Energy Efficiency for Sustainable Development in Africa: Challenges and Opportunities

Introduction

Globally, about 940 million people lack access to electricity, accounting for about 13% of the world’s population. Most of these people reside in rural and deplorable areas where this lack of electricity negatively affects their standard of living, the environment and sustainable development (Ahmad, Ali & Basit, 2022). In Africa, at least 645 million people do not have access to electricity. The continent’s electricity access rate stood at 40% in 2017, the lowest in the world. Power shortages and load shedding are on the rise. Even with the implementation of several power pool zones across the continent, Africans still experience a series of blackouts and power rationing that costs an estimated 2-4% of GDP per year. Electricity is necessary for agriculture, communications, healthcare, business and education, which are key drivers of sustainable development.  In Tanzania and Ghana, businesses have lost around 15% of the value of their overall turnover due to recurrent power outages (AfDB, 2018).

Similarly, in South Africa, economic growth has slowed in recent years due to severe power outages. There is also a decline in human capital as computers and other laboratory equipment cannot be used in schools because of the power cuts. Lives are at risk in hospitals, and life-saving equipment and services cannot be used because of the lack of electricity. An inadequate energy supply hampers economic development, hence the need for affordable, reliable, sustainable and clean energy with lower carbon dioxide emissions (UN SDG 7). This paper aims to examine the challenges faced by the energy sector in Africa and present opportunities for improving the sector to achieve sustainable development. The paper shows how energy providers, policymakers and other stakeholders can ensure an efficient and reliable energy supply and how this can be done to achieve sustainable development in Africa. The paper is structured in two sections; the first presents challenges facing the energy sector in Africa, while the second identifies opportunities for the sector.

Energy challenges in Africa  

One of Africa’s main challenges in terms of energy efficiency is insufficient infrastructure. Many African countries need more infrastructure to produce and distribute energy efficiently. The continent’s energy sector is characterized by aging and inefficient power plants, poorly equipped transmission and distribution channels and limited access to modern energy sources. As a result of this inadequate infrastructure, many Africans rely on traditional biomass fuels such as charcoal and wood for cooking and heating, which is not only inefficient but could be potentially detrimental to health and the environment (Makonese, Ifegbesan & Rampedi, 2018).

Secondly, inadequate policies and regulations are the other major barriers to achieving energy efficiency in Africa. Many African countries do not have clear policies and regulations to promote energy efficiency and renewable energy sources. Out of the 54 African countries, only 25 have implemented comprehensive energy access strategies (Djala, 2022). In some cases, policies and regulations exist. Still, they are not applied or strong enough to bring about the necessary changes. Despite being a small contributor to global greenhouse gas emissions, Africa has to do more to adapt to climate risks when compared to the rest of the world. The lack of policy and regulatory frameworks creates uncertainty for investors and can hinder the development of clean energy projects.

Furthermore, limited access to finance is also a major challenge for energy efficiency in Africa. Financing is essential for developing renewable energy projects and modernizing energy infrastructure. However, many African countries face limited access to finance due to perceptions of high risk and low creditworthiness (European Commission, 2019). Heavy investments often require huge finances that African countries can seldom raise, coupled with the lack of political will. The power sector in Africa still requires significant investment to expand access to electricity and improve reliability.

Nonetheless, the sector has traditionally been underfunded, constraining its ability to expand and modernize. Many countries in the continent rely heavily on fossil fuels for electricity generation, which can be expensive and environmentally damaging. This lack of finance makes it difficult to attract private sector investment, essential for scaling up energy efficiency efforts.

Opportunities for the Energy Sector

Despite the challenges, Africa has opportunities to improve its energy sector and achieve sustainable development. One significant opportunity is Africa’s potential for renewable energy. Africa has a good list of renewable energy sources. Included in the list are the power of the sun, wind, hydroelectric, and geothermal. Power pool zones can use these resources to increase the share of renewable energy in the electricity mix, which can help reduce costs, improve energy security and reduce greenhouse gas emissions.

Also, implementing the African Continental Free Trade Area allows power pool zones in Africa to come together and create a common electricity market through regional integration and cooperation in the energy sector; this will help to improve reliability and reduce costs. This includes the development of cross-border transmission infrastructure and the harmonization of electricity regulations and policies. Energy policies in the present AU are centered around implementing the African renewable energy initiative and a harmonized continental regulatory framework for the energy sector, which is a plus for the energy sector in the continent.

Moreover, private sector investment can significantly expand access to electricity and promote sustainable development in Africa. Power pool zones could attract private sector investment by developing transparent and predictable regulatory frameworks and implementing risk mitigation mechanisms such as guarantees and insurance products. Therefore, public-private partnerships are very important for this sector.

Power pool zones could promote energy efficiency by adopting energy-efficient technologies and implementing energy management systems. Another critical step is to prioritize energy efficiency in national development plans. This can involve setting goals and targets for energy efficiency and renewable energy and incorporating energy efficiency into other sectors such as transportation and industry. Such an approach can help African countries to reduce their carbon footprint, improve energy security, and create sustainable economic growth.

Finally, African countries must develop innovative financing mechanisms to support energy efficiency projects. This can include working with international financial institutions, such as the World Bank and the International Finance Corporation, to provide financing and technical assistance. The Africa-EU Energy Partnership (AEEP) is a long-term framework for strategic dialogue to share knowledge, set political priorities and develop joint programs on the key energy issues. It can also involve developing local financing mechanisms such as green bonds and impact investing funds to mobilize domestic resources for energy efficiency projects.

Conclusion and Policy Recommendation

Energy efficiency is very important for sustainable development in Africa. Although the continent still faces many challenges with respect to energy, Africa has opportunities to improve its energy efficiency and achieve sustainable development.  To that end, I propose the following recommendations.

Regional economic communities should come together and create a common electricity market by integrating power pool zones. This will help improve access to reliable and affordable electricity, reduce greenhouse gas emissions and promote economic growth.

There is a need to establish clear policies and regulations, invest in renewable energy projects, develop innovative financing mechanisms and prioritize energy efficiency in national development strategies. This will enable African countries to create a more sustainable and prosperous future for their citizens.

Larissa Ntoubia
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Ntoubia Ngapmen Larissa, holds a Bachelor’s degree in Banking and Finance and a Master’s degree in Economics and Financial Engineering from the University of Yaoundé II Soa. She is currently a research assistant at the Nkafu Policy Institute of Denis and Lenora Foretia Foundation under the Economic Affairs Division.

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