Business
The age of aid is ending – it is now time for the private sector to lead
But filling Africa’s energy gap requires long-term investment and a huge capital outlay: it will cost US$1 billion just to acquire the Ughelli plant and bring it up to its full installed capacity of 1,000 megawatts. Given Africa’s huge capital requirements for the power sector, an initiative like Power Africa is essential for bringing together international investors and financial institutions to support Africa’s changing power paradigm.
Nigeria was one of only seven countries included in the program – countries at the forefront of power reform in Africa. The world-class privatization process personally driven by President Goodluck Jonathan demonstrates that Nigeria deserves that place. And it means that Nigeria’s power sector will have access to preferential terms and an unprecedented focus by funders looking to deliver on their public commitments under the Power Africa initiative. Power Africa also offers a model for the 47 African countries that did not make the initial pilot list. The continent will not close its energy gap unless more African leaders urgently reform their policies and encourage this kind of private sector-led investment.
As an entrepreneur, I know that attracting capital is not and has never been the problem. I have always believed that if the policies and environment are right, investment will flow into Africa.
Investors need to know that the rule of law and the protection of property rights are assured – this is one of capital’s most important requirements. That is why I urge global leaders like President Obama to impress upon more African leaders that investment-led development requires more investor-friendly policies. I see a willingness in African leaders to seize these opportunities, but they need support and in some cases direction. The vision may be clear, but they may not know how to get there.
Rwandan President Paul Kagame is another positive role model for the continent – a progressive African leader who evinces both vision and commitment. Rwanda now ranks higher than any other sub-Saharan African country on global competitiveness, and ranks third in Africa overall. President Kagame and his team have created the sort of enabling environment that investors can only dream about elsewhere in Africa. For this reason, Heirs Holdings, Berggruen Holdings and 50 Ventures, chose Rwanda as the home for our East Africa Commodity Exchange (EAX), which will launch on July 15th.
The EAX will bring liquidity, transparency, and pricing power to farmers, while reducing lending risk to banks. The impact will be to create social wealth in local communities, and support development in the region. Like investments in the power sector, the EAX demonstrates Africapitalism in action: highlighting the huge development role of the African private sector. When I met with President Kagame last year, he immediately understood the significance of a commodity exchange for the East African region, and he pushed hard to make it happen. The Rwandan government delivered on all its promises, which enabled our investor group to deliver on our promises: the right investment team, partnering with a supportive government, will improve the lives of farmers across the region.
By following these models – of Power Africa and the EAX – we can transform the entire African economy, starting with the power sector. One day, the 70 percent of Africans who don’t currently have access to consistent affordable power, will take it for granted that they can flick a switch and transform their homes, offices and schools. And they will remember Obama’s visit. Because with private sector involvement now guaranteed, that day will soon become a reality.
