Companies in Ghana, Tanzania lose 15% of sales value due to power outages – Report

ElectricityGhana and Tanzania are two countries in sub-Saharan Africa where businesses are losing 15 per cent of the value of their sales due to power outages, the Africa Progress Report has said.

The report notes that sub-Saharan Africa as a whole is not on course to reach the international community’s goal of universal access to energy by 2030 and is projected to achieve it in 2080, by its current trends in energy infrastructure investment.

It puts the region’s inadequate current energy-sector investment levels at $8 billion a year, or 0.49 per cent of gross domestic product (GDP), and estimates that the financing gap for meeting demand and achieving universal access to electricity is $55 billion.

The 2015 Africa progress report also says sub-Saharan Africa is the only region where the absolute number of people without access to energy is set to rise: 45 million more people will lack access to electricity and the number that lacks clean cooking energy will rise by 184 million.

By current trends, universal access in the region to clean cooking energy is expected to be reached about 100 years after 2080.

“Sub-Saharan Africa is desperately short of electricity”, the report says, though access to reliable and adequate supply of power to homes, firms and service providers is a condition for sustained human development.

The entire region’s grid has a power generation capacity of just 90 gigawatts (GW), half of which is located in one country – South Africa.

The electricity consumption of the entire region is also exceeded by that of Spain.

While the $55 billion financing gap is admittedly huge, the report notes that “energy financing is an investment with the potential to generate high social and economic returns by increasing productivity, job creation and economic growth.”

Ghana and Tanzania are cited in the report as places where companies lose 15 per cent of the value of sales as a result of power outages.

It is estimated that nearly half of the financing gap could be covered by increasing the region’s tax-to-GDP ratio by 1 per cent of GDP and additional revenues could be mobilized by removing wasteful subsidies, stemming the finance lost from illicit financial transfers, and cautious recourse to bond markets.

“Far too much public finance is wasted on inefficient and inequitable energy subsidies. Governments spend US$21 billion a year covering utility losses and subsidising oil-based products, diverting resources from more productive energy investments”.

The report implicates African governments, corruption on their part and their view of utilities as sites of political patronage, for the continent’s energy shortfall.

“Governance of power utilities is at the heart of Africa’s energy crisis”, the report says.

By Emmanuel Odonkor

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