By Dr Fatih Birol, Executive Director of the International Energy Agency (IEA)
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
The COVID-19 pandemic continues to cause major disruptions to societies and economies around the world, and has dealt a worrying blow to years of hard-won progress in reducing the number of people in Africa who lack access to electricity. For seven years in a row, the number of Africans living without electricity has steadily decreased, thanks to efforts from governments, businesses and civil society. But this year, it is set to rise by 13 million amid the turmoil brought by the pandemic, according to IEA analysis. The worst effects are being felt in countries such as Nigeria, the Democratic Republic of the Congo and Niger. By putting energy services out of reach of more and more people, the crisis threatens to deepen their difficulties and those of economies across Africa.
Reliable and affordable energy is a key enabler of economic opportunities. It allows people to get from A to B, study, communicate, store and cook food and much more. This also means the energy sector can be a critical part of efforts to reinvigorate economic activity across Africa’s diverse and resourceful populations, spurring new growth and job creation. It is also an opportunity for Africa to take advantage of its abundant energy resources. This includes the world’s richest potential for solar power, which could eventually become Africa’s biggest electricity source. The continent also has hydropower and natural gas resources that can support renewed economic development, while policies to foster improvements in energy efficiency – in vehicles, electrical appliances and industry – offer the prospect of lower fuel bills, less pollution and stronger growth.
In South Africa, for example, a revitalised energy sector is at the heart of the recovery plan unveiled by the government in October. It aims to transform the national electricity system, with an emphasis on renewable energy technologies such as solar and wind. This in turn can open future opportunities in new technology areas such as low-carbon hydrogen. In its stimulus plan, Nigeria emphasised the role of decentralised solar PV systems and LPG, a key clean-cooking fuel, in providing modern energy services. Nigeria, Mali, Senegal and several other countries have also moved to protect vulnerable people by providing free electricity to poor households for several months this year.
As well as countering the economic damage from the COVID-19 crisis, governments in Africa and beyond need to ensure that clean energy transitions take place in an equitable manner for all citizens concerned. Workers in declining industries will need opportunities to move into the growing sectors of the future. However, the economic and financial stresses caused by the pandemic are complicating efforts to modernise energy systems across Africa. For example, the severely weakened financial health of electricity utilities is hindering their ability to access the capital they need to make much-needed investments in power grids and other infrastructure. Between 2019 and the first half of 2020, the cost of borrowing increased by around two percentage points on average across sub-Saharan Africa.
This contrasts starkly with the situation in many major economies in Europe, North America and Asia where central banks have responded to the crisis with aggressive moves to loosen monetary policy and drive down interest rates. With these parts of the world awash with cheap capital, innovative solutions are required to enable governments and companies in Africa to access this capital to help improve their energy infrastructure. African countries and international partners recognise that collective action is critical for addressing the challenges brought by the pandemic.
This is why the IEA and the African Union Commission (AUC) – in co-operation with South Africa’s Ministry of Mineral Resources and Energy – brought together Energy Ministers from across Africa along with other global energy leaders from government, industry and international organisations. Discussions at the high-level event focused on how the energy sector can help drive secure and sustainable recoveries for African economies. Despite the difficulties caused by COVID-19, we are optimistic about the ability of Africa and the world to renew the momentum for expanding energy access and for accelerating the shift to clean energy technologies to meet international climate goals. With ambitious actions and co-operation, we can emerge from today’s crisis on a path towards ensuring that everyone around the world – in Africa and elsewhere – will be able to benefit from the clean, reliable and affordable energy they need to prosper.