The Luxury of Electricity in Africa

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Table of Contents

Introduction
Energy Poverty in Nigeria
Economic Impact of Lack of Electricity in Africa
Bioenergy Technologies
Conclusion
Works Cited

Introduction

Over the years, the world has witnessed substantial progress in connecting people to reliable electricity supplies. However, some regions are still lagging in electrical services delivery. Although Nigeria has the largest population in Africa, it is one of the world’s most underpowered countries. Nigeria’s actual electrical consumption is 80% below expectations, which means that the power production by far does not meet national demands and needs (Akanonu). Given that electricity use and access significantly influence a country’s economic development, it is crucial to address electricity scarcity issues. This paper discusses the challenges of electricity supply in Africa and provides recommendations on how the continent can solve these issues. Addressing its electricity scarcity problems can help regimes within the continent achieve energy security.

Energy Poverty in Nigeria

Energy Poverty

Energy poverty is a multidimensional concept caused by a combination of complex factors such as the physical availability of energy sources, low incomes, and high energy costs. The energy development index defines energy poverty in sub-Saharan Africa by two measures: inadequate electricity access and dependence on traditional cooking fuels such as dung, charcoal, and firewood (Njiru and Letema 4). The quantity of energy used in a household per month is an indicator of energy poverty.

Although the energy demand in Nigeria is high, the country is still energy poor. According to Akanonu, Nigeria’s electricity demand is about 4-12 times the actual amount of electricity produced and distributed on the grid. Experts attribute the unmet energy demands to the country’s large population and limited electricity production (Akanonu). This demand-supply gap has led to energy poverty, which negatively affects the citizens. When electricity supply is not easily accessible, citizens are forced to seek other energy alternatives such as charcoal, kerosene lamps, and candle. Kerosene is not only toxic but also expensive, inefficient, and hazardous.

According to a report published by the World Economic Forum, inhaling kerosene fumes is equivalent to smoking two cigarette packets a day (Lucey). About two-thirds of adult females with lung cancer in African countries are non-smokers (Lucey). It is postulated that lung cancer in this population demographic is caused by inhaling toxic fumes such as kerosene fumes and wood energy sources. Therefore, increasing access to clean energy is not only an economic issue but also a health one.

The best way to ensure sustainable energy is to increase clean energy consumption at the household level. Unfortunately, many African countries have failed to meet these demands due to a multitude of factors. The factors that prevent household access to clean energy include lack of infrastructure, poverty, lack of human resources, political corruption, and disasters (Lucey). This paper will focus on inadequate infrastructure, poverty, and lack of human resources.

Inadequate Infrastructure

There is a multitude of literature examining the effects of poor infrastructure on electricity access. A study conducted by Stern et al. showed that regions that invest in rural electricity infrastructure have lower poverty rates and higher incomes. For example, in Egypt, electricity infrastructure has significantly contributed to its economic growth (Stern et al. 87). Electricity infrastructure includes wire networks, dams, towers, and turbines. They are essential parts of affordable and reliable electrical power systems and support the continuous generation of electricity.

Unfortunately, Nigeria is characterized by slow load growth and inadequate baseload capacity, and insufficient distribution systems. The majority of the available high-voltage transmission infrastructure was constructed during the colonial and post-colonial eras. Hence, most of the available infrastructure cannot accommodate modern grid uses, such as integrating alternative energy sources. Most developed countries meet their energy demand by supplementing electrical energy with renewable energy. This approach is achieved through integrating variable renewable energy sources and electrical grids. Considering the state of Nigeria’s electrical grids, this strategy cannot be applied.

The country’s distribution and transmission systems are in a deplorable state due to inadequate funding and lack of maintenance. Although the installed systems have a generated capacity of 6114 MW, only 3300 MW is produced. In hindsight, the country needs an excess of 10 000 MW to satisfy its electricity demand (Ebhota and Tabakov 314). The poor state of the nation’s electrical infrastructure makes it hard to convey power from generation sites to consumption points. Unless the transmission and distribution systems are in optimal conditions, the power supply will be limited. This deficit means that the country needs to invest in electric infrastructure, including smart meters, advanced distribution systems, buried power, and new poles, to adjust to new challenges and support the systems’ resilience and reliability.

Poverty

Poverty can influence a household’s access to energy and consumption. There is a direct relationship between poverty and energy consumption. The energy poverty matrix points out that “households that spend more than 10%-15% of their income on energy per month or year are generally energy poor” (Njiru and Letema 5). It is estimated that an average African household spends at least 13% of its income on fuel (Njiru and Letema 6). Due to limited electrical energy, families opt for unhealthy energy forms, which are typically expensive (Njiru and Letema 6). For example, over the years, the costs of wood fuels have been continuously increasing. Eventually, due to the costs of alternative energy sources, people are trapped in a vicious poverty cycle.

Natural disasters can also affect the industry’s ability to generate and distribute petroleum products, including kerosene, gasoline, and diesel, among others. These disruptions can cause kerosene shortages, leading to hiked prices. According to Stern et al., the return on investment for biomass fuels is low, which is why the industrial revolution was crucial (88). The course led to the shift from biomass to fossil fuels which maximized energy supply and, consequently, production and economic growth. Electrification in rural areas is expensive given that most of these regions are far from the national grid center (Njiru and Letema 6). Because of the distance, it becomes uneconomical to distribute energy to these regions. Additionally, most rural people cannot afford the initial installation costs and accessories.

Taken together, the above findings show that energy consumption is generally expensive for people living in Sub-Saharan Africa. Alternative energy sources such as biomass fuel and petroleum products are costly due to variable factors in the energy market. Nevertheless, electricity is cheaper but has high installation costs, which may not be affordable for low-income households. A study conducted by Onat showed that high electricity prices and low-quality energy supply are among the primary causes of electricity theft (165). Electricity theft is malpractice involving the illegal consumption of electricity. It involves by-passing meters that read the energy consumption of a particular household.

Arguably, the low quality of energy supply is the main reason for electricity theft in Nigeria. The Power Holding Company of Nigeria (PHCN), which later became the National Electric Power Authority, is poorly run and managed (Ebhota and Tabakov 314). The authority is characterized by poor workmanship, low-quality materials, and corruption. It has low standards for foreign and local contractors, which has affected the country’s quality of energy supply. Ebhota and Tabakov postulated that cable thefts, power thefts, and pipeline and transformers’ vandalization stem from the authority’s poor running (312). People in Nigeria have resorted to stealing equipment from the hydro-electrical plants due to energy poverty and mismanagement of the electrical facilities by relevant authorities.

Lack of Human Resources

Africa has long depended on foreign aid to stimulate its local economies. However, the over-dependence on foreign aid comes with debilitating effects. Although vast, foreign aid has failed to meet the continent’s development needs with respect to human and physical capital. The former is considered one of the most critical assets in any economic sphere. It is directly linked to economic growth because the workforce is an essential factor in aggregate production. Unfortunately, the energy industry has failed to address human resource issues and how they affect the electricity supply. The industry heavily depends on the foreign workforce to solve its technical challenges. Most African countries look up to developed states for answers to local problems.

For example, the continent is lagging in science and energy technology. The latter involves using advanced technological systems to locate, evaluate, harvest, and transport primary energy sources, such as hydro-power and fossil fuels, into secondary energy services, such as electricity. With technological innovation, energy companies can reduce the financial cost of electricity supply, increase service quality per given price, and reduce political or environmental impacts. While most developed countries have now standardized advanced electrical management systems, Africa is still using infrastructure developed in the pre-colonial era.

Interestingly, the continent has vast academic and research institutions established to resolve such problems. These institutions have received a considerable amount of investment to facilitate development processes. One of the Sustainable Development Goals (SDG) is to increase global access to clean and affordable energy. The SDG heavily invests in academic and research institutions as a strategy of expediting their global energy goals.

Unfortunately, despite the heavy investments, Africa is still lagging in scientific research, with only one percent of international research generated from Africa (Duermeijer et al.). This issue is problematic because higher institutions are responsible for producing a country’s refined workforce. Unless the higher institutions change their approach to education and research, Africa will continue depending on the foreign human resource for local problems.

Economic Impact of Lack of Electricity in Africa

As previously mentioned, a country’s electricity has a significant impact on a country’s economic development. The study by Stern et al. demonstrated that electricity use and access are strongly connected to economic development. The authors attributed the economic growth to an increase in GDP rates due to high electricity consumption. Electricity enables or powers the production of services that improve people’s livelihoods and quality of life. Typically, electricity shortages affect industrial processes since most companies cannot produce goods unless they have a constant electricity supply.

Although electricity accounts for a small share of a company’s production costs, it is critical in the manufacturing process. The Stochastic Frontier Analysis model postulates that electricity’s elasticity is almost three times more than its share of inputs (Onat 168). From the model’s perspective, electricity’s marginal revenue product is three times the labor and capital contribution at the margin (Onat 169.). Accordingly, electricity blackouts increase labor costs but reduce the manufacturing exports/output at the company. It leads to loss of production, which can affect the internal or external financial firm’s welfare. Therefore, it can be surmised that at the organizational level, electricity shortage can reduce supply shift output, which can lead to losses in productivity and corporate revenue.

Electricity shortages are also said to reduce job creation and employment. A study conducted by Ou et al. showed that living in a region with unreliable power supplies can minimize employment probability by 35% – 41% (Onat 170). The authors pointed out that electricity scarcity disrupts business activities, thereby decreasing entrepreneur incentives in SME businesses. According to the authors, reducing such incentives can lower a company’s employment rate. Another mechanism of how electricity shortage causes unemployment relates to supply and operational efficiency. As mentioned earlier, electricity supply disrupts a company’s production processes, forcing cut-downs in labor costs.

Africa can compete with other countries by adopting innovative technology. African governments should invest in a “skill revolution” to optimize their human capital. As indicated above, higher institutions and research centers are underperforming with respect to producing a skilled workforce and intellectual assets. These institutions should nurture people’s curiosity to enable young professionals to develop deep thinking, new mindsets, and creative imagination. This way, the continent will produce professionals equipped with the skills required in the next industrial revolution. African governments should also collaborate and develop growth-enhancing policies. The governments should prioritize eliminating trade obstacles, political instability, insecurity, and corruption. This strategy will improve intra-regional trade, which may bring economic benefits to upcoming start-ups.

Bioenergy Technologies

Governance

Africa has a tremendous social market to facilitate access to grid electricity and power each household with safe, clean, and affordable energy solutions. Nigeria is particularly advantaged due to its natural endowment in oil, hydro-power, solar, and gas. The country is the largest gas and oil producer in Africa and 13th in the world (Ebhota and Tabakov 316). Additionally, it has abundant biomass resources that can be utilized for electrical production. The country has the capacity to meet its domestic electrical demands and even produce surplus energy.

However, the government has failed to utilize available resources to solve the current energy crisis. Good governance plays a critical role in promoting energy security. As indicated by Dahunsi et al., the government can improve energy security by developing and implementing effective policies (10). Therefore, the government should implement policies that create a favorable investment environment in the energy industry. It should invest in electrical infrastructure that integrates renewable energy sources, for instance, wind, and electrical grids. In part, the country’s energy crisis is caused by low efficiency in energy conversion (Ebhota and Tabakov 315). Through good governance, the Nigerian government can reduce inefficiencies in energy production, transmission, and distribution.

Conclusion

The sufficiency of sustainable energy supply is of great importance for countries that cannot meet their local energy demands. Despite having the capacity to produce surplus electrical energy, Nigeria still has a sizeable demand-supply energy gap.

The country is characterized by resource limitations (electrical infrastructure) and inefficiencies in electrical production and supply. Poor governance, inadequate electrical infrastructure, and high electricity costs are the main factors influencing energy scarcity. To increase its energy security, Nigeria should develop policies that encourage a favorable investment environment in the energy industry. It should also invest in infrastructure that allows for the integration of renewable energy sources with electrical grids. This way, it will optimize natural resources to supplement the generated energy.

Works Cited

Akanonu, Precious. “How Big Is Nigeria’s Power Demand?” Energy for growth, 2019. Web.

Dahunsi, Samuel Olatunde, et al. “Bioenergy Technologies Adoption in Africa: A Review of Past and Current Status.” Journal of Cleaner Production, vol. 264, 2020, pp. 1–16. Web.

Duermeijer, Charon, Mohamed Amir, and Lucia Schoombee. “Africa Generates Less Than 1% of the World’s Research; Data Analytics can Change That.” Elsevier Connect, 2018. Web.

Ebhota, Williams, S., and Pashat, Tabakov. “The Place of Small Hydropower Electrification Scheme in Socioeconomic Stimulation of Nigeria.” International Journal of Low-Carbon Technologies, vol. 13, no. 4, 2018, pp. 311-319. Web.

Lucey, Katherine. “3 Ways to End Africa’s Energy Shortages.” World Economic Forum. Web.

Onat, Nevzat. “Electricity Theft Problem and Effects of Privatization Policies on Distribution Losses of Turkey.” Celal Bayar University Journal of Science, vol. 14, no. 2, 2018, pp. 163–176. Web.

Njiru, Christine. W., and Sammy C Letema. “Energy Poverty and Its Implication on Standard of Living in Kirinyaga, Kenya.” Journal of Energy, vol. 2018, 2018, pp. 1–12. Web.

Stern, David I., et al. “The Impact of Electricity on Economic Development: A Macroeconomic Perspective.” International Review of Environmental and Resource Economics, vol. 12, no. 1, pp. 85–127. Web.

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