British International Investment
17 May 2016

Why investing in electricity powers job creation

CDC’s Alex MacGillivray writes about how investing in electricity generation supports businesses and helps to create jobs.

Electricity generation through renewables

Africa needs reliable and affordable electricity to grow businesses, create jobs and improve people’s lives.

This goal is conclusively demonstrated by recent research for CDC – but achieving it on a large scale is one of the biggest development challenges Africa faces. The statistics are shocking: 70 per cent of the population of sub-Saharan Africa – 600 million people – don’t have electricity. Half of all African businesses say electricity supply is a major constraint. Power outages cost African countries between one and two per cent of GDP every year.

Massive investment is urgently needed – and it is beginning to flow. Over the past few years we have had the UN’s Sustainable Energy for All initiative, Barack Obama’s Power Africa and, most recently, the UK Government’s Energy Africa campaign led by Nick Hurd MP, the International Development Minister.

Energy Africa is focused on off-grid solar electricity. CDC is managing one investment in Uganda’s Solar Now – a company which has just made its 10,000th sale of home electricity kits, enabling poor Ugandans to light their homes, study harder, enjoy modern entertainment and set up small businesses charging phones or hairdressing.

Off-grid solar has enormous potential, but can’t power Africa on its own. So CDC has partnered with Norwegian government investor Norfund in Globeleq Africa, a company whose goal is to develop as much as 5,000 megawatts of electricity generation over the next 10 years. To place that in context, one megawatt is enough to power dozens of small businesses that provide work for hundreds of people.

But the extra power needs to be distributed to households and industry. CDC already supports the transmission and distribution networks of Uganda, Cameroon and Cote d’Ivoire, which together have 130,000 kilometres of power lines – that’s 18 times the distance from Cape Town at the very south of the continent to Alexandria in the north. Other poor countries desperately need such grid expansion and upgrading.

It is difficult to overstate the importance of investing in the energy sector. What is needed now is sustained investment across the whole sector, because without electricity, developing countries will fall short of reaching their economic potential.

Alex MacGillivray is the Director of Development Impact at CDC. You can see his full profile here.

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