He made the announcement against the backdrop of his “Africa rising” mantra which has formed the basis for most of his speeches in his three country Africa tour. “My own nation will benefit enormously if you reach your full potential,” he said.
It is anticipated that Obama’s $7 billion pledge will help combat the frequent power blackouts prevalent in many countries in sub-Saharan Africa. Funds from the initiative will be distributed over the next five years.
Watch President Obama make the announcement in the CNN video below.
The White House in a statement released to launch the initiative said:
“More than two-thirds of the population of sub-Saharan Africa is without electricity, and more than 85% of those living in rural areas lack access. Sub-Saharan Africa will need more than $300 billion to achieve universal electricity access by 2030.”
According to the White House, Power Africa will build on Africa’s enormous power potential, including new discoveries of vast reserves of oil and gas, and the potential to develop clean geothermal, hydro, wind and solar energy and will help countries develop newly-discovered resources responsibly, build out power generation and transmission, and expand the reach of mini-grid and off-grid solutions.
With an initial set of six partner countries in its first phase, the initiative aims to add more than 10,000 megawatts of cleaner, more efficient electricity generation capacity and aims to increase electricity access by at least 20 million new households and commercial entities with on-grid, mini-grid, and off-grid solutions. It also aims to enhance energy resource management capabilities, allowing partner countries to meet their critical energy needs and achieve greater energy security.
Power Africa poised to be rooted in partnership
Power Africa also aims to bring to bear a wide range of U.S. government tools to support investment in Africa’s energy sector. A list of U.S agencies involved in funding the initiative have been itemized below.
- The U.S. Agency for International Development (USAID) will provide $285 million in technical assistance, grants and risk mitigation to advance private sector energy transactions and help governments adopt and implement the policy, regulatory, and other reforms necessary to attract private sector investment in the energy and power sectors.
- The Overseas Private Investment Corporation (OPIC) will commit up to $1.5 billion in financing and insurance to energy projects in sub-Saharan Africa.
- The U.S. Export-Import Bank (Ex-Im) will make available up to $5 billion in support of U.S. exports for the development of power projects across sub-Saharan Africa.
- The Millennium Challenge Corporation (MCC) will invest up to $1 billion in African power systems through its country compacts to increase access and the reliability and sustainability of electricity supply through investments in energy infrastructure, policy and regulatory reforms and institutional capacity building.
- OPIC and the U.S. Trade and Development Agency (USTDA) will provide up to $20 million in project preparation, feasibility and technical assistance grants to develop renewable energy projects. These efforts will be coordinated through the U.S. – Africa Clean Energy Finance Initiative (US-ACEF) and supported by the recently launched U.S. – Africa Clean Energy Development and Finance Center (CEDFC) in Johannesburg, South Africa.
- The U.S. African Development Foundation (USADF) will launch a $2 million Off-Grid Energy Challenge to provide grants of up to $100,000 to African-owned and operated enterprises to develop or expand the use of proven technologies for off-grid electricity benefitting rural and marginal populations.
- In 2014, OPIC and USAID will jointly host an African energy and infrastructure investment conference. The conference will bring investors, developers, and companies together with U.S. and African government officials to demonstrate the opportunities for investment and the tools and resources available from the U.S. government and other partners to support investment.
Power Africa will also leverage private sector investments, beginning with more than $9 billion in initial commitments from private sector partners to support the development of more than 8,000 megawatts of new electricity generation in sub-Saharan Africa. Examples of commitments to-date include:
- General Electric commits to help bring online 5,000 megawatts of new, affordable energy through provision of its technologies, expertise and capital in Tanzania and Ghana.
- Heirs Holdings commits to $2.5 billion of investment and financing in energy, generating an additional 2,000 megawatts of electricity capacity over next five years.
- Symbion Power aims to catalyze $1.8 billion in investment to support 1,500 megawatts of new energy projects in Power Africa countries over the next five years.
- Aldwych International commits to developing 400 MW of clean, wind power in Kenya and Tanzania – which will represent the first large-scale wind projects in each of these countries, and an associated investment of $1.1 billion.
- Harith General Partners commits to $70 million in investment for clean, wind energy in Kenya and $500 million across the African power sector via a new fund.
- Husk Power Systems will seek to complete installation of 200 decentralized biomass-based mini power plants in Tanzania – providing affordable lighting for 60,000 households.
- The African Finance Corporation intends to invest $250 million in the power sectors of Ghana, Kenya and Nigeria, catalyzing $1 billion in investment in sub-Saharan Africa energy projects.