Building back better relies upon Africa's energy transition- Interview with Dr. Kandeh Yumkella
By Simone Melo
More than 770 million people do not have access to electricity today; 75% of this population lives in sub-Saharan Africa. For decades, international organizations have been drawing attention to the importance of universal energy access for socio-economic development and healthcare delivery. The COVID-19 pandemic raised an alarming call in the African continent and other developing regions where electrification progress has considerably lagged. According to the World Health Organization (WHO), one billion people use health facilities without access to electricity across the globe. In sub-Saharan Africa, the ratio goes down to one in every four clinics running without reliable electrification. Mitigating COVID-19 health risks depends on steady power supplies to operate ventilators, intensive care units, and, ultimately, to secure vaccine distribution through cold chains. The GFCC interviewed Dr. Kandeh Yumkella, a global energy leader, founder of The Energy Nexus Network (TENN), who served in the United Nations (UN) in various positions for two decades. Dr. Yumkella has been an active advocate for universal energy access, promoting the UN Sustainable Development Goals 7 (Affordable and Clean Energy) and 9 (Industry, Innovation, and Infrastructure). From Sierra Leone, his home country where he currently sits in the Parliament, he talks to the GFCC about Africa’s untapped renewable energy potential, regulatory frameworks, and public policies to build back better after the pandemic investing in a decarbonized economy. He also outlines market opportunities in the energy transition and the types of engagements needed to jump-start the process.
GFCC: You’ve been advocating for investments in renewable energy to ensure the electrification of healthcare facilities in Africa. How do you see the implementation of these strategies from now on? What types of frameworks do countries need?
Kandeh Yumkella: Africa has one of the largest availabilities of renewable energy resources. This is a fact. We are amongst the top three highest exposure to solar radiation; we also have huge hydropower potential and sustainable biomass possibilities. We know now that some parts of North Africa, East Africa, and Southern Africa also hold huge wind potential. However, Africa has the lowest proportion of investments into the renewable energy industry globally. A recent study estimates that 1% or less of the total global solar power investments were made in Africa. This is a huge untapped potential. Current strategies by the African governments and the multilateral institutions are not measuring up. We have 600 million or more people in Sub-Saharan Africa without access to electricity in this 21st century. All the projections for 2040 and 2050 suggest that at this pace, by 2030, we will still have almost one billion Africans without access to electricity. The rate of investment is too low to keep pace with the demand that exists right now.
GFCC: What types of investments African countries need to jump-start a successful energy transition?
Kandeh Yumkella: Some estimate that Africa would need at least $80 billion a year over the next two decades to meet its energy needs, particularly the Sustainable Development Goal 7, Affordable and Clean Energy. Half of that budget would go towards generation, transmission, and distribution. The other half would maintain systems and initiatives to scale them up to absorb and accept additional generation capacity. We need to quadruple the generation capacity in Africa by 2040 from 90 gigawatts to around 350/360 gigawatts. We need public-private partnerships to drive investments to the scale that is required in Southern Africa. But we also need to understand that everywhere else in the world, whether it’s the United States or elsewhere, electrification expansion has taken place with the support of government public policy and government capital. Public capital has driven research and development, with public finance leveraging additional private finance.
GFCC: How can governments create an enabling environment to facilitate the energy transition?
Kandeh Yumkella: For Africa, we need four basic components. First, we need proper and predictable regulations. By that, I mean good public policy that gives confidence to the private sector to engage. Second, we’re going to need public money. African governments have to set aside significant amounts of their resources, and this money could also be used to leverage private capital. Third, we need multilateral and bilateral finance from governments around the world through the World Bank, the African Development Bank, KFW Development Bank, and other mechanisms. This foreign public money will also leverage private investments, what they’ve been calling blended finance. Blended finance helps to derisk investments and lower the tariffs for low-income consumers in Africa, who will not have the resources immediately to pay for energy consumption. Number four, we need to build up the local African capital market. Currently, local African banks, except those in South Africa, do not finance energy projects. We need to build their capacity with more training and confidence to understand how to structure the deals for energy finance, do due diligence, and set aside some seed capital that they can use to leverage private capital.
GFCC: How could investments in digitalization facilitate Africa’s energy transition?
Kandeh Yumkella: Digitalization can enhance the deployment of renewable energy resources in Africa. For example, digitalization is crucial in payment collection systems. We have seen how “pay as you go” mechanisms in East Africa have helped spread energy solutions. The same can apply to the rest of Sub-Saharan Africa. Digitalization can help in data collection and the planning of demand and supply, indicating peak periods in the same way that it has contributed to establishing efficient systems in developed nations. It can also be an asset for geospatial planning or electrical systems. Where will the grid be in the next 10, 20 years? Where will off-grid locations be? What is the population density? That kind of analytical work will require digital solutions.
GFCC: There has been a steady growth in FinTech in Africa boosted by public-private partnerships. Could these types of initiatives facilitate the pandemic economic recovery?
Kandeh Yumkella: We have already said that in the post-COVID-19 world, we want to build back better. We need to drive the energy transition towards a decarbonized system and to achieve that, we’re going to need innovation in financial models. We’re going to need new technology solutions. We need flexible grids that can take on more renewable energy. We need smarter systems with great analytical power to be able to balance supply and demand. US President Joe Biden wants to provide this type of leadership in his infrastructure plan. Energy is very central to that plan. He’s looking at the future and being able to do that, we need new public finance to pay for these new systems. We should make the sacrifice now to benefit from it over the next 50 years.
GFCC: You have also been raising attention to the lack of access to clean cooking in Africa, and you advise the UN High-Level Coalition on Health and Energy. Could you talk about the work of this coalition? How do you engage global leadership in tackling these problems?
Kandeh Yumkella: I’ve been providing strategic advice to the Health and Energy Platform of Action (HEPA), led by the United Nations and the World Bank. We were forward-looking, and we started that work over two and a half years ago, trying to set up a platform of action. At that time, we already saw that many health clinics in developing countries did not have access to adequate energy services. Rural areas, in some cases, have no access to healthcare facilities, which was causing a lot of mortality, especially for pregnant women delivering babies in the evenings. Many of whom were delivering babies in the dark. We recognized already that we needed more global action to deal with that issue. The second problem was household air pollution from biomass used for heating and cooking, which was becoming the third largest killer of women, and in some cases, children as well. Household air pollution was claiming over 4 million premature deaths in developing countries per year. When COVID-19 hit, people realized that we also need energy solutions to deliver vaccines. We worked for two years to raise awareness of this problem that gained momentum when people realized that we need access to vaccines to fight COVID-19 in developing countries. COVID-19 is just like carbon emissions. It does not respect boundaries, and it can spread very fast and make the whole global economy much more expensive. It is almost like carbon itself. Carbon dioxide does not respect boundaries, and it causes global warming for all.
GFCC: What is necessary to support SMEs and improve the ease of doing business in Africa?
Kandeh Yumkella: Africa is the next frontier for growth and trade opportunities with the rest of the world. In 20–25 years, Africa will be adding billion people to its population. We will have 2.2 billion Africans by 2050, 70% of them below 35 years old. It’s a dynamic region and a huge market opportunity right in the middle of the world. Geographically, it could be a bridge for many companies. The digital revolution and the energy transition cannot happen without Africa because the biggest deposit of the minerals necessary for it is located in the continent, such as the platinum group, cobalt, and manganese. African innovative small businesses moving into the clean energy space need partnerships and joint ventures to start producing battery systems for solar and wind technologies and smart grids. But it is crucial to create value and wealth within Africa and make African enterprises part of the energy value chain, rather than only exploiting raw materials for the rest of the world. Producing batteries and other components required for the greater global energy transition will definitely involve small businesses.
GFCC: How can Africa secure its long-term recovery?
Kandeh Yumkella: Regional corporation will be key for long-term recovery strategies. The African Continental Free Trade Area (ACFTA) will be one of the world’s largest market collaborations, combining resources from 54 countries. It is a huge market opportunity. We already have the building blocks at the five sub-regions in Africa. Now we are talking about a continental free trade area, free movement of people and goods across borders. It is a huge market potential for African businesses and the rest of the world.
