Europes chance to help light up Africa

Energising poverty reduction in Africa

Contents
Executive summary ....................................................................................... 3 1 2 Introduction.................................................................................................... 6 Access: the African energy crisis .................................................................... 6 Energy and poverty in Africa .......................................................................... 6 Commercial energy in Africa .......................................................................... 8 Kenya case study ........................................................................................ 11 3 Treatment of energy in recent policy documents on Africa ............................ 13 Commission for Africa .................................................................................. 14 New Partnership for African Development energy strategy ........................... 15 4 European funding for energy in Africa: quantity and quality .......................... 17 GVEP approach ........................................................................................... 18 5 Reforming energy delivery in Africa .............................................................. 19 Affordability, accessibility, availability, sustainability ..................................... 19 ACP-EU Energy facility Europes chance to help light up Africa ................. 20 6 Recommendations ...................................................................................... 21 References .................................................................................................. 24

This paper is part of a project funded by the EC under its Public Awareness funding line (B7-6000). The project website can be found at www.africanvoices.org.uk

Europes chance to help light up Africa: energising poverty reduction Practical Action 2005

Executive summary
Energy is crucial in battle to tackle Africas poverty
Over the centuries energy has helped transform and underpin human development. It lights our schools, cooks our food, heats our homes, keeps our hospitals running, fuels our industries and transports us near and far. So pervasive is energy in our lives that we generally fail to notice its importance. Energy is vital to modern living. Energy is also vital if we are to achieve the Millennium Development Goals of halving poverty rates and improving health. Energy is needed to increase productivity and create jobs. It is needed to safely store medicines, light homes for evening study and to reduce the worlds greatest child killer, acute respiratory infection an infection caused to a great extent by cooking on solid fuel in poorly ventilated homes. Yet energy has long been the missing element in plans to transform Africa and tackle its peoples chronic poverty. Without substantial support Africas energy crisis will not be turned round. As the worlds largest aid donor the European Commission and the individual member states could have a major role in stimulating Africas energy revival.

Africa is the worlds least connected continent yet exports more commercial energy than it consumes
Africa has a great deal of under-exploited energy sources, both non-renewable and renewable. Despite this potential Africa has the worlds lowest per capita consumption of energy. More than a century after the invention of the light bulb only 23 per cent of people in sub-Saharan Africa have access to electricity. In the rural areas where the vast majority of Africans live 92 per cent of people has no electricity. Without a dramatic turnaround the number of Africans living without electricity will steadily increase. By 2030 there will be 650 million Africans living without electricity compared with the 509 million today. Per capita energy consumption in sub-Saharan Africa has been in decline. Between 1990 and 1997 average per capita consumption fell from 695 kilograms of oil equivalent (kgoe) to 410 kgoe. Africas paradox is that though it desperately needs energy for economic growth and poverty reduction it is a net exporter of commercial energy. Africa produces 7% of the worlds commercial energy, but only consumes 3% of commercial energy.

Africans depend on biomass that places huge burden on poor people

There is a high level correlation between poverty and the amount and quality of energy consumed. Poverty condemns the vast majority of people in sub-Saharan Africa, 89 per cent, to rely on biomass (wood, animal dung or crop waste) for their main energy requirements, cooking and heating. This places a huge burden on poor women and children. Many women in rural sub-Saharan Africa carry 20 kilograms of

Europes chance to help light up Africa: energising poverty reduction Practical Action 2005

fuel wood an average of five kilometres a day. But a greater burden is on their health and the health of their children. Worldwide 1.6 million people die from lengthy exposure to excessive levels smoke in their homes from cooking fires. A quarter of all these deaths occur in Africa.

Aid to energy is minimal and the emphasis is on boosting economic growth not poverty reduction
International development aid to energy in Africa has been minimal. According to the Organisation for Economic Cooperation and Development (OECD) only 4 per cent of total aid to Africa is spent on energy. Aid and international finance is currently focused on large-scale supply of energy at national or regional level, or the export of energy resources. There is almost no focus on delivery of energy services to the rural or urban poor. The New Economic Partnership for Africa (NEPAD) and the Commission for Africa focus on the financing of large-scale power projects. Energy has not been high on the agenda for European Unions aid to Africa, accounting for less than 5 per cent of European aid since 1990. The focus of the aid that has been provided has been large-scale infrastructure.

Africa does need energy to stimulate growth but it also needs energy for poverty reduction
While Africa undoubtedly needs modern energy to stimulate economic growth, the majority of the population will be bypassed without a significant effort to reach them. The vast majority of people in sub-Saharan Africa live in rural areas and many of these people do not live villages but in scattered homesteads. Getting power to these people will prove exorbitantly expensive through conventional grid extension schemes. Often conventional grid and fuel distribution networks, especially those driven by commercial gain, do not reach the majority of rural areas. In addition, few utilities or fuel suppliers will supply informal, and often illegally placed, slums with power or commercial fuels. Efforts at finding appropriate solutions to the energy problems in rural areas, where the majority of the poor live, are hampered by inadequate attention at the national policy level to rural development generally and energy in particular. Poor peoples priority energy need is for cooking, heating and lighting. They also need energy to improve their incomes through small-scale industries and food processing. Energy is also needed to improve the public services they rely on, such as refrigeration for health clinics and the pumping of water both for irrigation and domestic use.

Europes chance to help light up Africa: energising poverty reduction Practical Action 2005

Meeting these needs and reversing the downward trends in African economies and access to modern energy will depend on: Affordability bringing the cost of energy within the reach of more people Accessibility increasing capacity to address poverty in the region; the identification and mobilisation of resources to provide modern energy services; meeting huge imbalances between supply and demand; shifting energy consumption from biomass Availability making African energy resources more available to African populations Sustainability reducing dependency on unsustainable biomass.

The new European Commission aid fund for energy needs to be clearly poverty focussed if it is to meet the needs of the energy poor
Without attention to distribution of energy resources, the majority of rural people and many urban dwellers could remain ill served for many decades. It is essential that alongside the drive to upgrade and expand Africas energy supply there is an equally strong need for this supply to be inclusive of all African people. One new opportunity for resourcing energy delivery is the proposed ACP-EU Energy Facility under the 9th European Development Fund (EDF). This would provide 250 million for African, Caribbean and Pacific (ACP) countries to sharpen the focus and visibility of the energy and poverty agenda. The fund, to be managed by the EU Energy Initiative, will support rural electrification, decentralised energy systems, increased use of renewable energy and enhanced energy efficiency. Europe has the chance to help make a huge difference to Africas energy poverty. It is imperative that Europe seizes the chance to ensure that this facility sets poverty reduction and sustainability targets and that the modalities of the fund are pro-poor. Africas poor cannot afford to be ill served once more by another generous gesture that by passes their needs.

Europes chance to help light up Africa: energising poverty reduction Practical Action 2005

1 Introduction
This paper forms part of a project which is raising European public awareness of the strengths and weaknesses of the EC aid effort in east and southern Africa It outlines the how African populations are chronically underserved in terms of energy and how this contributes to the poverty crisis facing the continent. Kenya is used as a case study. It looks at two recent proposals for African development: NEPAD and the Commission for Africa to review how the energy question is currently being treated. The current and potential role of the EC is then considered. A set of recommendations is put forward which can guide the EC and other major donors on the energy question to ensure that existing and any heightened aid efforts in the sector are poverty focussed The following Practical Action/ITDG team contributed to this paper: Alison Doig, Daniel Theuri, Lasten Mika, Teo Sanchez and Cornelius Mzezewa.

2 Access: the African energy crisis

Energy and poverty in Africa
The energy situation in Africa is characterised by lack of access to energy services, which leads to a self-perpetuating vicious circle of poverty, poor health, low productivity and food shortage. The need to accelerate development in Africa is widely recognised and access to energy is vital to that task. Yet Africa lags seriously in this regard. Most of the commercial energy Africa produces is exported to other continents, sometimes with minimal benefit to local populations. Sub-Saharan Africa is home to close to 640 million people most of whom live in rural areas sustaining livelihoods through subsistence farming. They are highly dependent on natural resources for survival and land resources are under extreme pressure to meet basic requirements of food, clothing, shelter and energy needs. High use of firewood and charcoal and to a certain degree agricultural waste is registered in all countries in sub-Sarahan Africa. The technologies and appliances used often are of low efficiency hence high wastage in production and use of energy and other natural resources is experienced. People everywhere are dependent upon energy, as energy services facilitate livelihoods and development. Equality of access to energy, like access to food, water and shelter, is increasingly being recognised as an important part of the solution to debilitating poverty and social decline. Modern energy plays a critical role in social and economic transformation and conversely, lack of access has continued to exert severe constraints on national development where the poor are often the greatest losers. There is a strong

Europes chance to help light up Africa: energising poverty reduction Practical Action 2005

correlation between electricity use and standard of living. More intensive energy inputs are required for increased productivity of human labour and for income-generation. At the individual or community level people may not express their needs in terms of demand for energy, but they do desire the services that it provides, such as cooked food, pumped clean water, lighting, heating, radio, telephone, transport, reduced drudgery and time saved. In Kenya for example a livelihood analysis for a community found that women on general spend between 4 and 6 hours daily fetching water and firewood.1 At the national level energy is seldom the most visible issue on the national development policy agenda, yet it can help facilitate stable economic development, allow access to global markets, impact on the national and global environment and affect national budget allocations. Given the current global pursuit of economically and environmentally sustainable development paths, innovative opportunities for energy supply and use are essential in transforming lives for millions of people in the continent. The energy consumption and production scenario in sub-Saharan Africa reflects the continents struggles and desires for a decent life and growth of her economies. While this continent is endowed with huge energy resources, serious challenges remain and the future will to a great extent be determined by the way modern energy services will be provided to sub-Saharan Africa for an effective mix of goods and services to stem increasing poverty. Rural Africa is home of the majority of the poor and critical decisions must be made on supply and delivery options that take into consideration the special circumstances. Despite seemingly readily available energy, access to modern energy in sub-Saharan Africa is often limited, energy supply systems are inadequate and unreliable, and the energy sources offered are seldom affordable to the bulk of the rural population. Invariably efforts aimed at finding the most appropriate solution to energy problems in rural areas, where the bulk of the population live, are hampered by inadequate attention, at the national policy level, to rural development in general and to rural energy needs in particular. Statistics show a clear reversal of trends in the energy sector in parts of Africa. Per capita consumption of modern energy (electricity and fuels) is reducing, but consumption of biomass (wood, charcoal and agricultural residue) is increasing. Per capita energy consumption in sub-Saharan Africa is the worlds lowest and has been in decline. Between 1990 and 1997 average per capita consumption fell from 695 kilograms of oil equivalent (kgoe) to 410 kgoe. Poverty condemns the vast majority of people in sub-Saharan Africa, 89 per cent, to rely on biomass (wood, animal dung or crop waste) for their main energy requirement, cooking and heating2. This places a huge burden on poor women and children. Many women in rural sub-Saharan Africa carry 20 kilograms of fuel wood an average of five kilometres a day. But a greater burden is on their health and the health of their children. Worldwide 1.6 million people die from lengthy exposure to excessive levels smoke in their homes from cooking fires. A quarter of all these deaths occur in Africa.3

Europes chance to help light up Africa: energising poverty reduction Practical Action 2005

There is a high level correlation between poverty and the amount and quality of energy consumed.4

from Stephen Karekezi, AFREPREN, Options for Addressing the Nexus of Energy and Poverty in the Framework of NEPAD, Global Network for Sustainable Development (GNESD), 2002

Commercial energy in Africa 5 6

While being home to 13% of the worlds population and producing 7% of the worlds commercial energy, Africa accounts for only 2% of the worlds GDP and 3% of global commercial energy consumption The industrialised countries accounted for 58% of world consumption of petroleum in 2000, with the US consuming over 25%, compared to 3.5% in Africa. Investment in the petroleum industry represents 73% of all US direct investment in Africa. Africa accounts for 10.3% of worldwide production of crude oil, with the three African members of OPEC Algeria, Nigeria and Libya producing 66% of African oil. North Africa dominates oil consumption. Between them, Algeria, Libya and Egypt account for 58.5% of Africas consumption. South Africa consumes a further 14% and the remaining 27.5% is spread between all the other countries. Use of gas is even more concentrated in north Africa than oil. Algeria, Libya and Egypt account for 77% of continent-wide production. Nigeria represents a further 11% of gas consumption, meaning that 88% of African gas is consumed in or exported from north of the Equator. Coal consumption presents a very different picture. South Africa accounts for 93% of African coal consumption. South Africa, with its nuclear power plant near Cape Town, is the only African country consuming uranium. Electricity use follows the same pattern of concentration in the extreme north and south. South Africa accounts for nearly half (46%) of all the electricity consumed on the whole continent and Egypt, Libya and Algeria between them for a further 30%. Most of Africa is extremely poorly served with electricity. Electricity production for many African countries is equivalent to that of a small town in Europe or the USA, and per capita consumption is miniscule, as little as 24 KWh per capita per annum in some countries.

Europes chance to help light up Africa: energising poverty reduction Practical Action 2005

For the region to achieve the Millennium Development Goals of halving poverty, Africa needs substantial increase in modern energy service provision, especially affordable, reliable and adequate electricity. Improving on the current high infant mortality, low life expectancy, and high illiteracy and fertility rates of the region [World Bank, 2003] will require substantial electricity provision, particularly for the poor who are very much deprived of these services. Developing policies, especially in the energy and power sector, to cope with these challenges is very important for the overall net productivity of the region as whole. On current trends, balancing growth in electrification rates with population growth, the number of people without electricity worldwide will remain at around 1.6 billion people by 2015. Some 23 per cent of sub-Saharan Africa population has access to electricity. In the rural areas where the vast majority of Africans live 92 per cent of people have no electricity. The absolute number of people in region without electricity is increasing. By 2030 there will be 650 million Africans living without electricity compared with 509 million today. Without additional effort, by 2015 the number of people globally depending on biomass fuels will grow from 2.4 billion people in 2002, to 2.5 billion by 2015, mostly in India and Africa. In most sub-Saharan Africa countries nearly 90 per cent of the population depend on traditional biomass fuels for cooking and heating. By 2030 the proportion of people in sub-Saharan Africa dependent on biomass will have dropped to approximately 80 per cent, however this drop pales into insignificance compared with the 27 per cent increase of the absolute numbers of people relying on traditional biomass. In 2000, 583 million Africans were relying on biomass for cooking and heating, by 2030 this figure will leap to 823 million. The scale of the problem is huge, and will require billions of dollars each year to resolve. However, even with ambitious targets in mind, it is essential that the extension of energy delivery is actually reaching the people who need it most, and that it supplies the energy services required to bring these people out of poverty. To achieve poverty reduction, action has to take place at local level to extend desperately needed energy services to poor communities. The urgent energy requirements for poor people needed to achieve poverty reduction and the Millennium Development Goals, are:

Sustainable energy for cooking and heating

More than a third of humanity burn biomass (wood, crop residues, charcoal and dung) for cooking and heating. Burnt on open fires and rudimentary stoves, the smoke produced from these fuels is a major cause of respiratory infection, which constitutes the fourth greatest risk factor for death and disease in the worlds poorest countries, and is linked to 1.6 million deaths per year, a death toll greater than that caused by malaria. One quarter of these deaths are in Africa. Around 90% of the sub-Saharan Africas population is at risk, due to their reliance on traditional biomass for cooking and heating, but it is yet to be considered a priority. Many home-based enterprises, such as beer brewing or street foods production, increase a familys dependence on biomass fuels and exposure to smoke. Simple, low-cost solutions to

Europes chance to help light up Africa: energising poverty reduction Practical Action 2005

deadly indoor air pollution are available, including simple smoke hoods, more efficient and better-ventilated biomass stoves or switching to cleaner fuels (including kerosene, liquefied petroleum gas [LPG], biogas).

Energy to power production

The livelihoods of many small producers relying on energy are under threat because of inefficient production methods and diminishing natural fuel resources. Studies show that small and medim enterprise (SME) in sub-Saharan Africa still depends on biomass as a main fuel 84% of home based SMEs in Zimbabwe used biomass as their main fuels7. For enterprises relying on heat, such as bakeries or brickyards, up to half of the production costs are on fuel. Options at the industrial level include more fuel-efficient kilns, turning waste into energy (such as sawdust, agro-waste or charcoal dust), and fuel diversification. Greater fuel efficiency will reduce costs, hence increasing long-term profitability, as well as improving the environmental impact of the enterprise. Many enterprises in rural areas require mechanical energy to drive sawmills, pump water or grind grain. While much of this is still provided by manual labour, efficient mechanical power can be achieved directly through water or wind turbines, or through electric, diesel or biofuel motors.

Energy to modernise public services

Energy scarcity impinges on the provision of other basic services, such as water, health, and education. For example, the proportions of rural women affected by water scarcity are estimated to be 55% in Africa, 32% in Asia, and 45% in Latin America, with the median time for collecting water in the dry season about 1.6 hours per day. More emphasis is required on energy services for public services like remote health centres, schools and water supply. Whether it is refrigeration for vaccines, lighting for maternity wards, pumping drinking water or lighting for evening study, there is no doubt that the impact in terms of quality of life of poor people in remote areas is very significant. Public services are central to achieving the Millennium Development Goals on health and education, and modern energy will be an essential input to modernising and expanding service provision.

Sustainable energy for the urban poor

Africa is the fastest urbanising continent in the world around twice as fast as Latin America and Asia, with an annual urban growth rate of close to 5 per cent. Nearly 40 per cent around 300 million Africans now live in cities, compared to under 30 per cent in 1980. On current trends, this figure is expected to rise to 50 per cent in the next 25 years. Around 72 per cent of the population in African cities and towns live in slums. Many poor people living in cities depend on wood and charcoal for fuel, which contributes to both air pollution and deforestation. In the short to medium term, fossil fuels will continue to be the main alternative fuel for poor urban households. However, innovative technologies like solar water heaters, waste-to-energy and biogas need to be further developed for urban use to deliver sustainable long-term solutions.

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Improved energy access for women

70% of the approximately 1.3 billion people living on less than $1 a day are women, so empowering women and improving their status are essential to realising the full potential of economic, political and social development. Rural women (and their children) are the primary collectors of wood and residue fuels, which account for 80% of all household energy use in many developing countries. An important element of the rural energy crisis is rural womens time, with women working longer work days than men in providing human energy for survival activities such as fuel and water carrying, cooking, food processing, transport, agriculture, and small enterprises, non-monetised work which is largely invisible in national energy accounts and labour force statistics. Many income activities of women in the informal sector often critical to family economic survival are fuel intensive, and the viability of these activities is affected by energy prices and availability.

Kenya case study

Fifty-six per cent of Kenyans live on less than a dollar a day. Kenya is among 20 poorest countries in the world and energy poverty is an every day part of life for most Kenyan people. Kenya shows a heavy dominance of biomass energy with close to 92% of households reporting its use. This heavy dependency on biomass is associated with serious indoor air pollution, with indoor pollution levels in Kenya among the highest figures in the region.

Biomass trends (per capita energy consumption, kg of oil equivalent)

400 300 200 100 0 1996 1997 1998 1999 2000

general increase in biomass consumption

Nearly 89% of rural households use fuel wood, and 82% of the households in urban areas rely on charcoal to meet their energy needs. The national consumption of charcoal is 2.4 million tonnes per annum. This puts a huge strain on the countrys forests and is accelerating deforestation especially around Nairobi and Mombasa. The gender implications are strong, with women and children collecting and preparing wood fuel for household use, while men are involved in commercialised energy activities such as charcoal production.

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Other resources of rural energy are crop residues mainly stalks and left-overs with about 21% of households reporting use. In 2002 it was estimated that 92% of the population was using kerosene for lighting and to lesser extent for cooking. Human energy drives most of the rural economy and provide services in water supply, transportation and food production. Access to electricity is less than 15% of the total population with less than 4% in the rural areas. However, its consumption is extremely low at 121 kilowatt-hours (kWh) per capita. National access rate is below the average for developing countries. Government supports rural electrification programme but it is very expensive at between the equivalent of 1,210 1,350 per connection.

Five year modern energy consumption in Kenya

(per capita energy consumption, kg of oil equivalent)

100 75 general decline 50 25 0 1999 2000 2001 2002 2003

The cost of importing of petroleum puts a great strain on the countrys balance of payments. During the period 1998/99 2002/03 petroleum imports averaged 2.5 million tonnes per annum accounting for 25.7% of the countrys total annual import bill. There is a very low per capita consumption of commercial energy at 89 kilogrammes of oil equivalent (kgoe) for the period 1998-2002, which is below the 1994 commercial energy average of 384 kgoe for low-income economies and a world average of 1,434 kgoe. The consumption of the commercial fuels is lowest in rural areas with liquefied petroleum gas (LPG) at 1.8% and electricity at 3.8% penetration. This demonstrates a very serious negative trend in commercial fuel use.

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3 Treatment of energy in recent policy documents on Africa

International development aid to energy in Africa has been minimal. According to the Organisation for Economic Cooperation and Development (OECD) only 4 per cent of total aid to Africa is spent on energy8. The same is true of for private foreign investment. In the decade of the 1990s Africa received only 3 per cent of total investment into energy infrastructure compared with 42 per cent to Latin America and 33 per cent to East Asia9. Since the run up to the Johannesburg World Summit on Sustainable Development in 2002 there has been a greater emphasis on the importance of energy in sustainable development. Energy was one of the five priority issues discussed at the WSSD and several energy initiatives were launched, including the EU Energy Initiative, the Partnership for Clean Indoor Air and the Global Village Energy Partnership (GVEP). However aid and international finance remains focused on large-scale supply of energy at national or regional level, or the export of energy resources. There is almost no focus on delivery of energy services to the rural or urban poor. The New Economic Partnership for Africa (NEPAD) and the Commission for Africa focus on the financing of large-scale power projects, though the Commission also states that prestige projects should be avoided. Energy has not been high on the agenda for European Unions aid to Africa, accounting for less than 5 per cent of European aid since 1990. The focus of the aid that has been provided has been large-scale infrastructure. There are two models for expansion of energy supply in Africa: The first is a with main focus on large scale, centralised macro development, with expectation that poor will benefit from wider economic expansion (such as large power generation, expansion of regional grid transmission and large gas expansion plans). The second is prioritises widened access to energy, promoting small scale decentralised approaches. Both approaches are needed if Africa is to develop. However it is the first model that is predominantly applied. The second, people focused model, is virtually ignored by the macro-economic focused NEPAD and Commission for Africa, which potentially could absorb billions of Euros of development aid and favoured financing. While Africa undoubtedly needs growth fuelled by modern power in its drive for growth, the majority of the population could be left behind. The vast majority of people in sub-Saharan Africa live in rural areas and many of these people do not live in villages but in scattered homesteads. Getting power to these people will prove exorbitantly expensive through conventional grid extension schemes. According to the World Energy Council sparse low-income populations do not support expenditure on long transmission lines that would carry minimal loads.10

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Often conventional grid and fuel distribution networks, especially those driven by commercial gain, do not reach the majority of rural areas. In addition, few utilities or fuel suppliers will supply informal, and often illegally placed, slums with power or commercial fuels. Without attention to distribution of energy resources, then the majority of rural people and many urban dwellers could remain unserved for many decades to come. Therefore, it is essential that, alongside the drive to upgrade and expand Africas energy supplies, there is an equally strong need for this supply of modern energy to be inclusive of all African people.

Commission for Africa

The Commission for Africa was launched by the British Prime Minister Tony Blair in February 2004. The aim of the Commission was to take a fresh look at Africas past and present and the international communitys role in its development path. The work set out to be comprehensive and challenging, addressing difficult questions where necessary. Five formal objectives were established to guide the Commissions work. It was tasked with finalising its report by early 2005 and producing clear recommendations for the G8, EU and other wealthy countries as well as African countries. The aims of the Commission for Africa on energy seem quite contradictory. Energy comes under infrastructure investment (alongside drinking water supply, roads, housing, ICTs and irrigation). It recommends that African governments must reprioritise the importance of infrastructure in their poverty reduction strategies. The Commission recommends that a specific fund should be created, using aid money for infrastructure investment to the tune of US $10 billion per year to 2010, increasing to US $20 billion for the next 5 years. The funding will be predominantly grant based, given the importance of facilities being available to poor people. Country level donor officials should strive to empower local actors. However, the main energy aim of the Commission is to fund larger power projects, and not local access to energy. The Commission supports hydro- and gas-powered energy as they could also become important drivers of growth in Africa. It highlights macro energy issues. For example hydro resources in some African countries, notably the Democratic Republic of Congo, are huge, but largely unexploited. Mega-projects in the gas industry are planned in southern and west Africa. However, mega hydro, gas and grid expansion puts all the eggs in one basket, potentially absorbing all aid and investment funds, leaving very little to deliver access to energy services for poor people. In addition, large power and fuel projects tend to use international expertise, technologies and contractors, which means very little capacity building will take place within Africa, and a large portion of the funds will go directly to non-African companies. Only Eskom in South Africa has the capacity to deliver such large power expansion. The Commission report itself states that it should should avoid funding prestige projects that have so often turned into white elephants in the past.

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The emphasis in the Commissions approach to clean energy for Africa is to hope that the developed world will develop new markets, which will eventually open to Africa. This misses the huge potential for indigenous technology development, with local manufacture of technologies used in other parts of the developing world (micro hydro, biogas, small scale wind power, solar thermal water heaters, and so on), which can meet local needs now. Investment is needed in African technology for African people. On the positive side, the report does take the emphasis off a purely privatised supply of services, such as power, but to use private sector where it can be most valuable for example, innovative private sector approaches to providing rural electrification. In addition, the Commissions envisaged infrastructure fund could include the creation of 15 million electricity connections in a continent which sorely needs grid extension. With over half a billion Africans without electricity, there is some way to go. The Commission for Africa report gives clear direction for economic and social growth in Africa, including agriculture, small and medium enterprises, access to water and urbanisation. All of these priorities require appropriate clean energy services delivered to individuals, households, communities and enterprises in a form that is affordable, accessible and appropriate to the needs of the people. The implementation of the Commissions energy strategy must first start with the needs of the poor, and start to supply services where they are needed. Expansion of energy systems across Africa must reach to the heart of the poverty crisis in Africa. There is huge potential in the Commissions plans for development, but this could be lost if it only goes to large projects, and not to the delivery of energy to people.

New Partnership for African Development energy strategy 11

The Commission for Africa report has emphasised the need to support the New Partnership for African Development (NEPAD) energy strategy. The challenge for NEPADs Energy Infrastructure Initiative is to develop fully the energy resources of the continent in order to deliver affordable energy services to the various economic and social sectors. NEPAD energy-related objectives are: Increase access to reliable and affordable commercial energy Improve the reliability and lower the cost of energy supply Rationalise the territorial distribution of energy resources Reverse environmental degradation associated with biomass use Exploit and develop hydropower potential of river basins Integrate transmission grids and gas pipelines Reform and harmonise petroleum regulations and legislation.

There are some very positive opportunities for increased access and improved fuels for poor communities, with ambitions including: Increasing from 10 to 30% or more, access to reliable and affordable commercial energy by Africas population in 20 years
15

Europes chance to help light up Africa: energising poverty reduction Practical Action 2005

Reversing environmental degradation associated with the use of traditional fuels in rural areas Establishment of a task team to accelerate the development of energy supply to low-income housing Broaden the scope of the programme for biomass energy conservation from the Southern African Development Community (SADC) to the rest of Africa.12

However, the major investment plans under NEPAD, and being pushed by energy giants such as ESKOM and major oil companies, are the massive energy projects which absorb huge sums of money. This includes:13 studies for: Grand Inga hydro-power project Subregional power interconnection projects

investment projects with: West African gas pipeline Kenya-Uganda oil pipeline Mepande Uncua hydro-power project

Progress is already being made on the development of the Grand Inga hydro-power project, which was supported in the Commission for Africa report, with the establishment of a development company for the hydro plant. This project alone would absorb several billion dollars of investment and development funds. More than US $4 billion is earmarked for the first phase of the work, the building of Inga-3 and transmission lines to southern Africa. To develop the full potential of Ingas 40 gigawatts, would cost 50 billion14, into one high risk and highly contentious project. None of this investment includes the cost of delivering power to the majority of southern Africas people. There is no doubt that Southern Africa is in desperate need of increased power generation, with the prediction that by 2007 the Southern African Power Pool (SAPP) will not be able to supply all the power demand of the region. However, with such huge funds being directed towards generation and transmission of power and transportation of fuels, it is difficult to see where funds of a similar nature (donor based or commercial) will be available for delivering electricity and modern fuel to the majority of Africas people. In particular, the delivery of modern energy to disperse rural people is viewed as a very high cost and risky venture by private sector investors. In fact, it has been demonstrated that market-oriented reforms in the energy sector have had either a neutral or adverse impact on the poor.15 Therefore the drive to take forward objectives aimed directly at the poor are unlikely to be motivated by the large private companies. It has to be national governments and donor countries who take the lead.

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4 European funding for energy in Africa: quantity and quality

Despite the massive energy poverty across the continent, energy has not been high on the agenda for European Union aid to Africa. Energy projects account for less than 5% of European aid since 1990, and have been largely focused on large-scale infrastructure. Bilateral aid from Europe gives a similar picture, with a very low priority to energy.16 No African country has directly addressed energy under the 9th European Development Fund (EDF), and only five ACP (Africa Caribbean and Pacific) countries have included energy as a focal sector of cooperation in their countries. Where energy is addressed at a national level, the focus is almost always on support for national electricity utilities. For example, European Commission development assistance to Kenya accounts for 15% of the Government budget; it is the biggest donor after the World Bank. The focal sectors are agriculture, rural development and transport. The Kenyan Country Strategy Paper does not include the energy sector, and energy development is only funded if it supports development in the other sectors. According to the EC delegation to Kenya, the EC would like to fund the energy sector but at the moment they cannot release funds because the Kenyan utility does not have the capacity to provide electricity countrywide. They would like to see private sector players come in.17 A number of EU member states do provide development assistance to individual African countries to assist the energy sector. Some smaller levels of funding does go to decentralised programmes, such as the German support for GTZ-ProBEC programme for improved biomass cook stove in Southern Africa, and a number of scattered renewable energy initiatives across the continent. However, major funding still tends to go to large utility power projects or multinational fuel programmes, which rarely benefit poor rural or urban communities. In 2000, DFID supported the World Bank loan to the ExxonMobil-led Chad-Cameroon oilfield and pipeline project. In June 2000, the World Bank approved a loan package worth nearly $300 million to the Chad-Cameroon oil project, the largest oil investment in Africa, following several years of considerable controversy. A month later, the European Investment Bank followed suit and approved a loan of $120 million. Within the World Bank, DFID was a strong advocate of the project. The $3.7 billion project, led by US oil major Exxon, involves oil production in the south of Chad, one of the worlds poorest countries, together with a 1,000- km pipeline through Cameroon, and an export terminal on Cameroons coast. The pipeline came on-stream in October 2003. The impact of this development on the majority of people in these countries is very marginal.18 There has been significant energy sector development funding to Mozambique from Sweden, Denmark and Norway. However, further development of hydro power in Mozambique is mainly targeted for export to the SAPP or for expansion of large industry, not for increasing access to energy by the majority of the population.19

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Construction of large dams in developing countries will be subsidised under recent European commission proposals. The large-dam subsidy is part of a package of proposals to give better treatment to renewable energy projects, including solar, wind, tidal, wave and small hydro projects provided to developing countries. The proposal was presented on 18 April 2005 at a meeting in Paris of the export credit agencies of the worlds 29 richest countries.20

GVEP approach

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An alternative approach to poverty-focused energy planning is emerging through the Global Village Energy Partnership (GVEP). GVEP is a 10 year partnership which seeks to increase access to modern energy services in order to enhance economic and social development and reduce poverty. GVEP is working with a range of stakeholders in a number of developing countries to integrate energy planning with their poverty reduction strategies. Participating countries develop action plans with linkages between energy development and poverty reduction goals, such as education, health, access to water or income generation. They outline activities to increase energy access in the country, including policy changes. This plan identifies needs and barriers to energy access, it lays out concrete actions to address the issues, and details a schedule, aims and responsibilities for achieving goals. In parallel, GVEP engages potential donors who can support the implementation of the action plan. Progress is already being made in two sub-Saharan African countries, Cameroon and Senegal. GVEP Cameroon has prepared the first draft of the countrys National Energy Action Plan for the Fight Against Poverty (NEAP). In its present form the NEAP proposes to provide electricity for more than 1,200 educational establishments (primary schools, technical institutes, teacher training colleges, etc), close to 1,000 integrated health centres and around 200 rural water supply projects at a total cost of 45 million. This approach is in its early stages, and will require significant support from European donor countries to achieve its goals.

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5 Reforming energy delivery in Africa

The challenges facing the region today is to reverse the downward trend and put the domestic economies on a recovery path at a reasonable pace to redress rising poverty. The underlying success in surmounting these challenges will depend on a four critical factors. Affordability improving affordability by more people in a continent which is the only one registering negative growth forecast for the next decade and in a world becoming increasingly competitive. The cost of energy has significant impacts on economic activities particularly those that are energy intensive and at household level. Accessibility to modern forms of energy improving access to energy and energy services both at household level and at national level is the greatest challenge facing sub-Sahara Africa today. The challenge includes: lack of requisite capacity to address the poverty in the region; identification and mobilisation of resources to provide modern energy services to provide basic services and developmental needs; meeting the current huge supply demand imbalances; and resources to progressively shift energy use from biomass. This shift includes creating infrastructure to expand use of electricity to the majority of people, currently at less than 15% regionally. Special attention will need to focus on rural areas as they have been traditionally neglected and today are some of the poorest living conditions. Availability from the onset availability and accessibility are the vanguards of security of supply where market forces conditions the parameters of that security. SubSaharan Africa cannot be said to lack in energy resources and a glance at energy resource base reveals: Although many countries have at least some oil reserves, the majority of oil production is from only a few (eg. Nigeria, Angola, Gabon and Congo-Brazzaville). Similarly, the majority of natural gas is produced in western Africa from a few countries (eg. Nigeria, Cameroon and Congo-Brazzaville). The other fossil fuel coal is primarily found in southern Africa. Central Africa has the greatest biomass potential which declines outwards towards the sahel and tropics and the south. Even renewable energy, with its great potential in Africa, is unevenly distributed. For example, eastern Africa and the Congo basin has tremendous hydro potential, but wind power has the most potential in many coastal areas, and while almost every country has significant potential for solar energy, this potential varies area to area. Huge untapped geothermal resource associated with Great Rift Valley in eastern Africa is yet to be exploited. These inequities lead to divergent policies, programs and interests among the countries and only limited success can be quoted on regional development of energy resources that is impacting on the poor. Sustainability emerging from World Summit for Sustainable Development and the ongoing Commission for Sustainable Development discussions, sustainability will increasingly become a central feature of resource utilisation in future. There is a growing recognition of the importance of an integrated approach to resource
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development and use with special case for rural Africa which is highly dependent on wood fuel and generally biomass. The linkages among energy, environment, agriculture and their combined relationship with poverty requires sustainability being addressed fully and urgently. The dependency on unsustainably produced biomass is depleting the natural resource base. In Kenya, biomass meets 68% of the energy needs translated to a demand of 34 million tonnes of biomass, out of which sustainable yield met only 15 million tonnes, leaving 19 million tonnes to be sourced from other agricultural waste and leftovers and other unsuitable vegetation. This situation of mining of the resource base is consequently affecting land productivity through reduced soil fertility and erosion threatening livelihoods. Furthermore, this huge amount of energy is obtained and processed mainly by women and children, thus creating drudgery and exposing them to poor indoor air with serious health consequences. Land in sub-Saharan Africa is the last bastion for the poor as it is the only natural resource currently widely but not equitably shared. Further degradation of the already sensitive and fragile tropical soils will trigger irreversible ecological consequences and dash the hope of millions to move out of poverty. Sustainability will call for a mixture of interventions both at macro level and household level to reverse the trend and give fresh hope to many. Since cooking and lighting constitute the biggest demand for energy, special consideration should be given to liquefied petroleum gas (LPG), the leading candidate to replace traditional fuels for cooking and other thermal energy needs in a significant percentage of rural dwellings because of its technical characteristics, minimal environmental impact, convenience, availability, and cost.

ACP-EU Energy Facility Europes chance to help light up Africa 22

One opportunity for resourcing energy delivery to African people is the current proposal for an ACP-EU Energy Facility. The fund, when agreed, is to be allocated from the conditional billion of the 9th European Development Fund. While it is not of the scale of funding being proposed for the huge energy sector projects under NEPAD, it is a very significant fund for local delivery of energy services. This fund, which is managed by the EU Energy Initiative, will provide 250 million for ACP (Africa, Caribbean and Pacific) countries, to sharpen the focus and visibility of the energy and poverty agenda. The long term goal of the fund is to achieve a significant increase in the use of sustainable energy services for productive and social purposes for the target populations in ACP countries, and should be aimed at achieving WSSD and MDG targets. The fund will include rural electrification, decentralised energy systems, increased use of renewable energy, and enhanced energy efficiency, including cleaner and more efficient use of fossil fuels and more effective use of traditional biomass. Care must be taken that this facility does set poverty reduction and sustainability targets which mean the needs of the poor are met now and long into the future. It is essential to ensure modalities for the energy facility are pro-poor. It is important that the EU Energy Facility sets pro-poor indicators, against which funded projects will be monitored.

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6 Recommendations
Africa needs huge investment in its energy sector, in order to meet the basic energy requirements of the people. Access to modern, sustainable energy is a prerequisite to meeting the development targets of the Commission for Africa and to meet the Millennium Development Goals. While, undoubtedly, there is a need to invest in large-scale infrastructure across the continent, it is essential that modern energy is delivered to the millions of African people living in poverty, the majority of them in rural areas. The ACP-EU Energy Facility should open new opportunities for delivering power at a local level. The GVEP approach to energy planning with poverty reduction targets offers a new model for addressing energy poverty head on. As part of the EU-ACP partnership, African governments can adopt a national policy or strategy for rural energy modernisation and a strategic plan for achieving energy sustainability. EC and EU bilateral funds should be used to build local capacity to market, finance, sell, procure, install, and maintain decentralised energy technologies, including capacity to manufacture small-scale equipment and design, install and manage decentralised energy schemes. This should extend to support financial services and regulations, for building energy and energy technology markets in developing countries. From the $10 billion investment fund recommended by the Commission for Africa, there needs to be a significant annual budget for regional rural electrification. In order to ensure that this fund reaches the poor, at least 50 per cent investment in decentralised energy systems needs to be allocated. Development aid funding going to the energy sector in Africa must have explicit poverty focused objectives. Policy initiatives for EU countries should target energy poverty of the people, not just the nation, with clear indicators of poverty reduction. Funding should: Stimulate the development of the market to cope with the urban energy sector. Reduce overall dependency on biomass through improved access to improved biomass technologies and improved access in rural areas to commercial liquid and gaseous fuels. Promote sustainable forestry as a fuel source to the poorest and most isolated sectors of the rural population. Address the harmful effects of indoor air pollution, by enlarging energy choices for basic needs, such as cooking and lighting. Integrate energy advances with other aspects of rural development. Poverty reduction instruments will have to incorporate local planning and capacity development. Energy programmes should target productive uses integrating them to livelihoods programmes like agriculture and SMEs. Engage the poor as active partners in delivering change through the involvement of civil society in the process of decision making on how and where aid money for infrastructure is spent and explicit consideration of the contribution of energy services to poverty reduction in Poverty Reduction Strategy Papers.

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Develop financing mechanisms to facilitate access to modern energy services by the poor, including investment to leverage private sector partnerships to target the poor. Wider financial support, including appropriate delivery mechanisms that will target both vertical and horizontal scaling up of modern forms of energy. Technologies must be developed to suit local needs, and need not be the hightech solutions marketed in the North. Locally available solutions are often the most effective.

When major energy developments are considered, such as large generation projects (such as large hydro power) and international grid expansion, then investment and planning must include distribution networks for extension to rural communities.

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About Practical Action

Practical Action (formerly ITDG) is an international development organisation that uses innovative thinking and simple ideas to help people change their life for the better. We understand the places where we work and the people we work with, and we work together with communities sharing knowledge, multiplying benefits and influencing others to bring about real and sustained change. Practical Action is a charity registered in the United Kingdom, and works directly in four regions of the developing world Latin America, East Africa, Southern Africa and South Asia, with particular concentration on Peru, Kenya, Sudan, Zimbabwe, Sri Lanka, Bangladesh and Nepal. Practical Action The Schumacher Centre for Technology and Development Bourton-on-Dunsmore Rugby Warwickshire CV23 9QZ, UK T E +44 (0) 1926 634400 F practicalaction@practicalaction.org.uk W +44 (0) 1926 634401 www.practicalaction.org

Practical Action is the working name of Intermediate Technology Development Group Ltd. Patron HRH The Prince of Wales, KG, KT, GCB Registered Charity No 247257

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References

1 2 3 4 5 6 7 8 9

ITDG, Tungu-Kabri Microhydro Scheme Sustainable Livelihood Analysis, 1998 International Energy Agency, Energy and Poverty, World Energy Outlook 2002 World Health Organisation, World Health Report, 2002 Karakezi, Stephen, AFREPREN, Options for Addressing the Nexus of Energy and Poverty in the Framework of NEPAD, Global Network for Sustainable Development (GNESD), 2002.
The Potential for Regionally Integrated Energy Development in Africa: a Discussion Document WEC WORK PROGRAMME 2002-2004, World Energy Council 2003

Knight, Richard, Expanding Petroleum Production in Africa, www.richardknight.com, 2002 Kalumiana, O, et al, Energy services for urban poor in Africa: Issues and policy implications, AFREPREN, Zed Books, 2004. OECD, Focus on aid to Economic infrastructure and services and production commitments 2001-2002 average. World Energy Council, The Potential for Regionally Integrated Energy Development in Africa

10 World Energy Council, The Potential for Regionally Integrated Energy Development in Africa 11 www.nepad.org 12 Karakezi, Stephen, AFREPREN, Options for Addressing the Nexus of Energy and Poverty in the Framework of NEPAD, Global Network for Sustainable Development (GNESD), 2002. 13 A summary of NEPAD Action Plans, NEPAD 2005 www.nepad.org 14 $50-billion plan to tame the Congo River, Guardian Newspaper , 25 Feb 2005 15 GNESD, 2004, Energy Access Working Group Synthesis/Compliation Report, ed S. Karakezi and A.R. Sihag, Global Network for Sustainable Development 16 Intervention by Anders Wijkman, Member of the European Parliament, at the STS Forum in Kyoto, November 2004. 17 Study on the European Union Aid Agenda in Kenya and East Africa, Nancy Olomo for ITDG, March 2005 18 Pumping Poverty, Britains Department for International Development and the oil industry Researched and written by PLATFORM Research for Friends of the Earth, Plan B, March 2005 19 Intermediate Technology Consultants Ltd, Final Report for WWF, The Mphanda Nkuwa Dam project: Is it the best option for Mozambiques energy needs? June 2004 20 Rich countries to ignore green protests and back big dams, Paul Brown, environment correspondent, Guardian, London April 18, 2005 21 www.gvep.org 22 Communication on the future development of the EU Energy Initiative and the modalities for the establishment of an Energy Facility for ACP countries, Communication from the Commission to the Council and the European Parliament, Brussels, 2004 COM (2004) 711 final

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