Launched by President Barack Obama in Cape Town one year ago, the US Power Africa initiative has been making bold claims about its early successes in a campaign to boost sub-Saharan Africa’s installed generation capacity by some 10GW and connect some 20m more homes and businesses to the grid by 2020 (AE 258/5). Power Africa claims it will make some $7bn available in financial support and loan guarantees from 12 government agencies, led by the Export-Import Bank of the United States (Ex-Im Bank), Overseas Private Investment Corporation and US Trade and Development Agency (USTDA). It aims to ‘de-risk’ projects and to facilitate the inflow of some $15bn in private sector investment into an initial six countries – Kenya, Tanzania, Ethiopia, Nigeria, Liberia and Ghana – although US officials say all countries are eligible for support.

Obama’s initiative is focused on accelerating the development of clean energy and adoption of energy-efficient technologies (like the Africa-EU Energy Partnership). Through its Beyond the Grid programme, Power Africa seeks to facilitate investment in off-grid and small-scale power projects. But the initiative is being invoked on all possible occasions, for example, as a driver behind Ex-Im Bank approving a guarantee for Caterpillar exporter Energyst, and is central to Washington’s trade drive. As Ex-Im Bank chairman Fred Hochberg said, his agency “is committed to expanding US trade with sub-Saharan Africa, which is home to seven out of ten of the world’s fastest-growing markets”.

Gaining momentum from Obama’s global appeal and the pressure he can exert on government to provide resources, Power Africa is seen by analysts as probably the only big African element in his fast-looming ‘legacy’. The 3-4 June US-Africa energy ministerial meeting in Addis Ababa was attended by 350 business leaders and government officials, including more than 30 African energy ministers. Power Africa was prominent at big industry events such as Spintelligent’s mid-May Africa Utility Week in Cape Town and EnergyNet’s Africa Energy Forum on 18-20 June in Istanbul. 
US critics question its ability to meet targets within its five-year time frame. Others fear its main impact could be to help GE and other US heavy hitters to muscle out rivals for bankable projects, though critics such as APR Energy chief operating officer Brian Rich say even this is unlikely given bureaucratic, financial and other constraints in tapping Power Africa support. Only a small percentage of Power Africa’s headline numbers are likely to come from direct financing. “We are not a bucket of money,” said a senior Africa-based diplomat.

Power Africa is about leveraging support, by mitigating risk, encouraging private investment and unravelling the many blockages that have long stopped most projects from going ahead. The appointment of US-funded ‘transaction advisers’ to key positions in ministries, power pools and other strategic positions, coupled with targeted early-stage financing, reflect an accurate analysis of the weak points holding back developments in generation, transmission and distribution. 
Power Africa is supporting subtle but significant change, working “to confront the need to overcome stickiness in the system”, as the diplomat put it. Transaction advisers like Eric Olo in Nigeria have the financial expertise to champion projects and unravel difficulties. This strengthens the support offered by USTDA, which provides technical and financial assistance for prefeasibility studies – in the process giving projects an American flavour (and specification) from the start.

A range of stakeholders canvassed by African Energy welcomed moves such as putting embedded advisers into the Southern African Power Pool and its East and West African counterparts. With the African Union pushing its Programme for Infrastructure Development in Africa of slow-moving big-ticket projects (AE 266/19, 254/21), Power Africa’s commitment to helping ‘transformational projects’ should win friends in high places. Consequently, the non-US (usually lead) partners in several high-profile Power Africa schemes have told African Energy they can accept US grandstanding if it forces open doors to build missing infrastructure.

This article was published in Issue 280 of African Energy