Is Obama’s ambitious Power Africa program on track?

While in Cape Town, South Afica last year, U.S. President Barack Obama announced that a US$7 billion plan to “Power Africa” would double electricity output on the continent and bring “light where currently there is darkness”. A year later, Obama’s flagship project for Africa has already achieved 25 percent of its goal to deliver 10,000 megawatts of electricity and bring light to 20 million households and businesses, according to its annual report.

But the five-year plan has not yet delivered the power. Power Africa has not measured its progress by counting actual megawatts added to the grid but promises of additional power made in deals it says it helped negotiate, according to sources inside the project. Some projects facilitated by Power Africa – a program operated by the U.S. aid agency USAID – were under way years before the scheme’s inception, others are still in the planning stage. It is unclear how much of the US$7 billion Obama pledged has actually been spent or if a further US$20 billion in private sector investment commitments will materialize.

The 48 countries of Sub-Saharan Africa, with a combined population of 800 million, produce roughly the same amount of power as Spain, a country of just 46 million. This constrains Africa’s growth. According to Power Africa coordinator Andrew Herscowitz, there has been some confusion about the role of the program. He said it was always intended to “expedite transactions”, facilitating private investment rather than handing out aid. Herscowitz said Power Africa was there to help the private sector deliver electricity and it had already negotiated commitments from companies worth U$20 billion, although he did not know how much of this money had been spent.

Foreign companies sign billions of dollars of agreements with African governments to build infrastructure every year, although a large number never get built. In April 2011, the U.S. Millennium Challenge Corp., a government aid agency involved in Power Africa, signed a US$350 million deal to “revitalise” Malawi’s power sector. More than three years on, 1.7 percent of that money has been spent, according to the program’s website, which gives no detail on progress on the ground.

Memoranda of understanding Power Africa signed this year with its 6 focus countries including: Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania and contain less than US$100 million of financial commitments targeted at specific countries, most of which is for consultants. U.S. consultancy Tetra Tech won a US$64 million contract and former British Prime Minister Tony Blair’s Africa Governance Initiative was given a US$3 million deal.

As with many African aid projects, rights groups have criticised Power Africa as mostly being a vehicle to subsidise U.S. companies. Documents show US$5 billion out of the US$7 billion pledged is for loans for U.S. exports from the government’s Export-Import Bank (EXIM) and Overseas Private Investment Corporation. (OPIC).

It is not guaranteed that the Power Africa program, which has an initial 5-year mandate, will continue or be seen as a priority when Obama’s final term ends in 2 years. In addition, the investment banks EXIM and OPIC are fighting for their survival in Congress, where Obama’s Democratic Party was severely weakened in the mid-term elections. In a change of tack, the U.S. government said this month it wants to partner with China on improving power in Africa.

Source: Reuters