Scourge of Power Outages Holding Business Back in Africa

February 10,2015

NAIROBI— Power outages are a fact of life across much of Africa, with the near-daily blackouts affecting rich and poor countries alike.

A small business in Nairobi that began as a party supply outfit has expanded to serve restaurants and supermarkets - moving more than a ton of ice a day, while their custom-made ice sculptures decorate State House events.

It's an entrepreneurial success story. But Betty Mbithe, office manager of The Ice Man company, said the limits of the country's power supply puts the business in jeopardy.

“Sometime last year when we had three days without power, and we couldn't operate at all, because the machines need power, the cold room needs power, and no work can go on without any power,” she said.

To keep their swans cold and to keep their customers happy, the Ice Man needs a 24-hour supply of power, but relying on Kenya's grid is proving costly, said Mbithe.

“It is a difficult business, especially if the power is high, because everything you make goes to the power, we pay back to the government for power,” Mbithe said.

Africa is facing enormous power challenges. Some 600 million Africans have no access to electricity at all. That is 60% of the population.

Africa consumes less power than any other region in the world, but pays nearly the same average tariffs as the United States, and about twice as much as East Asia.

Speaking at the World Economic Forum in Davos Switzerland this year, African Development Bank President Donald Kaberuka said energy shortages are holding countries back.

“At this moment, every single African country is experiencing energy shortages and power outages. That is costing the continent 2% of GDP. In fact, an African leader says that we are a continent of miracles. If we are growing at 5% without enough electricity, think about what we could do if we had enough electricity,” said Kaberuka.

The African Development Bank says weak infrastructure is the biggest challenge to electricity distribution.

Even richer nations like South Africa and Nigeria have fallen behind because of a lack of investment in power generation.

While each nation presents its own challenges, Kaberuka said increasing the trade of energy across borders may help to create more consistent supplies and bring down prices.

“It is not possible for our individual 54 countries to have energy security from their own domestic resources. We have to create viable regional markets for power. And that is possible,” he said.

Investors are pouring money into renewable energy projects in Africa to help lessen the energy gap, but much more is needed.

Africa's booming population, expected to double by 2050, will continue to put pressure on power supplies.

And failure to improve generation could mean a lot of lost opportunity.