July 2, 2013 / 12:20 PM / in 6 years

AFRICA INVESTMENT-Can Obama's Africa Power plan hold a candle to China?

* U.S. $7 billion initiative follows big Chinese projects

* Obama hints U.S. investment will create markets, jobs

By Ed Stoddard

JOHANNESBURG, July 2 (Reuters) - U.S. President Barack Obama’s $7 billion plan to shine “light where currently there’s darkness” in Africa by doubling access to power on the world’s poorest continent was billed as a highlight of his African tour.

He announced the Power Africa initiative in Cape Town on Sunday in a speech which he also urged the fast-growing but still troubled region to follow the shining example of South Africa’s anti-apartheid hero Nelson Mandela.

But Obama’s proposal, which aims to partner U.S. government financing with private sector investment, may look low-wattage compared with China’s already ongoing big electricity projects on the world’s least-developed - and least lit - continent.

Beijing has been lighting the way in Africa with billions of dollars of promised power investment and projects. As with other infrastructure development opportunities in Africa, Washington seems to be arriving late to the party.

Visiting Africa in March, China’s President Xi Jinping renewed an offer of $20 billion in loans to “help African countries turn resource endowment into development strength”.

A major chunk of this Chinese money is aimed at connecting up African economies with electricity, from Zambia to Ethiopia.

“The major thrust of the Chinese infrastructure spend in Africa has been in the power sector. It is tens of billions of dollars,” said Martyn Davies, the chief executive of Frontier Advisory, a strategy and investment advisory company.

The Asian giant has a huge appetite for African resources from copper to oil and they cannot be extracted without power.

China’s Sichuan Hongda Co. Ltd. signed a $3 billion deal with Tanzania in 2011 to mine coal and iron ore and build a 600-megawatt (MW) coal-fired power plant in the country’s south. The centrepiece among an array of Chinese power projects in Ethiopia is the $4.1 billion Grand Renaissance Dam.


Satellite imagery of “Africa at Night” shows a mostly dark continent, the main exceptions being the region’s dominant economy South Africa, the more developed North African Mediterranean coast, and scattered pinpricks of light in the oil-producing Gulf of Guinea, which includes Nigeria.

More than a century after the invention of the light bulb, the World Bank says only one in four people have access to electricity in Sub-Saharan Africa.

According to the International Energy Agency (IEA), the region will require more than $300 billion in investment to achieve universal electricity access by 2030.

In numbers of projects and investment pledges, China seems well ahead of America at the moment in the race to add more bright spots to Africa’s nocturnal gloom. Some Chinese projects, for example a hyro-power project in Ghana that started producing 130 MW a month ago, have already come on line.

Power plants cannot be built overnight and it may take years for similar U.S. initiatives in Africa to be up and running.

This may put America at a disadvantage to China in the scramble for African resources.

But Obama clearly hinted American investment may be better for Africa than Chinese investment in creating industries and jobs on the continent - not just sucking our resources - with more of a focus on a potential consumers’ market.

“Our primary interest when it comes to working with Africa on energy issues has to do with how do we power Africa so that it can be an effective market creating jobs and opportunity,” Obama told a news conference in South Africa on Saturday.

“We also then have somebody to trade with and sell iPods to, and airplanes, and all kinds of good stuff,” he added.

“Obama seemed to be taking more of a Brazilian approach to Africa. A lot of Brazilian policy is looking at what Brazil can sell to the African market,” said Alex Vines, head of the Africa Programme at UK-based Chatham House.

Stressing rising oil, natural gas and clean energy production in the United States, Obama told his South African audience: “Frankly, we don’t need energy from Africa”.

Oil exports from Africa’s top producer Nigeria to the United States have fallen from over a million barrels per day (bpd) in 2010 to 383,000 now, the U.S. Energy Information Agency says. Angola’s U.S. exports in the same period dropped to 172,000 bpd from 393,000 as the domestic U.S. shale gas boom has taken off.


While he made a point of saying he did not view Beijing’s trade and investment surge as a threat to U.S. interests - “the more the merrier” was his take on foreign economic involvement in Africa - Obama could not resist a veiled mild jibe at the way Chinese companies conduct their businesses there.

“If somebody says they want to come build something here, are they hiring African workers? If somebody says that they want to help you develop your natural resources, how much of the money is staying in Africa?” Obama said.

This echoed complaints from some government and business circles in Africa that Chinese companies often bring in their own workforces to develop resource-related infrastructure projects, creating few new jobs, let alone value-adding processing or manufacturing industries.

The U.S. initiative, called Power Africa, will see Washington commit more than $7 billion over the next five years with the stated goal to “double access to power in sub-Saharan Africa,” according to the White House. This includes up to $5 billion being made available by the U.S. Export-Import Bank.

Over $9 billion in U.S. private sector investments have also been committed to support development of more than 8,000 MW.

But not everyone was happy. Outspoken American real estate mogul Donald Trump called Obama’s Power Africa plan “crazy”.

“Every penny of the $7 billion going to Africa as per Obama will be stolen - corruption is rampant! ... We should be concerned about the American worker & invest here,” Trump tweeted on his @realDonaldTrump Twitter Account. (Additional reporting by Sureka Asbury and Pascal Fletcher in Johannesburg, Fumbuka Ng’wanakilala in Dar es Salaam, Aaron Maasho in Addis Ababa and Kwasi Kpodo in Accra; Editing by Pascal Fletcher)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below