ing Poverty Reduction

8/4/2019 ing Poverty Reduction

1/24

Europes chance to help

light up AfricaEnergising poverty reduction in Africa


2/24

Europes chance to help light up Africa: energising poverty reduction Practical Action 2005 2

Contents

Executive summary ....................................................................................... 31 Introduction.................................................................................................... 62 Access: the African energy crisis .................................................................... 6

Energy and poverty in Africa .......................................................................... 6

Commercial energy in Africa .......................................................................... 8

Kenya case study ........................................................................................ 11

3 Treatment of energy in recent policy documents on Africa ............................ 13Commission for Africa .................................................................................. 14

New Partnership for African Development energy strategy ........................... 15

4 European funding for energy in Africa: quantity and quality .......................... 17GVEP approach ........................................................................................... 18

5 Reforming energy delivery in Africa .............................................................. 19Affordability, accessibility, availability, sustainability ..................................... 19

ACP-EU Energy facility Europes chance to help light up Africa ................. 20

6 Recommendations ...................................................................................... 21References .................................................................................................. 24

This paper is part of a project funded by the EC under its

Public Awareness funding line (B7-6000). The project

website can be found atwww.africanvoices.org.uk


3/24


Executive summary

Energy is crucial in battle to tackle Africas poverty

Over the centuries energy has helped transform and underpin human development.

It lights our schools, cooks our food, heats our homes, keeps our hospitals running,fuels our industries and transports us near and far. So pervasive is energy in our lives

that we generally fail to notice its importance. Energy is vital to modern living.

Energy is also vital if we are to achieve the Millennium Development Goals of halving

poverty rates and improving health. Energy is needed to increase productivity and

create jobs. It is needed to safely store medicines, light homes for evening study and

to reduce the worlds greatest child killer, acute respiratory infection an infection

caused to a great extent by cooking on solid fuel in poorly ventilated homes.

Yet energy has long been the missing element in plans to transform Africa and tackle

its peoples chronic poverty.

Without substantial support Africas energy crisis will not be turned round. As the

worlds largest aid donor the European Commission and the individual member states

could have a major role in stimulating Africas energy revival.

Africa is the worlds least connected continent yet exports more

commercial energy than it consumes

Africa has a great deal of under-exploited energy sources, both non-renewable and

renewable. Despite this potential Africa has the worlds lowest per capita

consumption of energy.

More than a century after the invention of the light bulb only 23 per cent of people in

sub-Saharan Africa have access to electricity. In the rural areas where the vast

majority of Africans live 92 per cent of people has no electricity. Without a dramatic

turnaround the number of Africans living without electricity will steadily increase. By

2030 there will be 650 million Africans living without electricity compared with the

509 million today.

Per capita energy consumption in sub-Saharan Africa has been in decline. Between

1990 and 1997 average per capita consumption fell from 695 kilograms of oil

equivalent (kgoe) to 410 kgoe.

Africas paradox is that though it desperately needs energy for economic growth and

poverty reduction it is a net exporter of commercial energy. Africa produces 7% of

the worlds commercial energy, but only consumes 3% of commercial energy.

Africans depend on biomass that places huge burden on poor people

There is a high level correlation between poverty and the amount and quality of

energy consumed. Poverty condemns the vast majority of people in sub-Saharan

Africa, 89 per cent, to rely on biomass (wood, animal dung or crop waste) for their

main energy requirements, cooking and heating. This places a huge burden on poor

women and children. Many women in rural sub-Saharan Africa carry 20 kilograms of


4/24


fuel wood an average of five kilometres a day. But a greater burden is on their health

and the health of their children. Worldwide 1.6 million people die from lengthy

exposure to excessive levels smoke in their homes from cooking fires. A quarter of all

these deaths occur in Africa.

Aid to energy is minimal and the emphasis is on boosting economicgrowth not poverty reduction

International development aid to energy in Africa has been minimal. According to the

Organisation for Economic Cooperation and Development (OECD) only 4 per cent of

total aid to Africa is spent on energy.

Aid and international finance is currently focused on large-scale supply of energy at

national or regional level, or the export of energy resources. There is almost no focus

on delivery of energy services to the rural or urban poor. The New Economic

Partnership for Africa (NEPAD) and the Commission for Africa focus on the financing

of large-scale power projects.

Energy has not been high on the agenda for European Unions aid to Africa,

accounting for less than 5 per cent of European aid since 1990. The focus of the aid

that has been provided has been large-scale infrastructure.

Africa does need energy to stimulate growth but it also needs energy for

poverty reduction

While Africa undoubtedly needs modern energy to stimulate economic growth, the

majority of the population will be bypassed without a significant effort to reach them.

The vast majority of people in sub-Saharan Africa live in rural areas and many ofthese people do not live villages but in scattered homesteads. Getting power to these

people will prove exorbitantly expensive through conventional grid extension

schemes. Often conventional grid and fuel distribution networks, especially those

driven by commercial gain, do not reach the majority of rural areas. In addition, few

utilities or fuel suppliers will supply informal, and often illegally placed, slums with

power or commercial fuels.

Efforts at finding appropriate solutions to the energy problems in rural areas, where

the majority of the poor live, are hampered by inadequate attention at the national

policy level to rural development generally and energy in particular.

Poor peoples priority energy need is for cooking, heating and lighting. They also need

energy to improve their incomes through small-scale industries and food processing.

Energy is also needed to improve the public services they rely on, such as

refrigeration for health clinics and the pumping of water both for irrigation and

domestic use.


5/24


Meeting these needs and reversing the downward trends in African economies and

access to modern energy will depend on:

Affordability bringing the cost of energy within the reach of more people

Accessibility increasing capacity to address poverty in the region; theidentification and mobilisation of resources to provide modern energy

services; meeting huge imbalances between supply and demand; shifting

energy consumption from biomass

Availability making African energy resources more available to African

populations

Sustainability reducing dependency on unsustainable biomass.

The new European Commission aid fund for energy needs to be clearly

poverty focussed if it is to meet the needs of the energy poor

Without attention to distribution of energy resources, the majority of rural people and

many urban dwellers could remain ill served for many decades. It is essential that

alongside the drive to upgrade and expand Africas energy supply there is an equally

strong need for this supply to be inclusive of all African people.

One new opportunity for resourcing energy delivery is the proposed ACP-EU Energy

Facility under the 9th European Development Fund (EDF). This would provide

250 million for African, Caribbean and Pacific (ACP) countries to sharpen the focus

and visibility of the energy and poverty agenda. The fund, to be managed by the EU

Energy Initiative, will support rural electrification, decentralised energy systems,increased use of renewable energy and enhanced energy efficiency.

Europe has the chance to help make a huge difference to Africas energy poverty. It

is imperative that Europe seizes the chance to ensure that this facility sets poverty

reduction and sustainability targets and that the modalities of the fund are pro-poor.

Africas poor cannot afford to be ill served once more by another generous gesture

that by passes their needs.


6/24


1 Introduction

This paper forms part of a project which is raising European public awareness of the

strengths and weaknesses of the EC aid effort in east and southern Africa

It outlines the how African populations are chronically underserved in terms of energy

and how this contributes to the poverty crisis facing the continent. Kenya is used as a

case study.

It looks at two recent proposals for African development: NEPAD and the Commission

for Africa to review how the energy question is currently being treated.

The current and potential role of the EC is then considered.

A set of recommendations is put forward which can guide the EC and other major

donors on the energy question to ensure that existing and any heightened aid efforts

in the sector are poverty focussed

The following Practical Action/ITDG team contributed to this paper: Alison Doig,

Daniel Theuri, Lasten Mika, Teo Sanchez and Cornelius Mzezewa.

2 Access: the African energy crisis

Energy and poverty in Africa

The energy situation in Africa is characterised by lack of access to energy services,

which leads to a self-perpetuating vicious circle of poverty, poor health, lowproductivity and food shortage. The need to accelerate development in Africa is

widely recognised and access to energy is vital to that task. Yet Africa lags seriously in

this regard. Most of the commercial energy Africa produces is exported to other

continents, sometimes with minimal benefit to local populations.

Sub-Saharan Africa is home to close to 640 million people most of whom live in rural

areas sustaining livelihoods through subsistence farming. They are highly dependent

on natural resources for survival and land resources are under extreme pressure to

meet basic requirements of food, clothing, shelter and energy needs. High use of

firewood and charcoal and to a certain degree agricultural waste is registered in all

countries in sub-Sarahan Africa. The technologies and appliances used often are oflow efficiency hence high wastage in production and use of energy and other natural

resources is experienced.

People everywhere are dependent upon energy, as energy services facilitate

livelihoods and development. Equality of access to energy, like access to food, water

and shelter, is increasingly being recognised as an important part of the solution to

debilitating poverty and social decline.

Modern energy plays a critical role in social and economic transformation and

conversely, lack of access has continued to exert severe constraints on national

development where the poor are often the greatest losers. There is a strong


7/24


correlation between electricity use and standard of living. More intensive energy

inputs are required for increased productivity of human labour and for

income-generation.

At the individual or community level people may not express their needs in terms of

demand for energy, but they do desire the services that it provides, such as cookedfood, pumped clean water, lighting, heating, radio, telephone, transport, reduced

drudgery and time saved. In Kenya for example a livelihood analysis for a community

found that women on general spend between 4 and 6 hours daily fetching water

and firewood.1 At the national level energy is seldom the most visible issue on thenational development policy agenda, yet it can help facilitate stable economic

development, allow access to global markets, impact on the national and global

environment and affect national budget allocations.

Given the current global pursuit of economically and environmentally sustainable

development paths, innovative opportunities for energy supply and use are essential

in transforming lives for millions of people in the continent. The energy consumption

and production scenario in sub-Saharan Africa reflects the continents struggles and

desires for a decent life and growth of her economies.

While this continent is endowed with huge energy resources, serious challenges

remain and the future will to a great extent be determined by the way modern energy

services will be provided to sub-Saharan Africa for an effective mix of goods and

services to stem increasing poverty. Rural Africa is home of the majority of the poor

and critical decisions must be made on supply and delivery options that take into

consideration the special circumstances. Despite seemingly readily available energy,

access to modern energy in sub-Saharan Africa is often limited, energy supply

systems are inadequate and unreliable, and the energy sources offered are seldom

affordable to the bulk of the rural population. Invariably efforts aimed at finding the

most appropriate solution to energy problems in rural areas, where the bulk of the

population live, are hampered by inadequate attention, at the national policy level, to

rural development in general and to rural energy needs in particular.

Statistics show a clear reversal of trends in the energy sector in parts of Africa. Per

capita consumption ofmodern energy (electricity and fuels) is reducing, butconsumption ofbiomass (wood, charcoal and agricultural residue) is increasing.Per capita energy consumption in sub-Saharan Africa is the worlds lowest and has

been in decline. Between 1990 and 1997 average per capita consumption fell from

695 kilograms of oil equivalent (kgoe) to 410 kgoe.

Poverty condemns the vast majority of people in sub-Saharan Africa, 89 per cent, to

rely on biomass (wood, animal dung or crop waste) for their main energy

requirement, cooking and heating2. This places a huge burden on poor women and

children. Many women in rural sub-Saharan Africa carry 20 kilograms of fuel wood

an average of five kilometres a day. But a greater burden is on their health and the

health of their children. Worldwide 1.6 million people die from lengthy exposure to

excessive levels smoke in their homes from cooking fires. A quarter of all these

deaths occur in Africa.3


8/24


There is a high level correlation between poverty and the amount and quality of

energy consumed.4

Commercial energy in Africa 56

While being home to 13% of the worlds population and producing 7% of the

worlds commercial energy, Africa accounts for only 2% of the worlds GDP

and 3% of global commercial energy consumption The industrialised

countries accounted for 58% of world consumption of petroleum in 2000,

with the US consuming over 25%, compared to 3.5% in Africa. Investment inthe petroleum industry represents 73% of all US direct investment in Africa.

Africa accounts for 10.3% of worldwide production of crude oil, with the

three African members of OPEC Algeria, Nigeria and Libya producing 66%

of African oil. North Africa dominates oil consumption. Between them,

Algeria, Libya and Egypt account for 58.5% of Africas consumption. South

Africa consumes a further 14% and the remaining 27.5% is spread between

all the other countries. Use of gas is even more concentrated in north Africa

than oil. Algeria, Libya and Egypt account for 77% of continent-wide

production. Nigeria represents a further 11% of gas consumption, meaning

that 88% of African gas is consumed in or exported from north of the

Equator. Coal consumption presents a very different picture. South Africa

accounts for 93% of African coal consumption. South Africa, with its nuclear

power plant near Cape Town, is the only African country consuming uranium.

Electricity use follows the same pattern of concentration in the extreme north

and south. South Africa accounts for nearly half (46%) of all the electricity

consumed on the whole continent and Egypt, Libya and Algeria between

them for a further 30%. Most of Africa is extremely poorly served with

electricity. Electricity production for many African countries is equivalent to

that of a small town in Europe or the USA, and per capita consumption is

miniscule, as little as 24 KWh per capita per annum in some countries.

from Stephen Karekezi, AFREPREN, Options for Addressing the Nexus of Energy and Poverty in

the Framework of NEPAD, Global Network for Sustainable Development (GNESD), 2002


9/24


For the region to achieve the Millennium Development Goals of halving poverty,

Africa needs substantial increase in modern energy service provision, especially

affordable, reliable and adequate electricity. Improving on the current high infant

mortality, low life expectancy, and high illiteracy and fertility rates of the region [World

Bank, 2003] will require substantial electricity provision, particularly for the poor who

are very much deprived of these services. Developing policies, especially in theenergy and power sector, to cope with these challenges is very important for the

overall net productivity of the region as whole.

On current trends, balancing growth in electrification rates with population growth,

the number of people without electricity worldwide will remain at around 1.6 billion

people by 2015. Some 23 per cent of sub-Saharan Africa population has access to

electricity. In the rural areas where the vast majority of Africans live 92 per cent of

people have no electricity. The absolute number of people in region without electricity

is increasing. By 2030 there will be 650 million Africans living without electricity

compared with 509 million today.

Without additional effort, by 2015 the number of people globally depending on

biomass fuels will grow from 2.4 billion people in 2002, to 2.5 billion by 2015, mostly

in India and Africa.In most sub-Saharan Africa countries nearly 90 per cent of thepopulation depend on traditional biomass fuels for cooking and heating.

By 2030 the proportion of people in sub-Saharan Africa dependent on biomass will

have dropped to approximately 80 per cent, however this drop pales into

insignificance compared with the 27 per cent increase of the absolute numbers of

people relying on traditional biomass. In 2000, 583 million Africans were relying on

biomass for cooking and heating, by 2030 this figure will leap to 823 million.

The scale of the problem is huge, and will require billions of dollars each year to

resolve. However, even with ambitious targets in mind, it is essential that the

extension of energy delivery is actually reaching the people who need it most, and

that it supplies the energy services required to bring these people out of poverty.

To achieve poverty reduction, action has to take place at local level to extend

desperately needed energy services to poor communities. The urgent energy

requirements for poor people needed to achieve poverty reduction and the

Millennium Development Goals, are:

Sustainable energy for cooking and heating

More than a third of humanity burn biomass (wood, crop residues, charcoal and

dung) for cooking and heating. Burnt on open fires and rudimentary stoves, the

smoke produced from these fuels is a major cause of respiratory infection, which

constitutes the fourth greatest risk factor for death and disease in the worlds poorest

countries, and is linked to 1.6 million deaths per year, a death toll greater than that

caused by malaria. One quarter of these deaths are in Africa. Around 90% of the

sub-Saharan Africas population is at risk, due to their reliance on traditional biomass

for cooking and heating, but it is yet to be considered a priority. Many home-based

enterprises, such as beer brewing or street foods production, increase a familys

dependence on biomass fuels and exposure to smoke. Simple, low-cost solutions to


10/24


deadly indoor air pollution are available, including simple smoke hoods, more

efficient and better-ventilated biomass stoves or switching to cleaner fuels (including

kerosene, liquefied petroleum gas [LPG], biogas).

Energy to power production

The livelihoods of many small producers relying on energy are under threat because

of inefficient production methods and diminishing natural fuel resources. Studies

show that small and medim enterprise (SME) in sub-Saharan Africa still depends on

biomass as a main fuel 84% of home based SMEs in Zimbabwe used biomass as

their main fuels7. For enterprises relying on heat, such as bakeries or brickyards, up

to half of the production costs are on fuel. Options at the industrial level include more

fuel-efficient kilns, turning waste into energy (such as sawdust, agro-waste or

charcoal dust), and fuel diversification. Greater fuel efficiency will reduce costs,

hence increasing long-term profitability, as well as improving the environmental

impact of the enterprise.

Many enterprises in rural areas require mechanical energy to drive sawmills, pump

water or grind grain. While much of this is still provided by manual labour, efficient

mechanical power can be achieved directly through water or wind turbines, or

through electric, diesel or biofuel motors.

Energy to modernise public services

Energy scarcity impinges on the provision of other basic services, such as water,

health, and education. For example, the proportions of rural women affected by water

scarcity are estimated to be 55% in Africa, 32% in Asia, and 45% in Latin America,

with the median time for collecting water in the dry season about 1.6 hours per day.

More emphasis is required on energy services for public services like remote health

centres, schools and water supply. Whether it is refrigeration for vaccines, lighting for

maternity wards, pumping drinking water or lighting for evening study, there is no

doubt that the impact in terms of quality of life of poor people in remote areas is very

significant. Public services are central to achieving the Millennium Development

Goals on health and education, and modern energy will be an essential input to

modernising and expanding service provision.

Sustainable energy for the urban poor

Africa is the fastest urbanising continent in the world around twice as fast as Latin

America and Asia, with an annual urban growth rate of close to 5 per cent. Nearly 40per cent around 300 million Africans now live in cities, compared to under 30 per

cent in 1980. On current trends, this figure is expected to rise to 50 per cent in the

next 25 years. Around 72 per cent of the population in African cities and towns live in

slums. Many poor people living in cities depend on wood and charcoal for fuel, which

contributes to both air pollution and deforestation. In the short to medium term, fossil

fuels will continue to be the main alternative fuel for poor urban households.

However, innovative technologies like solar water heaters, waste-to-energy and biogas

need to be further developed for urban use to deliver sustainable long-term solutions.


11/24


Improved energy access for women

70% of the approximately 1.3 billion people living on less than $1 a day are women,

so empowering women and improving their status are essential to realising the full

potential of economic, political and social development. Rural women (and their

children) are the primary collectors of wood and residue fuels, which account for

80% of all household energy use in many developing countries. An important

element of the rural energy crisis is rural womens time, with women working longer

work days than men in providing human energy for survival activities such as fuel

and water carrying, cooking, food processing, transport, agriculture, and small

enterprises, non-monetised work which is largely invisible in national energy accounts

and labour force statistics. Many income activities of women in the informal sector

often critical to family economic survival are fuel intensive, and the viability of these

activities is affected by energy prices and availability.

Kenya case study

Fifty-six per cent of Kenyans live on less than a dollar a day. Kenya is among 20

poorest countries in the world and energy poverty is an every day part of life for most

Kenyan people.

Kenya shows a heavy dominance of biomass energy with close to 92% of households

reporting its use. This heavy dependency on biomass is associated with serious

indoor air pollution, with indoor pollution levels in Kenya among the highest figures in

the region.

0

100

200

300

400

1996 1997 1998 1999 2000

Nearly 89% of rural households use fuel wood, and 82% of the households in urban

areas rely on charcoal to meet their energy needs. The national consumption of

charcoal is 2.4 million tonnes per annum. This puts a huge strain on the countrys

forests and is accelerating deforestation especially around Nairobi and Mombasa.

The gender implications are strong, with women and children collecting and

preparing wood fuel for household use, while men are involved in commercialised

energy activities such as charcoal production.

general increase inbiomass consumption

Biomass trends(per capita energy consumption, kg of oil equivalent)


12/24


Other resources of rural energy are crop residues mainly stalks and left-overs with

about 21% of households reporting use. In 2002 it was estimated that 92% of the

population was using kerosene for lighting and to lesser extent for cooking.

Human energy drives most of the rural economy and provide services in water

supply, transportation and food production.

Access to electricity is less than 15% of the total population with less than 4% in the

rural areas. However, its consumption is extremely low at 121 kilowatt-hours (kWh)

per capita. National access rate is below the average for developing countries.

Government supports rural electrification programme but it is very expensive at

between the equivalent of 1,210 1,350 per connection.

0

25

50

75

100

1999 2000 2001 2002 2003

The cost of importing of petroleum puts a great strain on the countrys balance of

payments. During the period 1998/99 2002/03 petroleum imports averaged 2.5

million tonnes per annum accounting for 25.7% of the countrys total annual import

bill. There is a very low per capita consumption of commercial energy at 89

kilogrammes of oil equivalent (kgoe) for the period 1998-2002, which is below the

1994 commercial energy average of 384 kgoe for low-income economies and a world

average of 1,434 kgoe. The consumption of the commercial fuels is lowest in rural

areas with liquefied petroleum gas (LPG) at 1.8% and electricity at 3.8% penetration.

This demonstrates a very serious negative trend in commercial fuel use.

general decline

Five year modern energy consumption in Kenya

(per capita energy consumption, kg of oil equivalent)


13/24


3 Treatment of energy in recent policy documents on Africa

International development aid to energy in Africa has been minimal. According to the

Organisation for Economic Cooperation and Development (OECD) only 4 per cent of

total aid to Africa is spent on energy8. The same is true of for private foreign

investment. In the decade of the 1990s Africa received only 3 per cent of total

investment into energy infrastructure compared with 42 per cent to Latin America

and 33 per cent to East Asia9.

Since the run up to the Johannesburg World Summit on Sustainable Development in

2002 there has been a greater emphasis on the importance of energy in sustainable

development. Energy was one of the five priority issues discussed at the WSSD and

several energy initiatives were launched, including the EU Energy Initiative, the

Partnership for Clean Indoor Air and the Global Village Energy Partnership (GVEP).

However aid and international finance remains focused on large-scale supply of

energy at national or regional level, or the export of energy resources. There is almost

no focus on delivery of energy services to the rural or urban poor. The New Economic

Partnership for Africa (NEPAD) and the Commission for Africa focus on the financing

of large-scale power projects, though the Commission also states that prestige

projects should be avoided.

Energy has not been high on the agenda for European Unions aid to Africa,

accounting for less than 5 per cent of European aid since 1990. The focus of the aid

that has been provided has been large-scale infrastructure.

There are two models for expansion of energy supply in Africa:

The first is a with main focus on large scale, centralised macro development, with

expectation that poor will benefit from wider economic expansion (such as large

power generation, expansion of regional grid transmission and large gas expansion

plans).

The second is prioritises widened access to energy, promoting small scale

decentralised approaches.

Both approaches are needed if Africa is to develop. However it is the first model that

is predominantly applied. The second, people focused model, is virtually ignored by

the macro-economic focused NEPAD and Commission for Africa, which potentially

could absorb billions of Euros of development aid and favoured financing.

While Africa undoubtedly needs growth fuelled by modern power in its drive for

growth, the majority of the population could be left behind.

The vast majority of people in sub-Saharan Africa live in rural areas and many of

these people do not live in villages but in scattered homesteads. Getting power to

these people will prove exorbitantly expensive through conventional grid extension

schemes. According to the World Energy Council sparse low-income populations do

not support expenditure on long transmission lines that would carry minimal loads.

10


14/24


Often conventional grid and fuel distribution networks, especially those driven by

commercial gain, do not reach the majority of rural areas. In addition, few utilities or

fuel suppliers will supply informal, and often illegally placed, slums with power or

commercial fuels.

Without attention to distribution of energy resources, then the majority of rural peopleand many urban dwellers could remain unserved for many decades to come.

Therefore, it is essential that, alongside the drive to upgrade and expand Africas

energy supplies, there is an equally strong need for this supply of modern energy to

be inclusive of all African people.

Commission for Africa

The Commission for Africa was launched by the British Prime Minister Tony Blair in

February 2004. The aim of the Commission was to take a fresh look at Africas past

and present and the international communitys role in its development path. The

work set out to be comprehensive and challenging, addressing difficult questionswhere necessary. Five formal objectives were established to guide the Commissions

work. It was tasked with finalising its report by early 2005 and producing clear

recommendations for the G8, EU and other wealthy countries as well as African

countries.

The aims of the Commission for Africa on energy seem quite contradictory. Energy

comes under infrastructure investment (alongside drinking water supply, roads,

housing, ICTs and irrigation). It recommends that African governments must re-

prioritise the importance of infrastructure in their poverty reduction strategies.

The Commission recommends that a specific fund should be created, using aidmoney for infrastructure investment to the tune of US $10 billion per year to 2010,

increasing to US $20 billion for the next 5 years. The funding will be predominantly

grant based, given the importance of facilities being available to poor people. Country

level donor officials should strive to empower local actors.

However, the main energy aim of the Commission is to fund larger power projects,

and not local access to energy. The Commission supports hydro- and gas-powered

energy as they could also become important drivers of growth in Africa. It highlights

macro energy issues. For example hydro resources in some African countries,

notably the Democratic Republic of Congo, are huge, but largely unexploited.

Mega-projects in the gas industry are planned in southern and west Africa.

However, mega hydro, gas and grid expansion puts all the eggs in one basket,

potentially absorbing all aid and investment funds, leaving very little to deliver access

to energy services for poor people. In addition, large power and fuel projects tend to

use international expertise, technologies and contractors, which means very little

capacity building will take place within Africa, and a large portion of the funds will go

directly to non-African companies. Only Eskom in South Africa has the capacity to

deliver such large power expansion. The Commission report itself states that it should

should avoid funding prestige projects that have so often turned into white elephants

in the past.


15/24


The emphasis in the Commissions approach to clean energy for Africa is to hope that

the developed world will develop new markets, which will eventually open to Africa.

This misses the huge potential for indigenous technology development, with local

manufacture of technologies used in other parts of the developing world (micro

hydro, biogas, small scale wind power, solar thermal water heaters, and so on), which

can meet local needs now. Investment is needed in African technology for Africanpeople.

On the positive side, the report does take the emphasis off a purely privatised supply

of services, such as power, but to use private sector where it can be most valuable

for example, innovative private sector approaches to providing rural electrification.

In addition, the Commissions envisaged infrastructure fund could include the

creation of 15 million electricity connections in a continent which sorely needs grid

extension. With over half a billion Africans without electricity, there is some way to go.

The Commission for Africa report gives clear direction for economic and social growthin Africa, including agriculture, small and medium enterprises, access to water and

urbanisation. All of these priorities require appropriate clean energy services

delivered to individuals, households, communities and enterprises in a form that is

affordable, accessible and appropriate to the needs of the people. The

implementation of the Commissions energy strategy must first start with the needs of

the poor, and start to supply services where they are needed. Expansion of energy

systems across Africa must reach to the heart of the poverty crisis in Africa.

There is huge potential in the Commissions plans for development, but this could be

lost if it only goes to large projects, and not to the delivery of energy to people.

New Partnership for African Development energy strategy 11

The Commission for Africa report has emphasised the need to support the New

Partnership for African Development (NEPAD) energy strategy. The challenge for

NEPADs Energy Infrastructure Initiative is to develop fully the energy resources of the

continent in order to deliver affordable energy services to the various economic and

social sectors.

NEPAD energy-related objectives are:

Increase access to reliable and affordable commercial energy Improve the reliability and lower the cost of energy supply

Rationalise the territorial distribution of energy resources

Reverse environmental degradation associated with biomass use

Exploit and develop hydropower potential of river basins

Integrate transmission grids and gas pipelines

Reform and harmonise petroleum regulations and legislation.

There are some very positive opportunities for increased access and improved fuels

for poor communities, with ambitions including:

Increasing from 10 to 30% or more, access to reliable and affordablecommercial energy by Africas population in 20 years


16/24


Reversing environmental degradation associated with the use of traditional

fuels in rural areas

Establishment of a task team to accelerate the development of energy supply

to low-income housing

Broaden the scope of the programme for biomass energy conservation from

the Southern African Development Community (SADC) to the rest of Africa.12

However, the major investment plans under NEPAD, and being pushed by energy

giants such as ESKOM and major oil companies, are the massive energy projects

which absorb huge sums of money. This includes:13

studies for:

Grand Inga hydro-power project

Subregional power interconnection projects

investment projects with:

West African gas pipeline Kenya-Uganda oil pipeline

Mepande Uncua hydro-power project

Progress is already being made on the development of the Grand Inga hydro-power

project, which was supported in the Commission for Africa report, with the

establishment of a development company for the hydro plant. This project alone

would absorb several billion dollars of investment and development funds. More than

US $4 billion is earmarked for the first phase of the work, the building of Inga-3 and

transmission lines to southern Africa. To develop the full potential of Ingas

40 gigawatts, would cost 50 billion14, into one high risk and highly contentious

project. None of this investment includes the cost of delivering power to the majority

of southern Africas people.

There is no doubt that Southern Africa is in desperate need of increased power

generation, with the prediction that by 2007 the Southern African Power Pool (SAPP)

will not be able to supply all the power demand of the region. However, with such

huge funds being directed towards generation and transmission of power and

transportation of fuels, it is difficult to see where funds of a similar nature (donor

based or commercial) will be available for delivering electricity and modern fuel to the

majority of Africas people. In particular, the delivery of modern energy to disperse

rural people is viewed as a very high cost and risky venture by private sector

investors. In fact, it has been demonstrated that market-oriented reforms in the

energy sector have had either a neutral or adverse impact on the poor.15

Therefore the drive to take forward objectives aimed directly at the poor are unlikely

to be motivated by the large private companies. It has to be national governments

and donor countries who take the lead.


17/24


4 European funding for energy in Africa: quantity and quality

Despite the massive energy poverty across the continent, energy has not been high

on the agenda for European Union aid to Africa. Energy projects account for less than

5% of European aid since 1990, and have been largely focused on large-scale

infrastructure. Bilateral aid from Europe gives a similar picture, with a very low priority

to energy.16

No African country has directly addressed energy under the 9th European

Development Fund (EDF), and only five ACP (Africa Caribbean and Pacific) countries

have included energy as a focal sector of cooperation in their countries. Where

energy is addressed at a national level, the focus is almost always on support for

national electricity utilities.

For example, European Commission development assistance to Kenya accounts for

15% of the Government budget; it is the biggest donor after the World Bank. The

focal sectors are agriculture, rural development and transport. The Kenyan Country

Strategy Paper does not include the energy sector, and energy development is only

funded if it supports development in the other sectors. According to the EC

delegation to Kenya, the EC would like to fund the energy sector but at the moment

they cannot release funds because the Kenyan utility does not have the capacity to

provide electricity countrywide. They would like to see private sector players

come in.17

A number of EU member states do provide development assistance to individual

African countries to assist the energy sector. Some smaller levels of funding does go

to decentralised programmes, such as the German support for GTZ-ProBEC

programme for improved biomass cook stove in Southern Africa, and a number of

scattered renewable energy initiatives across the continent. However, major fundingstill tends to go to large utility power projects or multinational fuel programmes, which

rarely benefit poor rural or urban communities.

In 2000, DFID supported the World Bank loan to the ExxonMobil-led Chad-Cameroon

oilfield and pipeline project. In June 2000, the World Bank approved a loan package

worth nearly $300 million to the Chad-Cameroon oil project, the largest oil investment

in Africa, following several years of considerable controversy. A month later, the

European Investment Bank followed suit and approved a loan of $120 million. Within

the World Bank, DFID was a strong advocate of the project. The $3.7 billion project,

led by US oil major Exxon, involves oil production in the south of Chad, one of the

worlds poorest countries, together with a 1,000- km pipeline through Cameroon, andan export terminal on Cameroons coast. The pipeline came on-stream in October

2003. The impact of this development on the majority of people in these countries is

very marginal.18

There has been significant energy sector development funding to Mozambique from

Sweden, Denmark and Norway. However, further development of hydro power in

Mozambique is mainly targeted for export to the SAPP or for expansion of large

industry, not for increasing access to energy by the majority of the population.19


18/24


Construction of large dams in developing countries will be subsidised under recent

European commission proposals. The large-dam subsidy is part of a package of

proposals to give better treatment to renewable energy projects, including solar, wind,

tidal, wave and small hydro projects provided to developing countries. The proposal

was presented on 18 April 2005 at a meeting in Paris of the export credit agencies of

the worlds 29 richest countries.20

GVEP approach 21

An alternative approach to poverty-focused energy planning is emerging through the

Global Village Energy Partnership (GVEP). GVEP is a 10 year partnership which seeks

to increase access to modern energy services in order to enhance economic and

social development and reduce poverty. GVEP is working with a range of stakeholders

in a number of developing countries to integrate energy planning with their poverty

reduction strategies.

Participating countries develop action plans with linkages between energydevelopment and poverty reduction goals, such as education, health, access to water

or income generation. They outline activities to increase energy access in the country,

including policy changes. This plan identifies needs and barriers to energy access, it

lays out concrete actions to address the issues, and details a schedule, aims and

responsibilities for achieving goals. In parallel, GVEP engages potential donors who

can support the implementation of the action plan.

Progress is already being made in two sub-Saharan African countries, Cameroon and

Senegal. GVEP Cameroon has prepared the first draft of the countrys National

Energy Action Plan for the Fight Against Poverty (NEAP). In its present form the

NEAP proposes to provide electricity for more than 1,200 educational establishments(primary schools, technical institutes, teacher training colleges, etc), close to 1,000

integrated health centres and around 200 rural water supply projects at a total cost of

45 million.

This approach is in its early stages, and will require significant support from

European donor countries to achieve its goals.


19/24


5 Reforming energy delivery in Africa

The challenges facing the region today is to reverse the downward trend and put the

domestic economies on a recovery path at a reasonable pace to redress rising

poverty. The underlying success in surmounting these challenges will depend on a

four critical factors.

Affordability improving affordability by more people in a continent which is the only

one registering negative growth forecast for the next decade and in a world becoming

increasingly competitive. The cost of energy has significant impacts on economic

activities particularly those that are energy intensive and at household level.

Accessibility to modern forms of energy improving access to energy and energy

services both at household level and at national level is the greatest challenge facing

sub-Sahara Africa today. The challenge includes: lack of requisite capacity to address

the poverty in the region; identification and mobilisation of resources to provide

modern energy services to provide basic services and developmental needs; meeting

the current huge supply demand imbalances; and resources to progressively shift

energy use from biomass. This shift includes creating infrastructure to expand use of

electricity to the majority of people, currently at less than 15% regionally. Special

attention will need to focus on rural areas as they have been traditionally neglected

and today are some of the poorest living conditions.

Availability from the onset availability and accessibility are the vanguards of security

of supply where market forces conditions the parameters of that security. Sub-

Saharan Africa cannot be said to lack in energy resources and a glance at energy

resource base reveals:

Although many countries have at least some oil reserves, the majority of oil

production is from only a few (eg. Nigeria, Angola, Gabon and Congo-Brazzaville).

Similarly, the majority of natural gas is produced in western Africa from a few

countries (eg. Nigeria, Cameroon and Congo-Brazzaville). The other fossil fuel coal is

primarily found in southern Africa. Central Africa has the greatest biomass potential

which declines outwards towards the sahel and tropics and the south.

Even renewable energy, with its great potential in Africa, is unevenly distributed. For

example, eastern Africa and the Congo basin has tremendous hydro potential, but

wind power has the most potential in many coastal areas, and while almost everycountry has significant potential for solar energy, this potential varies area to area.

Huge untapped geothermal resource associated with Great Rift Valley in eastern

Africa is yet to be exploited.

These inequities lead to divergent policies, programs and interests among the

countries and only limited success can be quoted on regional development of energy

resources that is impacting on the poor.

Sustainability emerging from World Summit for Sustainable Development and the

ongoing Commission for Sustainable Development discussions, sustainability will

increasingly become a central feature of resource utilisation in future. There is agrowing recognition of the importance of an integrated approach to resource


20/24


development and use with special case for rural Africa which is highly dependent on

wood fuel and generally biomass. The linkages among energy, environment,

agriculture and their combined relationship with poverty requires sustainability being

addressed fully and urgently. The dependency on unsustainably produced biomass is

depleting the natural resource base. In Kenya, biomass meets 68% of the energy

needs translated to a demand of 34 million tonnes of biomass, out of whichsustainable yield met only 15 million tonnes, leaving 19 million tonnes to be sourced

from other agricultural waste and leftovers and other unsuitable vegetation. This

situation of mining of the resource base is consequently affecting land productivity

through reduced soil fertility and erosion threatening livelihoods.

Furthermore, this huge amount of energy is obtained and processed mainly by

women and children, thus creating drudgery and exposing them to poor indoor air

with serious health consequences. Land in sub-Saharan Africa is the last bastion for

the poor as it is the only natural resource currently widely but not equitably shared.

Further degradation of the already sensitive and fragile tropical soils will trigger

irreversible ecological consequences and dash the hope of millions to move out of

poverty.

Sustainability will call for a mixture of interventions both at macro level and household

level to reverse the trend and give fresh hope to many. Since cooking and lighting

constitute the biggest demand for energy, special consideration should be given to

liquefied petroleum gas (LPG), the leading candidate to replace traditional fuels for

cooking and other thermal energy needs in a significant percentage of rural dwellings

because of its technical characteristics, minimal environmental impact, convenience,

availability, and cost.

ACP-EU Energy Facility Europes chance to help light up Africa 22

One opportunity for resourcing energy delivery to African people is the current

proposal for an ACP-EU Energy Facility. The fund, when agreed, is to be allocated

from the conditional billion of the 9th European Development Fund. While it is not of

the scale of funding being proposed for the huge energy sector projects under

NEPAD, it is a very significant fund for local delivery of energy services. This fund,

which is managed by the EU Energy Initiative, will provide 250 million for ACP

(Africa, Caribbean and Pacific) countries, to sharpen the focus and visibility of the

energy and poverty agenda. The long term goal of the fund is to achieve a significant

increase in the use of sustainable energy services for productive and social purposes

for the target populations in ACP countries, and should be aimed at achieving WSSD

and MDG targets.

The fund will include rural electrification, decentralised energy systems, increased

use of renewable energy, and enhanced energy efficiency, including cleaner and

more efficient use of fossil fuels and more effective use of traditional biomass.

Care must be taken that this facility does set poverty reduction and sustainability

targets which mean the needs of the poor are met now and long into the future. It is

essential to ensure modalities for the energy facility are pro-poor. It is important that

the EU Energy Facility sets pro-poor indicators, against which funded projects will be

monitored.


21/24


6 Recommendations

Africa needs huge investment in its energy sector, in order to meet the basic energy

requirements of the people. Access to modern, sustainable energy is a prerequisite to

meeting the development targets of the Commission for Africa and to meet the

Millennium Development Goals. While, undoubtedly, there is a need to invest in

large-scale infrastructure across the continent, it is essential that modern energy is

delivered to the millions of African people living in poverty, the majority of them in

rural areas. The ACP-EU Energy Facility should open new opportunities for delivering

power at a local level. The GVEP approach to energy planning with poverty reduction

targets offers a new model for addressing energy poverty head on.

As part of the EU-ACP partnership, African governments can adopt a national policy

or strategy for rural energy modernisation and a strategic plan for achieving energy

sustainability.

EC and EU bilateral funds should be used to build local capacity to market, finance,

sell, procure, install, and maintain decentralised energy technologies, including

capacity to manufacture small-scale equipment and design, install and manage

decentralised energy schemes. This should extend to support financial services and

regulations, for building energy and energy technology markets in developing

countries. From the $10 billion investment fund recommended by the Commission

for Africa, there needs to be a significant annual budget for regional rural

electrification. In order to ensure that this fund reaches the poor, at least 50 per cent

investment in decentralised energy systems needs to be allocated.

Development aid funding going to the energy sector in Africa must have explicitpoverty focused objectives. Policy initiatives for EU countries should target energy

poverty of the people, not just the nation, with clear indicators of poverty reduction.

Funding should:

Stimulate the development of the market to cope with the urban energy sector.

Reduce overall dependency on biomass through improved access to improved

biomass technologies and improved access in rural areas to commercial liquid

and gaseous fuels.

Promote sustainable forestry as a fuel source to the poorest and most isolated

sectors of the rural population.

Address the harmful effects of indoor air pollution, by enlarging energy choices

for basic needs, such as cooking and lighting.

Integrate energy advances with other aspects of rural development. Poverty

reduction instruments will have to incorporate local planning and capacity

development. Energy programmes should target productive uses integrating

them to livelihoods programmes like agriculture and SMEs.

Engage the poor as active partners in delivering change through the involvement

of civil society in the process of decision making on how and where aid money

for infrastructure is spent and explicit consideration of the contribution of energy

services to poverty reduction in Poverty Reduction Strategy Papers.


22/24


Develop financing mechanisms to facilitate access to modern energy services by

the poor, including investment to leverage private sector partnerships to target

the poor.

Wider financial support, including appropriate delivery mechanisms that will

target both vertical and horizontal scaling up of modern forms of energy.

Technologies must be developed to suit local needs, and need not be the high-

tech solutions marketed in the North. Locally available solutions are often the

most effective.

When major energy developments are considered, such as large generation projects

(such as large hydro power) and international grid expansion, then investment and

planning must include distribution networks for extension to rural communities.


23/24


About Practical Action

Practical Action (formerly ITDG) is an international development organisation that

uses innovative thinking and simple ideas to help people change their life for the

better. We understand the places where we work and the people we work with, and

we work together with communities sharing knowledge, multiplying benefits and

influencing others to bring about real and sustained change.

Practical Action is a charity registered in the United Kingdom, and works directly in

four regions of the developing world Latin America, East Africa, Southern Africa and

South Asia, with particular concentration on Peru, Kenya, Sudan, Zimbabwe, Sri

Lanka, Bangladesh and Nepal.

Practical Action

The Schumacher Centre for Technology

and Development

Bourton-on-Dunsmore

Rugby

Warwickshire CV23 9QZ, UK

T +44 (0) 1926 634400 F +44 (0) 1926 634401

E [email protected] W www.practicalaction.org

Practical Action is the working name of Intermediate Technology Development Group Ltd.

Patron HRH The Prince of Wales, KG, KT, GCB Registered Charity No 247257


24/24

References

1 ITDG, Tungu-Kabri Microhydro Scheme Sustainable Livelihood Analysis, 1998

2 International Energy Agency, Energy and Poverty, World Energy Outlook 2002

3 World Health Organisation, World Health Report, 2002

4 Karakezi, Stephen, AFREPREN, Options for Addressing the Nexus of Energy and Poverty in

the Framework of NEPAD, Global Network for Sustainable Development (GNESD), 2002.

5 The Potential for Regionally Integrated Energy Development in Africa: a Discussion

DocumentWEC WORK PROGRAMME 2002-2004, World Energy Council 2003

6 Knight, Richard, Expanding Petroleum Production in Africa, www.richardknight.com, 2002

7 Kalumiana, O, et al, Energy services for urban poor in Africa: Issues and policy

implications, AFREPREN, Zed Books, 2004.

8 OECD, Focus on aid to Economic infrastructure and services and production commitments

2001-2002 average.

9 World Energy Council, The Potential for Regionally Integrated Energy Development in Africa

10 World Energy Council, The Potential for Regionally Integrated Energy Development in Africa

11 www.nepad.org

12 Karakezi, Stephen, AFREPREN, Options for Addressing the Nexus of Energy and Poverty in

the Framework of NEPAD, Global Network for Sustainable Development (GNESD), 2002.

13 A summary of NEPAD Action Plans, NEPAD 2005 www.nepad.org

14 $50-billion plan to tame the Congo River, Guardian Newspaper , 25 Feb 2005

15 GNESD, 2004, Energy AccessWorking Group Synthesis/Compliation Report, ed S. Karakezi

and A.R. Sihag, Global Network for Sustainable Development

16 Intervention by Anders Wijkman, Member of the European Parliament, at the STS Forum in

Kyoto, November 2004.

17 Study on the European Union Aid Agenda in Kenya and East Africa, Nancy Olomo for

ITDG, March 2005

18 Pumping Poverty, Britains Department for International Development and the oil industry

Researched and written by PLATFORM Research for Friends of the Earth, Plan B,

March 200519 Intermediate Technology Consultants Ltd, Final Report for WWF, The Mphanda Nkuwa

Dam project: Is it the best option for Mozambiques energy needs?June 2004

20 Rich countries to ignore green protests and back big dams, Paul Brown, environment

correspondent, Guardian, London April 18, 2005

21 www.gvep.org

22 Communication on the future development of the EU Energy Initiative and the modalities

for the establishment of an Energy Facility for ACP countries, Communication from the

Commission to the Council and the European Parliament, Brussels, 2004 COM (2004)

711 final

Documents

ing Poverty Reduction