African leaders urge passage of Electrify Africa Act

By Tony Elumelu and Aliko Dangote*

Dangote, Elumelu at World Economic Forum Davos

In the next week, the U.S. House of Representatives is expected to vote on the Electrify Africa Act, passed by the Senate under unanimous consent late last year. This bill directs the President to establish a multiyear strategy to assist countries in sub-Saharan Africa implement national power strategies and develop an appropriate mix of power solutions, including renewable energy, to provide access to reliable, affordable, and sustainable power in order to reduce poverty and drive economic growth.

On behalf of the African Energy Leaders Group (AELG), a high-level public-private partnership launched last year, we welcome the leadership of the U.S. Congress on this issue. It is our view that the Electrify Africa Act will provide a durable strategic framework to address the challenges of energy poverty on the continent by leveraging a private sector-led, market-based approach which is essential to the sustainability of this effort over time. If passed, Electrify Africa will be the most significant legislation to advance U.S. commercial relations with the continent of Africa since the initial passage of AGOA, 15 years ago.

A wide range of energy sources exist on the continent. Yet, more than 600 million Africans lack access to affordable, reliable and modern energy services. Hundreds of millions are also denied access to basic nutrition, quality education, medical services and sanitation due to lack of adequate energy supply. Recent surveys of African businesses reveal that energy costs account for 40-60 percent of operating expenditure (more than 10 times what it is in the United States), dramatically increasing the cost of doing business in Africa. The effect of the power deficit on our economies is damaging and tangibly constrains development.

Africa has the largest rates of extreme poverty and the fastest population growth of any region. The rapid industrialization and sustained economic development necessary to provide jobs for this growing population simply cannot be achieved on a weak power base

We have been encouraged by the increasing awareness among both African and U.S. political leaders on these issues, and by the willingness of the private sector to invest alongside governments in meeting the growing demand for power on the continent. Through the much-lauded Power Africa Initiative, the United States is helping to provide assistance for policy reforms and transactions which expand infrastructure and strengthen regulations in the power sector. This is not only good for Africa, as these initiatives benefit U.S. companies seeking access to new and rapidly expanding markets for their equipment, expertise and products.

The Overseas Private Investment Corporation (OPIC) is another critical development instrument which supports U.S. investments in Africa’s energy sector. However, it is hampered by well-intentioned yet counterproductive restrictions on carbon emissions for projects financed even in the lowest emitting countries of the world.  In order to better leverage U.S. resources towards implementing the objectives of the Electrify Africa Act, we encourage Congress to follow this legislation with a strong reauthorization of OPIC that includes the flexibility to align with the national realities and priorities of the countries you wish to help and considers the full range of energy options available to them. In this regard, we must work together to identify an appropriate balance between poverty alleviation and environmental protection.

We applaud the efforts of all those who have championed the Electrify Africa Act, and urge the House of Representatives to pass this legislation without delay. From our perspective, this bill would codify access to electricity in Africa as a long-term U.S. foreign policy priority, for the benefit of millions of Africans and for U.S. companies doing business on the continent.

*The Hill.Dangote is president of the Dangote Group. Elumelu is chairman of Heirs Holdings and founder of the Tony Elumelu Foundation. Both are co-founders of the African Energy Leaders Group.

The African Energy Leaders Group, launched at the World Economic Forum in January 2015, is a working group of high-level African business leaders and heads of state. In line with the targets of UN Secretary-General Ban Ki-moon’s Sustainable Energy for All initiative (SE4All), one of the group’s primary goals is guaranteeing access to reliable, affordable energy services for all Africans by 2030, through regional power pools and innovative public-private partnerships