Turning on the Lights to Energize U.S. Leadership in Africa

June 27, 2014 By Ashley E. (Chandler) Chang

Democrats and Republicans are finding common ground when it comes to energizing U.S. leadership in Africa.

The Senate Foreign Relations Committee approved the “Energize Africa Act” this week and, like the “Electrify Africa Act” that passed the House in May, it would codify and expand the Administration’s Power Africa initiative. Taken together, these bills could transform America engagement on a continent that is home to seven of the 10 fastest growing economies.

What’s more, sending President Obama a bill before the U.S.-African Leaders Summit in early August would be a powerful demonstration of America’s commitment to working with African governments to improve the lives of hundreds of millions of people.

Why it’s the right thing to do

“U.S. leadership can help provide modern, clean, reliable, and affordable energy services to people lacking access to electricity,” said Sen. Robert Menendez (D-NJ), who introduced the bill with Ranking Member Bob Corker (R-TN), along with Senators Chris Coons (D-DE), Johnny Isakson (R-GA), Edward J. Markey (D-MA), and Mike Johanns (R-NE).

In sub-Saharan Africa, nearly 70 percent of the population lack access to reliable and affordable electricity. The electricity crisis has trapped the region in extreme poverty – creating widespread health, education, and safety challenges, particularly for women and girls – and is the biggest constraint to continent’s economic growth.

The Senate bill would “help 50 million Africans with first-time access to electricity” and play “a meaningful role in providing nearly 600 million Africans with electricity” by 2020.

Why it’s the smart thing to do

“To be most effective with limited foreign aid resources,” said Senator Corker, “we should focus our efforts on things like electricity where we can ultimately reduce the need for U.S. support over time.” As with the House bill, sponsored by Chairman and Ranking Member of the House Foreign Affairs Committee Ed Royce (R-CA) and Eliot Engel (D-NY), the Senate bill embraces a “new model of development” that focusses on leveraging private investment, technologies, and partnerships.

Because the level of funding needed to electrify the continent far outstrips the capacity of African governments and foreign donors, the legislation pools the resources and tools of USAID, OPIC, USTDA, and the U.S. African Development Foundation, along with the Treasury Department’s influence at the World Bank and African Development Bank. This will then enhance the availability of energy sector resources in Africa and catalyze private sector involvement.

The Senate bill, like the House bill, requires the President to “develop a highly comprehensive multi-year strategy” to guide U.S. policy through 2020. It requires the measurement and evaluation of development impact, but where the House’s bill seeks to extend OPIC’s authorization to three years, the Senate’s reauthorizes this small, but impactful agency through 2019.

Return on Investment

Looking at Power Africa, which “will make electricity access available for 20 million people” by 2018, this approach is working and crowding in private investment. Over the past year, every one dollar committed by the U.S. government to Power Africa “has already leveraged more than two dollars in private sector investment commitments.”

It commits $7 billion across 12 U.S. government agencies – with USAID in the lead, but relying heavily on OPIC, USTDA, MCC, and the U.S. Export-Import Bank, which alone will finance around $5 billion to catalyze exports for power projects.

Together, they have already generated nearly $15 billion in private investment commitments, from big and small U.S. companies like General Electric, Goldman Sachs, Symbion Power, Hecate Energy, and others.

With sub-Saharan Africa expected to have more than 1.3 billion consumers by 2030, legislation like the Energize and Electrify Africa have the potential to create enormous opportunities for American businesses – while boosting energy production, unlocking the region’s economic potential, and alleviating poverty.

It may take some creative compromise for the Hill to get the President a bill by early August, but it’s the smart thing and the right thing to do.