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ENERGY: World Bank, IFC Seek Investors in Off-Grid Africa

Abid Aslam

WASHINGTON, May 5 2008 (IPS) - An international campaign to bring modern lighting to one-fourth of Africa’s people enters a new phase this week with talks to draw investors to markets beyond the reach of the continent’s outdated power grid.

Representatives of the global lighting industry, governments, donor agencies, and non-governmental organisations are to gather in Accra, Ghana from Tuesday for what organisers call the first global business conference on off-grid lighting in Africa.

The event is part of the “Lighting Africa” campaign launched last September by the World Bank and its private-sector unit, the International Finance Corporation (IFC).

In addition to stimulating investor interest in the emerging off-grid lighting market, the agencies plan to use the Ghana conference to help firms establish strategic business and financial partnerships.

Electricity woes are considered a major impediment to economic and social development. Supply interruptions plague industry and repel investors, and health and education initiatives rise and fall on the availability of current to light classrooms or refrigerate vaccines.

By 2030, Lighting Africa seeks to reach 250 million people cut off from existing power infrastructure and to free them from dependence on expensive and hazardous fuels.


Rising energy prices underscore the urgency of this mission, said organisers of the May 6-8 talks.

“Increasing access to affordable and clean lighting is essential to Africa’s development,” said Anil Cabraal, lead energy specialist at the World Bank. “Waiting for an expansion of the electricity grid is not an option, given today’s energy concerns.”

Even before utilities and their customers confronted surging fuel prices, only 26 percent of Africans had access to electricity. In some countries, the figure remains as low as 5 percent. The continent’s power grid long has been characterised by crumbling infrastructure, outdated technology, and corruption.

“Energy-poor” Africans spend some 40 billion dollars per year on fossil fuel-based lighting products which the World Bank describes as “costly, inefficient, poor-quality, [and] polluting”. The most common among these are kerosene lanterns, which the bank says consume 10-30 percent of household expenses in Africa below the Sahara desert.

Since the 1980s, ambitious efforts to boost the quantity and reliability of the continent’s power supply – including major infrastructure projects backed by the bank and IFC and executed by international and domestic firms – appear to have had little effect: Africa is home to about one in six humans but generates about four percent of the world’s electricity.

Now, the bank and IFC are promoting alternatives such as light emitting diodes (LEDs) and compact fluorescent lamps. Both technologies produce more light per watt than incandescent bulbs and they last longer than the traditional bulbs, although initial costs often are higher.

Additionally, the agencies are trying to reduce political barriers that, in their view, interfere with the private sector’s efforts to penetrate the off-grid market.

“By building a coalition between all parties in the industry, we hope to reduce hurdles and perceived uncertainties that accompany the development of a market as undiscovered as this one,” said Monika Weber-Fahr, manager of the IFC’s Sustainability Business Innovator Group.

At the Ghana talks, the bank and IFC expect to announce the winners of a competition for the design and delivery of innovative lighting products. The agencies then will help translate winning proposals into actual services that prove affordable for low-income African consumers and profitable for the companies.

Also to be unveiled at the conference is pilot research on consumer demand, behaviour, and preferences in Ghana and Kenya. Additional market research is being conducted in Ethiopia, Tanzania, and Zambia, according to the bank and IFC.

This research marks the first detailed exploration of what the bank has described as a potentially huge market for safe and reliable lighting products that are cost-competitive with fuel-based lamps and that are powered by renewable energy or mechanical sources.

Lead sponsors of this week’s conference include the Energy Sector Management Assistance Programme, a technical consultancy set up by the World Bank and U.N. Development Programme; the multi-donor Global Environment Facility; and the Public-Private Infrastructure Advisory Facility, which the British and Japanese governments established, with World Bank help, to ease private participation in development efforts funded by public agencies.

Other supporters include renewable energy investor Good Energies Inc.; the governments of Britain, Luxemburg, the Netherlands, and Norway; the European Commission; and the Renewable Energy and Energy Efficiency Partnership, an Austria-based network of public policy activists funded by donor governments.

 
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