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Addressing Energy Poverty will Take a Multi-Resource Approach in Africa

The African continent has the most people without access to energy and yet also represents the continent with the fastest-growing population. As demand continues to far outweigh supply, energy poverty becomes more of a crisis across the continent.

The African continent has the most people without access to energy and yet also represents the continent with the fastest-growing population. As demand continues to far outweigh supply, energy poverty becomes more of a crisis across the continent. In order to address this crisis and achieve Sustainable Development Goal 7 – universal access to affordable, reliable and sustainable electricity – NJ Ayuk, Executive Chairman of the African Energy Chamber (AEC) has outlined a strategy.

Speaking during the January 2022 edition of the Rystad Talks Energy webinar – a platform for enhanced dialogue on Africa’s economy, led by CEO Jarand Rystad -, Ayuk emphasized that in order to address energy poverty, Africa needs to have a multi-resource approach, whereby the continent utilizes all of its natural resources in the short term, slowly reducing the reliance on oil and coal in the medium term through the uptake of natural gas, and transitioning to cleaner sources in the longer term.

“If we want to look at a solution, we need to make sure we create the energy we need immediately and use the resources we have. We have to use all forms of energy we have. Climate change is a big problem, but we also have 600 million with no access to electricity and 900 million with no access to clean cooking. We should be able to use oil, natural gas, and in some stages coal. We need to move towards renewable energies and carbon capture but still continue to fight for poor people,” he said.

“We need to look at the wealthy nations to cut down emissions and then address Africa. We are all in this together. Right now we have a crisis in Europe where people are turning to coal. They are changing regulations to start looking at gas. We can phase out coal and do it fast, but we need to explore other resources in the short term like gas.”

Specifically, Ayuk reaffirmed both his and the AEC’s position on natural gas, emphasizing that the resource has a critical role to play in Africa’s energy transition. The problem lies not with leapfrogging to the future – as is seen in other sectors such as telecommunications, where Africa has made considerable progress with mobile money platforms – but rather in the unrealistic expectations of the west. How can Africa be expected to leapfrog to a renewable energy future without the adequate financing to do so?

Meanwhile, Africa’s struggle with energy poverty can be attributed to a variety of factors, some of which include the continent’s reliance on foreign aid; ineffective resource management; and tight market controls. By addressing these factors, Africa can not only open up its market, spurring business across multiple sectors, but establish domestic capital raising opportunities that will improve investment across the energy sphere.

“We have to be honest, it’s poverty. Poverty causes energy poverty. Africans are also responsible for this. We have relied on foreign aid and waiting for someone to come and do things that we have been able to do ourselves. We have not managed our natural resources well. If we focus on revenues and building power plants, we could have had fast tracked industrialization. We have relied on multinational institutions and development partners, and they have not met commitments. I am a big fan of free markets, individual liberty and letting the markets work for themselves. We need to change in Africa because we deserve better,” Ayuk stated.

Inadequate infrastructure and the blocking of financing by international organizations is problematic. European countries, for example, are still using African gas to power their economies – which is fair – and yet African gas investment has been restricted. Africans, like the west, have a right to develop their resources, working together with international investors to power Africa and accelerate industrialization.

In order to increase investment and drive renewable energy development, Africa needs to implement structural reforms within its energy sector by focusing on creating enabling environments for investment; introducing attractive fiscal terms for foreign players; and incentivizing increased private sector participation in the sector.

“We have to do bigger things in Africa. We need to make it easy to do business, we need to become more transparent, we need to fast track projects, cut our bureaucracy and really take a look in the mirror. With every day that we have a child in Africa go to bed without lights, we take away opportunity from that child. Energy poverty should be the fight of our lifetimes,” Ayuk concluded.

While foreign capital is important, African institutions also have a role to play in driving Africa’s energy growth. Accordingly, facilities such as the African Energy Bank could not only meet demand for capital in the renewable energy space, but enable the effective development of oil and gas resources across the continent. The creation of an African Energy Bank will open up critical solutions for Africa’s energy sector, solutions which need to be established before and at African Energy Week (AEW) 2022 in Cape Town, where a number of deals will be signed, and key decisions announced by international stakeholders and their African counterparts.

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