Obama's $7 Billion for African Electricity

Yes, you guessed it: There's less there than meets the eye

3 min read
Obama's $7 Billion for African Electricity

With respect to the US $7 billion U.S. program to help six African countries upgrade their electric power systems, which President Obama announced on Sunday during his trip to Africa, there are two questions that spring immediately to mind: First, though the United States is a very rich country and the presidency is a very powerful position, does Obama actually have the authority to just write a huge $7 billion check to support a cause he happens to like? And second, is a paltry $7 billion enough to really make a difference?

There answer to both questions is No.

First, none of the $7 billion consists of direct grants to African countries, and almost all of it consists of credit and credit guarantees, the biggest single chunk being up to $5 billion in Export-Import Bank export credits. Most of that money will not go to Africans at all, in fact, but to the big U.S. companies that get the work of supplying power plant and grid equipment to the Africans, starting with General Electric. None of that will be any surprise to students of the "give and take" of what goes by the name of international aid, which often involves more taking than giving.

Tellingly, perhaps, the White House fact sheet describing the $7 billion program twice refers to "new discoveries of vast reserves of oil and gas" in Africa, despite the apparent lack on any real connection between those discoveries and the program.

Second, $7 billion is not really very much money when one's talking about Africa, African electricity needs, or electric power in general. Two thirds of Africans lack grid access, and the total cost of getting them all on the grid often is estimated at $300 billion, according to the White House. "When it comes to building power plants, $7 billion isn't a lot of money," notes a reporter for Forbes.  "In Tanzania [for example], Japanese banks are financing a $414 million Sumitomo-built 240 [megawatt] gas-fired plant. While in Ghana the Chinese are building a 400 [MW] hydropower plant for more than $600 million." So, even if Obama were actually giving six African countries $7 billion outright, it could get used up pretty quickly without making much of a dent in the larger problem.

And then there's the painful truth that much of what ends up getting spent will be spent unwisely, or arguably so. To take just one category of new generation, large dams, serious questions are being raised about some of the big ones on the drawing boards or already under construction. Science writer Fred Pearce describes some of the biggest African hydropower projects in an article just posted on the Yale.360 website, among them:

  • the 6000-MW Grand Renaissance dam that Ethiopia is building on the Blue Nile near the Sudanese boarder, which may threaten Egyptian water supplies and aggravate geopolitical tensions
  • dam projects totaling 13 000-MW along the Zambezi River (the border between Zambia and Zimbabwe), despite an anticipated 10-15 percent decrease in rainfall in its catchment area, because of global warming
  • and, biggest of all, the series of flow-by dams being planned for the Congo, which could have a final capacity twice that of China's Three Gorges and, initially, send most of its output to South Africa, 3000 kilometers away.

Is it really a good idea to be planning a giant project in the world's most tragically messed up place, which will require power to be transmitted over immense distances through other difficult areas? Perhaps the best that can be said for Obama's Power Africa initiative is that the president is thinking small, really small.

Photo: Thomas Mukoya/REUTERS

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