01/08/14

ICT can inspire a revolution in energy consumers’ behaviour The provision of electricity and access to clean energy remain beyond the grasp of hundreds of millions of sub-Saharan consumers, but Africa’s information and communications technology (ICT) boom points to a capacity of investment, entrepreneurship and innovation that, if harnessed to energy supply, could radically lift economic performance. Mobile financial services have brought unbanked communities into the globalised economy; apps relevant to African communities are drawing in funds from US and other tech investors; new ways of linking communities to the diaspora are stimulating business and supporting entrepreneurs. Unchained from stifling government controls and liberated by technological advances, ICT in Africa is a hotbed of innovation. Reflecting radical shifts in the business environment, Google chairman Eric Schmidt in mid-2013 said that Nairobi “has emerged as a serious tech hub”. ICT markets have boomed to an extent unimaginable a decade ago, as long-ignored populations consistently raise their average revenue-per-user figures, and gross domestic product rises with them.

The past decade’s roster of ICT achievements stands in stark contrast to most sub-Saharan African (SSA) states’ failure to provide reliable power. Of course, payments procedures and tariff-setting are more straightforward for mobile telecoms, a largely greenfield boom industry that faces none of the legacy issues confronting electricity and water utilities (it’s natural to pay for telecoms, less so for water, however clean). But the contrast between ICT’s advance in even the remotest locations and the failure to bring sustainable energy for all is stark. The holy grail of African energy economics remains stubbornly distant: how to make gas and electricity consumers behave like market-friendly ICT customers, to become agents for change.

Big business has bought into the African ICT boom. IBM has based a research centre in Nairobi; Google and Microsoft are rolling out new projects in Kenya. But only now, with demand curves rising sharply, have major power developers (re)discovered SSA, and they must contend with tariff regimes that are far from cost-reflective and political opposition to some of their most basic business decisions. Small business – a key motor for entrepreneurial SSA’s take off – has taken to ICT, from opening internet cafes and phone kiosks to developing apps that tackle specifically African problems. African Energy has talked to US business angels who see global opportunities from exporting African innovations. So far, electricity distribution has been the monopoly of often bankrupt utilities, but more localised solutions could unleash pent-up initiative. With distributed energy options increasingly in vogue, entrepreneurs can become involved in everything from off-grid renewables to kiosks recharging the prepaid meters that can help revive utilities’ finances or finance privatised distributors. Mobile apps, developed in markets such as Kenya, have brought unbanked populations even in benighted Democratic Republic of Congo and Somalia into
the global financial services system. Global giant Vodafone developed its M-Pesa (Swahili for cash) mobile wallet in Kenya, and has rolled out the service across poorer SSA communities. It now plans to do the same for poorer eastern Europeans, starting in Romania.

Reforms are making electricity markets more investor friendly. Tariff increases are planned by most utilities, with metering playing a critical role, and the next decade could see electricity delivered more like ICT. Distributed energy options will benefit from increased donor and corporate support, but – more importantly – could be developed according to new economic models. Entrepreneurs are rolling out services from solar-powered milk refrigerators to affordable solar panels to power lighting and television. To give these developments a continentwide impact requires a change of mindset from government, consumers and
other stakeholders. Key battlegrounds will be jurisdictions such as Nigeria, where previous promises of reform have crashed. But ICT has provided models and inspiration for a potential revolution that can, literally, light up the whole of Africa.

This article was published in Issue 282 of African Energy