How to get Africa’s power utilities back on their feet

With an electrification rate of 42% in 2016, Africa lags all other regions in the world, with the lowest rates in rural areas, according to the World Bank. That may not change soon, as the vast majority of the power utilities in Africa are effectively bankrupt.

Only two of the 39 African utilities that were surveyed by the World Bank, in the Seychelles and Uganda, were able to generate enough cash to cover both their operating costs and capital expenditures necessary to invest in the maintenance and expansion of the grid. And only 19 of the 39 companies were able to generate enough cash to cover their day-to-day operating costs.

In a report by Quartz, solutions are presented. One is a focus on increasing efficiency, which should lead to improved service quality. The other is technology. As renewable power and storage technologies become cheaper and more efficient they will gradually allow for the implementation of cheaper mini-grids and smart grids for the poor. But governments, says the report, “need to bite the bullet, make some bold, hard and potentially unpopular choices if they want to increase the long-term welfare of their citizens.” According to Quartz, an increase in power tariffs may be necessary, as prices may have been set too low by African governments. These subsidies have also been made too widely available, benefitting the elite and middle classes more than the poor.

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