This interview by Anne-Sophie Clulow Garrigou was published in The Beam #4 (Jul 11, 2017 ). Mobisol is now known as ENGIE Mobisol since it was acquired by ENGIE in 2019. For more information, please visit: www.engie-mobisol.com. Subscribe now to read more on the subject.
Regular supply of power, which is taken for granted in developed countries, is still a luxury in Africa in the 21st century. Some 137 years after Thomas Edison developed the light bulb, the continent is still in the dark. Yet, its energy potential is enormous, in particular with almost unlimited solar resources.
Recently, Akinwumi Adesina, President of the African Development Bank Group (AfDB) visited Mobisol, a company that offers solar home system to off-grid populations in Africa. The goal of the visit was to discuss how AfDB could support Mobisol in its mission to electrify Africa.
The main mission of the AfDB is to spur sustainable economic development and social progress for the continent, contributing to the fight against poverty. Within AfDB’s “Sustainable Development Goals” developed in 2015, Goal 7 was particularly at the heart of the visit: “Ensure access to affordable, reliable, sustainable and modern energy for all”. By providing solar energy to rural populations, companies like Mobisol also help other goals defined by the AfDB such as to ensure healthy lives, support the empowerment of women and combat climate change and its impacts.
The African Development Bank last year launched the New Deal on Energy for Africa. Through the New Deal, the Bank intends to invest US$12 billion on energy in the next five years and leverage US$45–50 billion from the private sector and other partners.
We met with Mr. Adesina at the Mobisol headquarters and asked how the AfDB can help companies like Mobisol to drastically change people’s lives by bringing power to the continent.
What would you say are the main challenges that the off-grid sector faces in Africa today?
I think whether we talk about off-grid, mini-grid or grid, the fact is that 645 million people don’t have access to electricity in Africa. The majority of those live in rural areas. As I have always said, Africa can not develop in the dark. You need electricity for small- and medium-sized enterprises to work, you need electricity for hospitals and you need electricity for kids to go to school and learn. Electricity access is a lifeline for Africa’s present and future.
When I became President of the African Development Bank, we decided that electricity would be a priority. Our goal is to reach universal access to electricity over the next 10 years. Now of course trying to do that, we set ourselves a lot of targets. The first is to connect 130 million people through the grid systems, the second is to connect 75 million people to the off-grid systems and the third is to provide some 175 million access to clean energy for cooking.
When it comes to the off-grid system, we have a number of companies like Mobisol that are doing a fantastic job. Now, the main challenges that companies like Mobisol face is the access to finance for them to be able to operate. The second challenge is the consumer of electricity themselves, which are often poor households, or as we say “at the bottom of the pyramid”, therefore they need access to consumer credit to be able to afford this system. The third problem is the energy regulatory environment because it was designed for the grid even though the grid is not there and therefore doesn’t take in consideration the off-grid systems.
To solve these problems, the African Development Bank can provide access to quicker equity financing, we can provide debt financing, we can even reduce the level of interest rate on debt financing to make it more affordable for companies like Mobisol. We also committed to providing consumer credit for the bottom of the pyramid households in Africa to have access to decent off-grid single solar panel systems for their households.
Our ambition with the AfDB is to work with companies like Mobisol, to use their fantastic model and replicate it to reach 75 million people. I think they will be a great part of the puzzle and that is why I’m here today, to discuss those options with them.
What is the direct impact of Trump’s political decision (cutting financial international aid) on your work? Is it affecting the AfDB?
First and foremost, I think that Africa has to develop using a lot of his own resources. I don’t have any problem with the need to focus on individual countries. But my job as President of the African Development Bank is to put Africa first. It is to look for ways to accelerate Africa’s development. We need to focus on how to mobilise our own domestic capital for Africa’s development, so Africa is not developing by begging.
So I want to mobilise all the money that we have on the continent. The pension funds will reach US$1 trillion by 2020 on the continent, and the sovereign wealth funds are worth US$164 billion. We want these institutional investments — the pension funds, the sovereign wealth funds, the insurance companies — to invest in energy, to invest in infrastructure. Our mission is to encourage this by giving guaranties that reduces their risk of investments.
On the other hand, I really believe that we shouldn’t be myopic when it comes to international development. We need to look at the long term and we need to invest in development financing to make sure that we can improve the lives of people.
Right now, we’ve got a triangular disaster in Africa, one part of that triangle is extreme poverty in rural areas, the second is high unemployment rates amongst the youth and the third is climate and environmental issues. These three factors bring terrorism. So to cut aid that will support rural areas, that will support creation of jobs, is going to be disruptive, and it can only make it easier for terrorists to recruit in all of these areas.
If you also look at the migration situation, we see young African people hitting European coasts, and dying at the bottom of the Mediterranean Sea. I don’t believe the future of Africa’s youth lies at the bottom of the Mediterranean sea, I also don’t believe it lies in Europe. It lies in Africa, where we can create jobs.
To address this, we have launched a program that aims to create 25 million jobs for young people in Africa in the next 10 years, called Jobs Youth in Africa. The goal is to create jobs in the ICT industry, in agriculture, in small- and medium-sized enterprises. But to do so we need more financing, not less.
Which country could take the lead in driving for climate action in Africa?
I think the issue is not about finding a country globally that is leading on climate change, or on the agreements that were reached in Paris. What we need is global leadership on climate financing, we need honest execution and delivery on the commitments made in Paris.
Africa contributes only 2% of global greenhouse gas emissions but today is suffering terribly from its consequences. Today in Africa we have drought, we have famine, and we had two years in a row of lack of rainfall.
So now we need global leadership that will provide climate adaptation finance for Africa, for the farmers, for the countries to insure themselves against catastrophic risk events, and to also support the kind of off-grid system which will reduce the dependency of people on using charcoal and kerosene, all of which contributes even more to CO2 emissions.
We need global leadership and commitment on what has been made, because the only promises that matter are the promises that are kept.
How optimistic are you about the development of renewable energy in Africa?
I am very optimistic, because the AfDB is leading the way on renewable energy for Africa. We helped finance the largest concentrated solar power plant in the world, which is in Morocco, and we also helped to finance the largest wind farm in Africa, the Lake Turkana Wind Power, and we are currently financing the Menengai geothermal plant in Kenya.
We have just set up a new fund, the Facility for energy inclusion [afdb.org], which should provide equity and debt financing for energy companies like Mobisol and others that are helping to generate anything between 3MW and 30MW. The Bank will invest anything between US$2 million to US$30 million in those companies to lead the way.
Secondly, within the AfDB we’re hosting what is called the Africa Renewable Energy Initiative [AREI] which is an initiative to help Africa unlock its massive renewable energy potential. And that initiative has commitments from the G7 to contribute US$10 billion. So if that money comes in, I think you will see a massive renewable energy revolution in Africa.
We have got the sun all the time, and the sun should do more than just nourish our crops, it should also power our homes.