the total 10 000MW committed across all six countries.
The company would achieve this in several ways, said Jay Ireland, the president and chief executive of General Electric Africa in a telephonic interview with the Mail & Guardian.
Clean and renewable forms of energy
Among other things, it plans to provide expertise, project management, maintenance and support services to projects it identifies.
"We also might invest equity into certain projects," he said.
While the programme makes an overt commitment to clean and renewable forms of energy, it also speaks about tapping into Africa's "new discoveries of vast reserves of oil and gas".
Energy commentator Matt McDermott said the speech revealed the president's tendency to "talk up clean energy, but expand dirty energy".
In his opinion, "committing the programme to all-renewables would be the only sustainable solution".
But Jack Hillmeyer, the spokesperson for the US embassy in Pretoria, said the project would not stipulate where investors should put their resources.
Bringing American companies to the table
"Power Africa is not about telling sub-Saharan African countries how to develop their sector. It's about bringing American companies to the table and encouraging them so that they look at the region as an investment opportunity."
Ireland said that General Electric preferred natural gas sources.
"Natural gas is what we like the best, but we also do biomass, wind and solar," he said.
Ireland could not yet indicate how much of the 5 000MW would be produced by which of the energy sources as the company was still in the process of identifying projects.
Standard Chartered also did not state where the intended energy sources would be.
"There's a big thrust —quite rightly — from the US to look at clean and renewable energy. So we will look at that, but there's got to be a mix. There's only a certain amount of capacity for renewable energy," said Mobley.
Investment loans
While small portions of the $7-billion allocation from the government are grants, the vast majority of the amount to be made available will be in the form of investment loans.
The US Export-Import Bank will be the main contributor. It has undertaken to make up to $5-billion in investment available to support US exports for the development of power projects across the area.
"Companies can get concessional loans — loans at a lower rate — if they support and use American products," said Hillmeyer. While the criteria for qualifying for loans do not stipulate strict exclusivity, they will mainly be awarded to American companies.
"The programme is clear: it is here to stimulate American investment into Africa," he said.
Part of the offering is provided by the Overseas Private Investment Corporation. The corporation provides insurance in developing economies where investors might battle to secure it.
"What Africa needs is not a hand-out from the US government. It's investment from US private businesses," said Hillmeyer.
But while the programme aims to entice new investors, many of the players already on board are anything but that. Both General Electric and Standard Chartered have been on the continent for over a century.
For this reason, Brian Mugabe, the head of research, Africa, at investment firm Imara Capital, said that the announcement did not materially affect the investment environment in countries such as Nigeria.
"Where the sector was open to foreign investors, there were no impediments pre-Power Africa," he said.
Who is plugging into Power Africa campaign?
• United States government contributions make up $7-billion;
• US Export-Import Bank: Up to $5-billion available to support US exports to develop power projects;
• Overseas Private Investment Corporation (Opic): Up to $1.5-billion in financing and insurance;
• Millennium Challenge Corporation: Up to $1-billion through country compacts;
• US Agency for International Development: Up to $285-million in technical assistance, grants, risk mitigation and policy implementation;
• Opic and the US Trade and Development Agency: About $20-million in project preparation, feasibility and technical assistance grants; and
• The US African Development Foundation and General Electric: A $2-million off-grid energy challenge to provide grants of up to $100 000 to African-owned and operated enterprises to develop or expand off-grid solutions. — Source: White House fact sheet