New move to bring electricity to Africa

A World Bank contest seeks to spur businesses to provide light for the poor.

from the November 15, 2007 edition

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"The impact of LEDs on African entrepreneurs would be huge," says Sturm. "There are hundreds of thousands of fishermen on Lake Victoria, and they typically spend $1,000 per year on kerosene so that they can fish at night and attract fish up to the surface. Imagine a business where half of your resources go to a fundamental cost of operation. Now imagine if you can do it cheaper and create bigger margins."

But no single solution suits all of Africa's needs, and with annual growth rates of 6 percent in many African countries, the continent will need to go on a monumental building spree of power plants to meet the growing energy needs of its citizens.

Lack of light can have devastating social effects. In the Senegalese town of Thiancone Boguel, a school used to provide free kerosene light to allow local students to study after their chores.

The effort paid off. By 2005, 100 percent of the graduating students passed, and all went on to college. But as oil prices rose, the school was forced to stop the program. Last year, the school had only a 60 percent graduation rate, and only 10 percent of those students went on to college.

At a modern shopping mall in Nigeria's biggest city, Lagos, the first mall built in the country, you can find all the trappings of a comfortable European life: Fresh lunch meat at the deli section of a supermarket, an Italian-style coffee shop with free wireless Internet. But frequent power cuts turn all that apparent modernity into a deferred dream. [Editor's note: the original version of the story misstated the status of Lagos.]

In Nigeria, a dream deferred

"What this shows," says John Adaleke, a leading economist in Lagos, referring to the shopping mall itself, "is that it is possible to build this in Nigeria without compromising standards. It shows the yearning that people have for the kind of lifestyle they thought they could only get outside of Nigeria."

After a half dozen power cuts in a half hour, Mr. Adaleke shakes his head. "It's like there's somebody switching things off with their toes," he says.

Even in South Africa, with its first-world infrastructure and booming economy, power cuts have become increasingly common, and the country plans to spend 150 billion rand ($23 billion) over the next five years just to keep pace with current demand.

At present, it produces 39,000 megawatts of electricity through its coal-fired and nuclear power plants. That's just 8 percent over the peak demand. Last month, power cuts rolled across Johannesburg, because colder temperatures prompted many South Africans to turn on their electric heaters.

South Africa's power crunch has been anticipated for years, after nearly a decade of 5 percent growth, says Azar Jammine, chief economist at Econometrix, a Johannesburg economic think tank. "Nothing happened for five years," he says. "No one put their thinking cap on to the needs for more power."

Few private firms are willing to take the risk of building a power plant that won't deliver a fair rate of return, notes Mr. Jammine. "Who's going to generate the 150 billion rand in investment?" he says. "Who's going to pay for it?"

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