OPEC should review its aid funding models to help power Africa, writes Dr Ricardo G Barcelona
Good souls bemoan Africa’s energy poverty. While money flows freely, African aid is a story of unfulfilled dreams and broken promises. OPEC – oil exporting and producing countries – could change this by playing a smarter game in grant giving and impact investing.
The OPEC bloc earns $3.28bn on a good day, or half a billion when they have a “bad hair day”. The OPEC Fund for International Development (OFID) has disbursed $4.8bn since its launch in 2007.
Out of the $464.4mn aid dished out by OFID in 2017, Africa ($266.8mn) and Asia ($110mn) received the lion’s share. While some small-scale wind or solar power projects were funded, around 60 per cent went of the monies went to trade financing. So, for OFID to achieve “higher levels of financing and bolder policy commitments, together with a willingness to embrace new technologies on a wider scale”, they must integrate impact investing into their gift giving.
Corruption, bureaucratic leakages, and poor governance, are well known snag points in Africa. They impede the effective use of aid. At worst, these weaknesses are seen to perpetuate under-development by encouraging a culture of dependency. However, these are not legitimate reasons to do little, or nothing, to ease Africa’s energy poverty. Less than half of the people have access to energy in most countries, with South Africa as the only exception.
Corruption, bureaucratic leakages, and poor governance, are well known snag points in Africa. They impede the effective use of aid. At worst, these weaknesses are seen to perpetuate under-development by encouraging a culture of dependency. However, these are not legitimate reasons to do little, or nothing, to ease Africa’s energy poverty. Less than half of the people have access to energy in most countries, with South Africa as the only exception.
Scaling up aid may prove the easier task. Making grants work and earn their keep is more challenging. Here are some thoughts:
Massive energy supply increases are needed
To ease energy poverty, a massive increase in supplies is called for. Small commitments in wind or solar power, while laudable, may hardly make a dent. Kenya’s access to energy is estimated at 55 per cent, on a power system with 2,351 MW installed capacity. To create full energy access, its capacity may have to double, together with massive investments in interconnections and distribution networks. To meet its clean energy ambition, Kenya would have to rely on its under-utilised geothermal and hydro resources, each accounting for 1,105 MW and 705 MW of existing capacity (or 76.9 per cent), to expand.
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