by Armand Pineda, GE
Many assume Africa’s economy is agrarian-driven, but a number of different sectors have contributed to the region’s growing economy in the past few years including mining, consumer goods, oil and gas, and telecommunications. Combined with the nearly $55 M in aid Africa receives every year and you’d wonder why the region isn’t financially thriving.
The answer lies in the impact between long-term economic stimulation versus short-term charitable donations. One invests in the infrastructure, technological development and skill building of the workforce to spark business growth while the other has a more temporary effect on the society, such as material items. In the long run, economic stimulation is better for the regions because it will still alleviate poverty and ensure the country can keep up with the demands of a growing economy.
There are a number of solutions designed to eradicate poverty, but only some allow nations to truly prosper. Building office space, investing in reliable power and teaching skills that enable a workforce are all ways a country can continue to grow for years to come. Ethiopia, for example, is undergoing an approximately $60 M dollar project to upgrade its current 4,200 megawatt grid to support local small businesses, factories and adjacent communities. One of the benefits of an investment like this is the impact it will have on society—the access to education, Internet, standard electricity. On the other hand, monetary donations and donations of consumer goods don’t leave as much of an effect on the economy. While they provide much-needed relief at the time, they are disposable. A country needs to create their own resources and income to support its industrial ecosystem and citizens.
Putting it into context
Populations from countries like Mozambique, Democratic Republic of Congo, Zambia and Malawi all live on $1,90 per day. To compare, consumer rent, groceries and local purchasing power in more developed country like Germany or France costs about 150 percent more. The average cost of a monthly utility bill in Maputo, Mozambique is (36.03 €) versus Paris, France, where it costs (166,88 €). This doesn’t factor in location and lifestyle, but you’ll notice the economic health has a direct impact on the level of poverty in a society.
Take Malawi: The agricultural industry supports well over 80 percent of the population, but relying on agriculture can’t support the growth of the digitising worldwide economy for much longer. Countries are investing in digital technologies to power their GDP and stimulate growth—countries that rely on pre-industrialised sources of income will fall behind.
Spurring the Economy
Africa has great market potential: It’s the second most populous region with over 1 billion people, has a total land area of 29 million square kilometers, and roughly half of its inhabitant live in urban areas. Given this opportunity, Africa must address high poverty and low electrification rates with economic development through various industries. Real improvements happen when a country develops itself and can rely on its own infrastructure.
So, how can the energy sector improve the economic potential of Africa? It can start by providing the necessary technology for populations to be healthy and educated, so they become attractive locations to businesses for jobs, schools and organisations.
How Energy Can help
There are more than 1 billion people without access to electricity around the world. For those remote areas that don’t have access to electricity or a grid there are number of solutions and technologies that can be implemented:
Typically used in rural or remote locations, microgrids are efficient means of electrifying communities that don’t otherwise have access to the grid. They can also be used for islands and other land areas isolated by water that aren’t connected to large grid infrastructure. Plus, locations with water resources are attractive for microgrid applications because of their renewable potential.
Digitising the Grid
As the world economy grows, industries are transforming the technology they use to keep up with digital transformation—and this is not limited to the energy industry. Because they’re ripe for infrastructure, African countries are often sough for implementation of these projects. For example, GE worked with MCA-Malawi, a government entity that aims to revitalise the power sector, to install and commission an Energy Management System (EMS). The purpose of the project is to stimulate economic growth and provide individuals with the means to get an education and build work skills.
In addition to helping the community, energy solutions are also sought to industrialise cities and nearby towns. In Ethiopia, GE is partnering with the country on its largest sub-Saharan product package to date to build new high voltage stations and upgrade existing facilities under a $49 million contract. The upgrade will provide sufficient and reliable power for businesses interested in the Ethiopian capital of Addis Ababa and benefit the surrounding area financially.
While education and business growth are crucial to Africa, access to an affordable, efficient, local and fast health system is key to support economic development and reduce poverty. GE is developing a program aiming at providing smart power supply solutions/assets for the local hospitals, independent from the existing grid (which is sometimes weak or out-of-reach). By providing stand-alone autonomous, available and sustainable energy, GE enables the installation of modern and efficient medical systems as well as their long-term and optimal use, to the direct benefit of the local population and ecosystem.
Putting the proverbial power in the hands of organisations, governments and policy makers
Not investing the technology, energy and resources into regions with such potential, like Africa, is hampering our global economy. When people don’t have access to education and affordable healthcare due to lack of electricity, we’re failing to give citizens the opportunity to contribute to the world simply because they don’t have means to help. It’s up to businesses and governments to energise their partners so we can all enlighten the world.