With a bit under 1.5 million reported cases, Africa seems to be relatively spared by the virus, compared to other continents. The African continent has however felt the economic effects of the global Covid-19 crisis since its onset, causing it to enter recession for the first time in 25 years. The World Bank growth forecasts now vary between -2.1% and -5.1% in 2020, from 2.4% in 2019. Beyond these seemingly limited and general predictions, Institut Montaigne wanted to dig deeper into the impact of the pandemic on six different sectors on the continent: energy, information and technology, education, media and communications, the agro-food industry and finally, the arts. How have they weathered this crisis? What challenges do they each face? How are these sectors being shaped by the Covid-19 crisis, and is the change here to stay?
And who can better answer these questions than young African leaders who are active players in these very sectors? Mahaut de Fougières, Policy Officer for International Affairs at Institut Montaigne, has interviewed six Young Leaders from the French-African Foundation, for this six-part series. We begin with the power sector, which has been greatly impacted by the global economic downturn and the lockdowns introduced in a number of countries across the African continent. Linda Mabhena-Olagunju, Founder and Managing Director of DLO Energy Resources Group (Pty) Ltd, a wholly African female-owned and independent power producer, shares her analysis of the impact of Covid-19 on South Africa and Nigeria’s power sectors.
The impact of the Covid-19 pandemic on global health has been widely reported across the world. What is underreported is the success of the African continent’s handling of this crisis. Africa is often criticized for poor leadership. However in this instance, its leaders managed, for the most part, to provide their citizens with decisive leadership to curb the spread of the pandemic. Most African governments had a clear strategy which included strict lockdown measures, mask wearing policies and mass testing. As a result, the continent was able to keep its infection and death rates down.
Whilst the continent has been successful in managing the pandemic, it now has to deal with the economic fallout as countries around the world face recession. A majority of African economies are heavily resource-based and with the global resource downturn, many had already been struggling prior to the global lockdowns. Covid-19 has merely put pressure on underlying economic deficiencies primarily linked to years of mismanagement of state funds, underinvestment in public infrastructure and a failure to implement economic reform policies. As lockdown measures are eased, there is a scramble by African governments to save their ailing economies and create employment for an increasingly agitated and unemployed youth population. The International Monetary Fund has projected that sub-Saharan Africa will enter into a recession for the first time in 25 years due to the Covid-19 pandemic, with growth falling to -3.2% in 2020 from 3.1% in 2019. Many African countries are in great debt and have a limited fiscal capacity to absorb the looming economic crisis.
A number of taskforces and advisory committees have been appointed to think of ways to stimulate economies across the various countries. In my view, Africa is not a continent without brilliant ideas and policy writers. What we are is a continent with a chronic inability to implement these policies. A perfect example can be found in the power sectors across sub-Saharan Africa. A large part of the continent’s power sector has suffered from underinvestment as well as a failure to implement the various energy reform policies proposed over the years.
No Growth Without Energy
According to the International Renewable Energy Agency (IRENA), Africa has 147 GW of installed capacity, which to put into perspective, is the total amount of power produced by China every 1 or 2 years. Various studies have shown the link between the consumption of electricity and the rate of growth in the GDP. On average, electricity consumption in sub-Saharan Africa, with the exception of South Africa, is 153 kWh per annum which is one fourth of the rate of consumption in India and just 6% of the global average. Nearly 600 million people in Africa lack access to power and this has had huge ramifications on businesses’ expenses. IRENA has found that the lack of access to power costs the continent up to 5% in the growth of its GDP annually. It is a widely accepted fact that there can be no meaningful economic growth without access to affordable and reliable electricity supply. Any economic response that does not have increased power generation as well as an investment into grid and transmission infrastructure at the top of its agenda is bound to fail.
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