Clean and reliable energy can generate jobs, improve transportation, and help create more sustainable, inclusive, and resilient communities.
Accordingly, the provision of affordable and clean energy is one of the 17 global goals adopted by the United Nations General Assembly in 2015.
Yet, the World Bank estimates in 2019 revealed that 840 million people still live without electricity and the Sub-Saharan Africa is home to three-fourths of them.
The Covid-19 pandemic has led to an increased immiseration of this population and a recent report indicates that the number of people without access to electricity in sub-Saharan Africa rose by 2% in 2020 compared to the pre-pandemic level.
Several countries in Africa were making good progress on improving electricity access in the last decade. Since 2013, Kenya, Senegal, Rwanda and Ghana had adopted strong electricity access policies and enhanced support for off-grid initiatives.
The pandemic has upended these gains and derailed plans to reach universal energy access by 2030. This reversal of progress stems mainly from a lack of available financial resources. Covid-19 has also forced states to reallocate priorities, resulting in a lack of financing available for expanding and improving electricity access.
Many private companies deploying decentralized energy solutions like solar home systems and mini-grids have also faced operational and financial challenges because of the pandemic. Although a few markets like Kenya, Rwanda and Togo have remained strong, sales of solar products in SSA have dropped by more than 10 percent in the first half of 2020.
These trends imply that many households in the region do not have access to basic electricity services. For the SSA, the IEA estimated that in the first half of 2020, sovereign risks perceived by investors (i.e., the premium on top of the long-term cost of borrowing) rose by two percentage points compared to the end of 2019. Rising financing costs have crimped progress on expanding electricity access.
In order to meet the objectives of SDG-7 and attain universal electricity access, the SSA region will require around $20 billion of annual investments over the next decade.
This will be a challenging goal as the current investment in the region’s power system is only around 8 billion US$ per year.
This significant gap in the energy investment in the SSA region underscores the vital need to mobilize development finance institutions and donors. To add to the complexity facing policymakers, energy-related aid, while necessary for economic growth can also be associated with increased carbon emissions.
The burning of fossil fuels for energy in the SSA region accounts for 36% of total greenhouse gas emissions.
Several studies have previously noted the association between economic growth, energy, and environmental pollution.
Traditionally, energy aid for development has targeted two separate goals: economic growth or poverty reduction while policy prescriptions attempt to address obstacles of growth, poverty, mitigation and adaptation for climate change simultaneously.
A reality check suggests that this multiplicity of objectives has not been very successful. Higher economic growth is associated with increased emissions as fossil fuels are cheaper and less capital intensive than renewable energy options.
A Guest Editorial