Power continues to be a focal point in SSA as demand for energy continues to grow and governments allocate material funds in order to drive Power Sector projects forward. As a result private sector interest tends to follow. The continuing focus and interest in the Power Sector leads to a need for thought leadership documents such as this, which allows decision makers, investors, existing and potential clients to gain insight into SSA’s Power Sector.
Sub-Saharan Africa (SSA) consists of 49 countries with a combined population in the region of 900 million people. The area, which has historically been known for its high growth rates, suffered a bit of a setback in 2015, with overall GDP slowing to 3.5%, down from 5.1% in 2014. The slowdown was further highlighted by the fact that growth in the final quarter of 2015 was the slowest expansion since the final quarter of 2009.
This slowdown can be attributed to various factors including reduced growth in the region’s biggest economies - Nigeria and South Africa -, slumping commodityprices, security threats, a slowdown in trade with SSA’s main trading partners and adverse weather conditions.
All economies start with two primary infrastructure developments, namely Power and Transport. Without both of these industries being properly developed anyfurther investment into secondary infrastructure (education, health, housing etc)will struggle to materialise.
Power is one of the main challenges facing the SSA region across all aspects of the Economic Value Chain. Although SSA has a current installed capacity of approximately 70GW, at least a quarter of this is unavailable due to poor infrastructure and maintenance.
It is estimated by the World Bank that the short-term need for power is in the region of a further 70GW and that investment of between USD120 billion and USD160 billion is required per annum in order to provide electricity access to the entire Sub-Saharan region by 2030.
The lack of power infrastructure is proving a bottleneck to growth in the region and is an urgent problem which needs to be addressed. More than 30 African countries are now experiencing power shortages leading to either expensive short-term fixes or power blackouts. The economic cost of such power shortages can amount to more than two percent of GDP.
Due to the importance of power in SSA, this document provides an analysis of the Power Sector in the region utilising the Power Value Chain and highlights the key trends and issues that are happening across the different regions within SSA.
In this document we introduce the KPMG version of the Power Value Chain which forms the underlying theme of this Report. Each Value Chain element is experiencing its own developments and challenges and opportunity for private sector investment, in each of these Value Chain phases, either currently exists or will exist as the Power Sectors in SSA countries align with those of developed economies.