Investors seeking ‘clarity’ might be better off looking at the electricity supply--and not only whether the vote is stolen.
LATE last month, Guinea president Alpha Conde could barely hide his delight while inaugurating the $526 million Kaleta hydroelectric project, a 240-megawatt plant located north out of the capital Conakry.
With Republic of Congo president Denis Sassou Nguesso and Niger leader Mahamadou Issoufou in attendance at the ceremony, Conde said the plant would help lift his country’s, and the region’s, economic fortunes.
“Without electricity, Africa cannot develop,” he said. “With electricity, we will industrialise and we will no longer see our children dying in the waters of the Mediterranean because they despair of Africa.”
The dam, 75% funded by China’s Exim bank, is also expected to supply neighbours such as Senegal, Guinea-Bissau and Gambia and was built by some 2,500 Guinean youth—and 850 Chinese workers—over three years and came in 12 months ahead of schedule.
The effects are already being felt: energy supply has tripled, with many in the country enjoying reliable power for the first time. Conde’s joy was also political: With elections this weekend, the resulting bump to optimism over an economy that has had trying times in recent months puts him firmly in the driving seat to retain his seat.
The developments in Guinea are significant for African growth. For decades electoral fortunes have hinged on the ability to play up supporters against opponents using all available cleavages from ethnicity to religion and even nationality. However, in recent years the focus has shifted to how the fortunes of voters have been or will be transformed.
Energy is widely accepted as the biggest impediment to the continent’s growth: new African Development Bank president Akinwumi Adesina, who took over last month, set his term rolling with a push to harness $55 billion in investment to plug sub-Saharan Africa’s energy deficit.
In 2014, the bank spent $2 billion on energy projects, in a continent where over 600 million people—or half of its population — do not have access to electricity.
US President Barack Obama too, seemed to understanding one route to Africa’s heart is through an electric switch, announcing his $7bn “Power Africa” project when he visited the continent in 2014.
It’s therefore no surprise that the old politics are never too far away: The political order in Guinea is still battling to shed the shadow of an overbearing military, which remains a threat as highlighted recently in Burkina Faso.
Conde’s backing is predominantly from the Malinke people, while his main opponent Cellou Dalein Diallo, a former premier, will be banking on the support of the majority Peul. Yet the change in economic fortunes in a country where many agree has dramatically become a better place to invest, has the incumbent confident of beating the drop.
Ethiopia’s infrastructure politics
In Ethiopia, prime minister Hailemariam Desalegn was this week re-elected prime minister. The overwhelming mandate—100% of parliament’s electors—might strike some as old-fashioned, but for many Ethiopians the fast near-double digit economic growth—the totem pole of which has been the 6,000MW Grand Renaissance Dam, is an acceptable trade off for now.
Ivory Coast, also holds an election this month, and investors have been purring over the regulatory scheme that allows private sector investment into electricity, helping strengthen a country that has one of the region’s highest coverage—at nearly 60%.
A regular power exporter, French-speaking Africa’s largest economy has seen the power industry grow in tandem with the strong economic expansion that followed the political upheaval of a disputed 2010 election, and which looks set to hand incumbent Alassane Ouattara a second term.
One of the countries it has exported electricity to is Ghana, which holds elections next year. For months it has struggled with load shedding, and is now set to increase the share of the more expensive thermal power in its electricity mix, hitting suffering consumers hard, and leaving incumbent John Mahama with a tough balancing act that the opposition will look to exploit.
Electricity and government
Further showing the connection between political power and energy, another erstwhile African economic star Zambia is mired in a crisis that will feasibly decide if president Edgar Lungu gets to keep his job in the election next year. With blackouts that last as long as 14 hours following the worst power crisis on record, the country has tumbled from its lofty perch in the affections of investors, with its assets being dumped and its currency arguably the word’s worst performing.
Zambia depends on copper for 70% of its exports, and coupled with China’s slowing demand for the metal which has cut prices, has seen output hit by the power shortage, a lot of which has been blamed on mismanagement of its key Lake Kariba hydropower station.
In South Africa, many agree that the ruling ANC party is now living on residual goodwill due to its liberation credentials, and the country’s crippling power deficit of recent months could bleed it more votes in the next election, giving the opposition a chance make up more ground.
For Africa’s largest economy, Nigeria, most of the excitement about Muhammadu Buhari’s new term has come from long mothballed oil refineries starting up, while in recent months the country has hit historical highs for power generation.
Of the country’s 12,522 MW of installed capacity (less than a third that of rival South Africa’s), only a quarter reaches the end user, with the rest lost to losses and obsolete equipment. According to the World Bank, nearly half, or 41%, of Nigerian businesses generate their own electricity.
Given its growing importance as an electoral issue, electricity supply could well be a sturdier forecaster of election results that opinion polls. Unless you are Tanzania, where despite constant battles with electricity shortages, the ruling CCM party looks set to extend its decades-long hold on power. Some things, it seems, cannot just be lit up.
But for super-charged growth, the smart bet is investment in power generation infrastructure. The World Bank, while last week downgrading growth prospects for the continent to 3.7%, its lowest level since 2009, noted that the countries that would beat the prevailing gloom—Ethiopia and Ivory Coast among them—had notably ramped up spending on energy.