IEA: Energy Access Could Increase African Economic Growth

LONDON (13 October 2014)—Increasing access to modern forms of energy is crucial to unlocking faster economic and social development in sub-Saharan Africa, according to the International Energy Agency’s (IEA) Africa Energy Outlook, a special report in the 2014 World Energy Outlook series. More than 620 million people in the region (two-thirds of the population) live without electricity, and nearly 730 million people rely on dangerous, inefficient forms of cooking. The use of solid biomass (mainly fuelwood and charcoal) outweighs that of all other fuels combined, and average electricity consumption per capita is not enough to power a single 50-watt light bulb continuously. “A better functioning energy sector is vital to ensuring that the citizens of sub-Saharan Africa can fulfil their aspirations,” said IEA Executive Director Maria van der Hoeven. “The energy sector is acting as a brake on development, but this can be overcome, and the benefits of success are huge.” In the IEA’s first comprehensive analysis of sub-Saharan Africa, it finds that the region’s energy resources are more than sufficient to meet the needs of its population but that they are largely under-developed. The region accounted for almost 30 percent of global oil and gas discoveries made during the last five years, and it is already home to several major energy producers, including Nigeria, South Africa and Angola. It is also endowed with huge renewable energy resources, including excellent and widespread solar and hydro potential, as well as wind and geothermal. In an “African Century Case,” the IEA report shows that three actions could boost the sub-Saharan economy by another 30 percent in 2040 and deliver an extra decade’s worth of growth in per capita incomes by 2040. These actions are as follows: • An additional $450 billion in power sector investment, reducing power outages by half and achieving universal electricity access in urban areas. • Deeper regional cooperation and integration, facilitating new large-scale generation and transmission projects and enabling a further expansion in cross-border trade. • Better management of energy resources and revenues, adopting robust and transparent processes that allow for more effective use of oil and gas revenues. As well as boosting economic growth, these actions bring electricity to an additional 230 million people by 2040. They result in more oil and gas projects going ahead and a higher share of the resulting government revenues being reinvested in key infrastructure. More regional electricity supply and transmission projects also advance, helping to keep down the average cost of supply. But the report warns that these actions must be accompanied by broad governance reforms if they are to put sub-Saharan Africa on a more rapid path to a modern, integrated energy system for all.