Universal electricity access in Africa represents a $500 billion opportunity
There is a big opportunity in increasing electricity access in Africa: Universal energy access by 2030 could unlock more than $500 billion in GDP, create millions of jobs, and transform health, education, and livelihoods across the continent, according to a new report from Boston Consulting Group.
There is a lot of optimism in Africa. With so many countries so rich in resources and talent, Africa has been shown to be the most hopeful continent time and again in recent polls. There is a sense that change is on the horizon as young Africans look to technology and entrepreneurship in their pursuit of success.
Energy access is the foundation of inclusive economic growth – and Africa now stands at a turning point when it comes to electrification. Around 600 million people in Africa still lack access to electricity, which represents 83% of the global total.
Electricity challenges in Africa
The vast majority of people living in energy poverty are in Sub-Saharan Africa. Progress there has stagnated, with around 570 million people still living without electricity. This means populations are disconnected from not just power, but also information, and live with major burdens and even health hazards, like those associated with cooking over fire.
These figures are staggering – around 40% of the continent’s population lives without electricity. This energy gap is most acute in rural areas and fragile states, but, even in electrified urban centers, supply is often unreliable and costly, forcing reliance on backup generators and expensive fuels.
In Nigeria, for example, inadequate grid supply compels businesses and households to spend an estimated $14 billion annually on diesel generators, and power outages cause about $25 billion in economic losses (over 6% of GDP).
It is precisely Nigeria, Africa’s most populous country, which has the largest number of people living without access to electricity in all of Africa. The Democratic Republic of the Congo, Ethiopia, and Tanzania are not far behind. The Democratic Republic of the Congo, still currently enveloped in a decades-long series of conflicts, has a whopping 78% of its residents living without electricity.
This figure is also above 80% in several other African nations such as Chad, Malawi, and others.
The solution: A $500 billion opportunity
Despite this daunting set of challenges, global experience shows that rapid electrification is indeed achievable. The report notes that between 2000 and 2023, the number of people worldwide with electricity access increased by 2.6 billion, reaching a global electrification rate of 92%.
African leaders strive to attain universal energy access by 2030, an ambitious target that would require a huge amount of coordination. One initiative working towards that goal is Mission 300, a joint effort between the African Development Bank, the World Bank Group, and philanthropic partners, which aims to connect 300 million Africans to electricity by 2030
The World Bank has pledged to double its annual financing for African energy access by 2030 and the African Development Bank has been investing in utility-scale renewables across the poverty-stricken Sahel region.
Some of the key challenges to overcome in meeting these goals include: Vast geography and dispersed populations, making last-mile connections difficult; poor grid infrastructure, especially in rural areas; an array of policy and economic hurdles; and the high cost of energy projects, which tend to have high interest rates in Africa.
Reaching these various targets over the next few decades could add $500 billion to African GDPs, the Boston Consulting Group (BCG) report claims. Near total connection to electricity in Africa would also dramatically increase graduation rates, which would have its own related benefits, and could help cut back on over 350 million tons of CO2 emissions.
This huge challenge would, of course, require a substantial amount of capital. The report estimates that universal electricity access across the continent would only be possible with up to $200 billion in investments. That means investments of $10 billion to $12 billion per years, which is three times or more what is currently being invested annually.
“By focusing on five levers – enabling governments, building grids, scaling decentralized solutions, mobilizing finance, and maximizing use and inclusion – Africa can navigate the complexity that has long stymied progress,” said Lucas Chaumontet, managing director and senior partner at BCG.
These levers all depend on each other: For example, better planning leads to more investment, while more funding then enables grid and off-grid expansion, and so on. The effects of strategic investments are holistic, with cumulative benefits in cross-sector and public-private collaborations.
The experience of past projects and current initiatives show that Africa’s public and private sectors can successfully align efforts, backed by data-driven planning and community engagement, to turn the lights on and change peoples’ lives.
“Falling costs of solar and batteries, paired with initiatives like Mission 300, make this moment a window of opportunity. But we need to move fast from pledges to projects. Let’s power prosperity, sustainably and inclusively,” says Emile Detry, managing director and partner at BCG.
