Higher economic growth in Africa in the coming years would lead to an inevitable increase in energy consumption on the continent, according to the recent International Energy Outlook 2018 (IEO2018) by the US Energy Information Administration (EIA).
The Outlook had focused on how different macroeconomic conditions and growth patterns might affect international energy markets in three key regions of the world: China, India, and Africa.
“The work presented in IEO2018 is an important step to better understanding the effects of different patterns of economic growth on China, India, and Africa, as well as improving EIA’s international modelling capabilities,” said EIA Administrator Dr Linda Capuano.
It said greater economic growth on the continent would lead to an expansion of the manufacturing sector and an increase in industrial energy use “because of possible regional competitive advantages”.
The EIA projects Africa’s energy consumption per capita to be about 30 percent higher by 2040.
“Africa, with its wealth of natural resources and fast-growing population, may have a significant impact on international energy markets over the next 25 years.”
It added that there was the need to “further explore the relationship between projected changes in Gross Domestic Product (GDP) and the response of energy consumption, particularly in the industrial end-use sector”.
“Africa has a wealth of natural resources and a younger and faster-growing population than many other parts of the world – and potential for rapid economic growth.
This case also leads to an expansion of the African manufacturing sector and an increase in industrial energy use.
The growing gap in GDP per capita between Africa and other regions highlights the potential for faster African economic growth.”
It said “Further infrastructure development, particularly transportation network development and electrification, could alter this projection”.
Despite the positive forecast, the EIA noted that Africa’s energy consumption per capita lagged behind other regions.
“In 2015, Africa’s manufacturing sector was relatively small, and its services sector was relatively large, which contributed to Africa’s comparatively low energy use,” the Outlook noted.
According to the World Bank, the electrification rate in Africa was 42 percent in 2016, a situation compounded by power utilities failing to provide efficient and regular electricity supply.
“Only one out of every three Africans has access to electricity,” it said in its report: Making Power Affordable for Africa.
“Power shortages are widespread, not least because utilities are cash strapped and have allowed their assets to fall into disrepair.”
The Bank said only power companies in Seychelles and Uganda, out of 39 surveyed in Africa, were in a position to make enough money to cover operating costs and capital expenditures that were needed for maintenance and expansion of the grid.
“In only 19 countries did the cash collected by utilities cover operational costs; just four of these countries were also covering half or more of capital costs, based on new replacement values of current assets.
Such large funding gaps prevent power sectors from delivering reliable electricity to existing customers, let alone expand supply to new consumers at an optimal pace,” it noted.