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Exploring Investment Opportunities

Exploring investment opportunities for the power


sector in emerging economies
Purbashish Ganguly, Karanvir Sidana, Spreha Kanika, Siddhi Agarwal, heer !ora,
Aseem "ohatgi
KE# $O"S% Emerging e&onomies, power se&tor, investment, "OI, per'orman&e
parameters, GP, growth(
INTRODUCTION
)An emerging market e&onomy *E+E, is
de-ned as an e&onomy with low to
middle per &apita in&ome(. *Antoine $(
!an Agtmael, $orld /ank,( Su&h
&ountries &onstitute approximately 012
o' the global population, and represent
about 312 o' the world4s e&onomies(
5he Global GP growth in 3167 will be
around 8(9:;2 *International +onetary
<und,( /y 3167, the emerging e&onomies
will &ontribute more than 992 to the
global growth &ompared to only 892 in
3111 *Global E&onomi& $at&h 3168,
P$=,(
Our &lient is &onsidering investing in the
power se&tor be&ause the 'eel that the
growth in the Indian &onstru&tion and
&ivil in'rastru&ture is stagnating( Sin&e
the Indian power se&tor is already
o&&upied by 81 players and is dominated
by players like >5P= ?td, Power Grid,
>@P=, 5ata Power *">=OS, 3168,, they
are looking to invest in A'ri&a in sear&h o'
higher returns(
A&&ording to A'ri&an bio:resour&es
4exploited by $est4 report, A'ri&a has a
large Auantity o' natural resour&es
in&luding oil, diamonds, gold, iron,
&obalt, uranium, &opper, bauxite, silver
and petroleum( Su&h high reserves o'
natural resour&es and also &onsidering
the 'a&t that A'ri&a is an emerging
e&onomy makes investment
opportunities viable(
THE CONTEXT
A&&ording to report )Prospe&ts to the
A'ri&an power se&tor. by I"E>A, A'ri&a
&urrently has an installed &apa&ity o'
6;7G$, &omparable to the &apa&ity
=hina installs in one to two years( 5he
average per &apita ele&tri&ity
&onsumption in sub:Saharan A'ri&a
*ex&luding South A'ri&a, is Bust 698 k$h
per year whi&h is one:'ourth o' the
&onsumption in India and is Bust C2 o'
the global average( A&&ording to the
same report, around C11 million people
in A'ri&a la&k a&&ess to ele&tri&ity and
bla&kouts o&&ur daily in many A'ri&an
&ountries( 5hus many &ountries depend
upon the expensive diesel power
generation 'or their ele&tri&ity demands
whi&h &osts these &ountries 62:92 o'
their GP annually( All these 'a&tors
make A'ri&a an immensely viable option
to invest in the power se&tor(
A'ri&a Growth Initiative, the &ontinent is
extremely ri&h in minerals, energy
resour&es and un&ultivated arable land(
5he surprising part here is that most o'
the land has been unutiliDed and
untou&hed( ?ess than 912 o' the land
has been surveyed and it is already
being spe&ulated that A'ri&a &ontains
6
Exploring Investment Opportunities
more than hal' the worldEs gold, more
than ;12 o' its platinum and vast
deposits o' &opper, diamonds and iron
ore( It &an be in'erred that deposits o'
higher gold and other valuable minerals
&ould lead to more industries being set
up and that will lead to higher power
reAuirement *<oresight A'ri&a, 3168,(
A'ri&a &ontinues to be&ome more open
and demo&rati&( Sin&e 6FF6, however,
pea&e'ul transitions o' power have
o&&urred in more than 81 instan&es in
sub:Saharan A'ri&a( 5his would lead to
better government poli&ies whi&h will
make the inGow o' investment 'rom
'oreign &ountries stable *5he A'ri&an
=ompetitiveness "eport 3168, $orld
E&onomi& <orum,(
Also, almost ;12 o' the A'ri&an
population is under the age o' 60 and
that promises to be an extremely big and
produ&tive working population( As these
younger and more edu&ated people
enter the work'or&e, &onsumer
expenditures in sub:Saharan A'ri&a are
proBe&ted to rise 'rom HC11 billion in
3161 to nearly H6 trillion in 3131( 5his
will 'urther push the demand 'or power(
A'ri&a has probably the highest growth
potential among all the &ontinents( 5he
I+< predi&ts that out o' the ten 'astest
growing e&onomies 'rom 3166:3169,
seven o' them will be in sub:Saharan
A'ri&a and expe&ts A'ri&a to take 'rom
Asia the title o' the worldEs 'astest
growing region( 5hey have a very low
base o' whi&h growth is expe&ted and
that hints at what &ould be years or even
de&ades o' rapid e&onomi& growth( 5his
tells us that the rate o' growth will be
sustained over a long period o' time(
AROACH TO THE RO!"E#
Ex$mining Dem$n% $n% suppl& in
ower In%ustr&
5he demand and supply trend in the
power industry will be addressed with
the help o' resear&h Bournals *"osnes and
!ennemo 3163, that would assist in
investigating the gap and thus realising
opportunity in the A'ri&an market
Investment clim$te $n% e$se of
%oing 'usiness
It is vital to understand the business
environment o' nation be'ore de&iding on
investment( 5he approa&h would use
a&ademi& Bournals *Eberhard and
Gratwi&k 3166, and to &ompare
investment s&enarios in diIerent
&ountries o' A'ri&a
Current #$croeconomic
Environment Assessing &urrent
ma&roe&onomi& s&enario through
available reports *Investment =limate in
A'ri&a program J =omparative "eport ,
and published arti&les *5he role o'
&entral banks in ma&roe&onomi& and
-nan&ial stability, /IS paper, in diIerent
nations o' A'ri&a so as narrow down the
resear&h to the &ountries that &an reap
the maximum pro-t 'or power se&tor(
Ev$lu$ting future growth $n% its
imp$ct on power sector
5he evaluation would be done by
re'erring available resear&h Bournals
*=hete, Adeoti, Adeyinka, and Ogundele
316;, and arti&les *E&onomi& "eport on
A'ri&a : +aking the +ost o' A'ri&aEs
=ommodities% IndustrialiDing 'or Growth,
Kobs and E&onomi& 5rans'ormation 3168,
so as to shortlist the &ountries with high
growth potential and the eIe&t o' su&h
growth on power se&tor
"ITERATURE RE(IE)
3
Exploring Investment Opportunities
Ex$mining Dem$n% $n% suppl& in
ower In%ustr&
Dem$n% si%e $n$l&sis
5here are broadly three trends whi&h
should &ontribute to in&reasing demand
'or power in A'ri&a% 5he population o'
A'ri&a is growing 'ast* 3(82 I"E>A report
3168,( 5his is a&&ompanied by rising per
&apita in&ome and rapid urbanisation( It
is proBe&ted that the A'ri&an population
will grow to 3:8 billion by 3191 'rom
6(196 billion in 3161( 5he urbanisation
trends &urrently show a wide range 'rom
as high as 912 in >igeria to 602 in
Ethiopia( In some >orth A'ri&an &ountries
it is proBe&ted as high as 712( It is
proBe&ted to in&rease by 31 per&ent
points by 3191( Almost CC2 o' the
population will then live in &ities *See
5able 6, 5oday 8;2 o' the population
lives in urban areas and the rest are still
rural( A'ri&an &ountries have been
growing at around ;2 on average and
are expe&ted to grow at around C times
by 3191(
5he model by "osnes O( L !ernnemo @(
geographi&ally divides the A'ri&an
&ontinent into ; power pools%
Southern A'ri&a Power Pool*SAPP,
&onsisting o' emo&rati& "epubli& o' the
=ongo *"=,, , +oDambiAue, +alawi,
>amibia, South A'ri&a, Angola, Mambia
,Mimbabwe(
5he =entral A'ri&a Power Pool *=APP,
&onsisting o' =ameroon, the =entral
A'ri&an "epubli&, =had, the "epubli& o'
the =ongo */r,, EAuatorial Guinea and
Gabon(
5he East A'ri&a Power Pool *EAPP,
&onsists o' /urundi, Bibouti, Egypt,
Ethiopia, Kenya, "wanda, Sudan,
5anDania and Nganda(
5he $estern A'ri&a Power Pool *$APP,
&onsisting o' /enin, /urkina <aso, =Ote
d4Ivoire, Gambia, Ghana, Guinea, Guinea:
/issau, ?iberia, +ali, +auritania, >iger,
>igeria, Senegal, Sierra ?eone and 5ogo(
Nsing the e&onometri& model by Khanna
and "ao 311F, we arrive at the
&onBe&ture that in determining demand
'or power, &oeP&ient on in&ome,
representing in&ome elasti&ity, drops
'rom approximately 6(6 to 1(9 i' one
in&ludes urbaniDation in the regression(
5he &oeP&ient on urbaniDation is highly
statisti&ally signi-&ant( *See 5able 3,
=he&king on individual &ountries we -nd
that the need 'or ele&tri&ity is huge in
A'ri&a as there are &ountries whose F1
plus per&ent o' population go without
&onsuming ele&tri&ity( *See 5able 8,
$e look at the existing produ&tion and
&onsumption patterns o' power and try
and analyDe supply gaps in these
&ountries(
?ooking spe&i-&ally at EthiopiaEs re-ned
petroleum se&tor, a gap exists in terms
o' &onsumption and produ&tion( It does
not produ&e any re-ned petroleum, yet
imports ;3,911 bblQday *3161 est(,*=IA
$orld <a&tbook,( Its &onsumption stands
at% ;F,101 bblQday *3166 est(, (
5anDania shows a similar &onsumption
produ&tion gap in the ele&tri&ity se&tor(
Produ&tion is at ;(813 billion k$h *3161
est(,, 8(;18 billion k$h *3161 est(, is
&onsumed and 91 million k$h *3161
est(, is imported( Also with regards to
re-ned petroleum it shows a similar
trend( It doesnEt produ&e re-ned
petroleum, &onsumes about
;8,861 bblQday *3166 est(, and imports
8
Exploring Investment Opportunities
81,791 bblQday *3161, implying a
demand supply gap(
I' we look at Ghana, we see that itEs
maBorly oil produ&ing e&onomy( Oil
proBe&ts are being developed and are
expe&ted to &ome on line in a 'ew years(
Estimated oil reserves have in&reased to
almost 711 million barrels and GhanaEs
growing oil industry is expe&ted to boost
e&onomi& growth( Even this is a &rude oil
exporter but import dependent 'or
re-ned petroleum produ&ts(
In Mambia, &opper mines are abundant
and re&ent privatiDation o' &opper mines
has in&reased the pro-tability o' the
government and has spurred e&onomi&
growth( Produ&tion o' ele&tri&ity
stands at 66(6F billion k$h *3161,
while &onsumption is at 7(FC billion k$h
*3161,(It imports 38 million k$h *3166,
o' ele&tri&ity while it is exporting 970
million k$h *3161,( As regards &rude oil,
it produ&es 67;(C bblQday *3163, and
imports 63,911 bblQday *3161 est(,(
>igeria is a petroleum dependent
e&onomy and has mu&h o' its problems
emerging 'rom &orruption,
mismanagement and institutionaliDing
demo&ra&y( It has emerged as A'ri&a4s
largest e&onomy, with GP estimated at
NSH 913 billion *3168,( 5he government
is seen to be working to develop
stronger publi&:private partnerships 'or
power(
>amibia is another &ountry relying on
imports 'or ele&tri&ity generation( It
produ&es 6(886 billion k$h *3168,,
&onsumes ;(380 billion k$h *3168,,
exports 0F million k$h *3168, and
imports about 3(F17 billion k$h *3168,(
5here is mu&h spe&ulation today that
urban e&onomies in sub:Saharan A'ri&a
are greatly improving and that the region
may be on the brink o' an upsurge in
e&onomi& development( In terms o'
urbaniDation some e&onomies that show
positive signs o' urbaniDation in terms o'
growth in urbaniDation are /urkina <aso,
5anDania, =ameroon, "wanda, Ghana,
5anDania, Mimbabwe, emo&rati&
republi& o' =ongo, Angola and Kenya
*Potts 3168,(
As 'ar as per &apita GP in terms o'
pur&hasing power parity we see that
whi&h &ountries are per'orming well *See
5able ;, *=IA $orld <a&t /ook, 3168,(
@en&e these 'a&tors give a 'air idea o'
the demand side 'a&tors aIe&ting the
A'ri&an e&onomies(
Investment clim$te $n% e$se of
%oing 'usiness
5wo third o' additional &apa&ity needed
in Sub:Saharan A'ri&a *SSA, by 3181 is
yet to be built *I"E>A, 3163,( 5he $orld
/ank estimates that between H631
billion and H6C1 billion needs to be
invested ea&h year to bring energy
a&&ess to everyone in sub:Saharan A'ri&a
by 3181(
Among alternative sour&es hydropower
has lowest &ost, next is onshore wind,
biomass( Solar is &urrently more
expensive, but it has a huge potential
and &osts are rapidly 'alling(
/etween 3110 and 3181, renewable
approa&h will &ost around NS 711 billion
more as &ompared to the non:renewable(
/ut, in the long run the &ost will be 6
trillion lower, hen&e strong investments
are needed in the short run( 5hus many
small &ountries &ould leap'rog dire&tly
into renewable based system i' Publi&:
Private Partnerships *PPPs, and
;
Exploring Investment Opportunities
Independent Power ProBe&ts *IPPs, are
supported by suitable poli&ies(
<a&tors 'avoring investment in SSA
*I"E>A, 3168,%
6, English language skills *oP&ial in
many Sub:Saharan &ountries,
3, Improving litera&y and edu&ation,
availability o' splendid resour&es and
&heaper labor 'or&e
8, Around F1 million people with
household in&omes ex&eeding H9,111,
meaning that they &an dire&t more than
hal' o' their in&ome towards
dis&retionary spending rather than
ne&essities( 5his number &ould rea&h a
proBe&ted 630 million by 3131(
$hen it &omes to 'oreign dire&t
investment *<I, in Sub:Saharan A'ri&a
*SSA,, the &ommon per&eption is that <I
is largely driven by natural resour&es and
market siDe( 5he three largest re&ipients
o' <I are Angola, >igeria and South
A'ri&a( 8 points to be interpreted *Asiedu,
3168,(
It suggests that <I in the region
is mainly determined by an
un&ontrollable 'a&tor, and natural
resour&e:poor &ountries or small
&ountries will attra&t very little or
no <I, regardless o' the poli&ies
the &ountry pursues(
5he &ountries in SSA are small in
terms o' in&omeR38 out o' the ;7
&ountries in the region have a
GP o' less than NS H8 billion
<I in resour&e:ri&h &ountries are
&on&entrated in natural resour&es
and investments in su&h
industries tend not to generate
the positive spillovers *e(g(
te&hnologi&al trans'ers,
employment &reation, that are
o'ten asso&iated with <I
@owever, a good in'rastru&ture, an
edu&ated labor 'or&e, ma&roe&onomi&
overall stability, openness to <I, an
eP&ient legal system, less &orruption
and politi&al stability also promote <I( A
ben&hmark spe&i-&ation tells us that a
de&line in &orruption 'rom the level o'
>igeria to that o' South A'ri&a has the
same positive eIe&t on <I as in&reasing
the share o' 'uels and minerals in total
exports by about 8;(0; per &ent(
COUNTR*+"E(E" ,ACTOR-
A,,ECTIN. THE I #AR/ET
Several elements have &ontributed to the
su&&ess o' IPP proBe&ts in SSA

*Eberhard
et al(, 3168,
A 'avorable investment &limate
>ew poli&y 'rameworks and
regulation
5he linking o' planning,
pro&urement, and &ontra&ting
?ow:&ost 'uel and se&ure 'uel
&ontra&ts(
Standard /ank Group is o' the opinion
that in order to 'a&ilitate greater
investment 'rom the private se&tor,
governments on the &ontinent need to
address -ve key areas *Standard /ank
"eport, 3163,, some o' whi&h we have
used to rankQ&ompare prospe&tive
&ountries in SSA%:
6, 5he development o' an integrated
power poli&y
5his is a &ombination o' various 'a&tors
like 'unding, partnering, pri&ing and
taxing the power se&tor( Individual
parameters are analyDed in the 'ollowing
segments(
3, =reating an investment:'riendly
environment%
9
Exploring Investment Opportunities
/ased on investor 'riendly government
poli&ies, world ranking o' top SSA
&ountries are in below table, suggesting
Ghana, +oDambiAue and >igeria to be
most investor 'riendly nations( <a&tors
&onsidered are extent o' dis&losure,
investor prote&tion, extent o' dire&tor
liability, ease o' shareholder suits *$orld
/ank "eport 3168,(
Econom& R$n0
Ghana 8;
+oDambiAue 93
>igeria C0
Angola 01
+alawi 01
>amibia 01
Mambia 01
Kenya F0
5anDania F0
=ongo, em( "ep( 6;7
=Ote d4Ivoire 697
Ethiopia 697
Guinea 670
8, Exe&uting a bankable independent
power pro&urement program%
Improper Power Pur&hase Agreements
*PPAs, deter &ompanies 'rom investing
and getting 'unds( 5hus, they reAuire
support 'rom the e&onomyEs -nan&ial
se&tor( In many o' the sub:Saharan
A'ri&an &ountries, &entral banks still la&k
the ne&essary autonomy: -nan&ial
se&tors are thin and have diP&ulty in
mobiliDing domesti& savings and
attra&ting 'oreign private &apitalS
banking institutions are 'ragileS and
intermediation is inadeAuate( So, steps
should be taken to */asu et al(, 3166,%s
ensure that &entral banks are
independent and 'ully a&&ountable
deepen and broaden -nan&ial
markets
establish or strengthen the
institutions responsible 'or the
prudential regulation and
supervision o' banks
&omplete the rehabilitation o' weak
&ommer&ial banks and improve on
loan re&overy
open the banking se&tors to healthy
&ompetition and in&ul&ate best
pra&ti&es
"elative ranking based on lending rates
*$orld /ank "eport, 3168,
Countr& N$me
Rel
r$n0
>amibia 6
Mambia 3
+oDambiAue 8
Angola ;
5anDania 9
>igeria C
Kenya 7
=ongo, em( "ep( 0
+alawi F
;, Suitable regulations%
"elative ranks o' the &ountries with
respe&t to tax laws and regulations are in
below table( <a&tors in&lude &omplexities
o' obtaining li&enses, permits and
obtrusive tax rates *$orld /ank "eport,
3168,
Econom&
Rel$ti
ve
r$n0
>amibia 6
+alawi 3
Ghana 8
Mambia ;
>igeria 9
Kenya C
Ethiopia 7
+oDambiAue 0
C
Exploring Investment Opportunities
Guinea F
5anDania 61
=Ote d4Ivoire 66
Angola 63
=ongo, em(
"ep(
68
9, evelopment o' a reliable regional
distribution network%
/ased on eP&ien&y *power transmission
losses,, &ountries are relatively ranked
*$orld /ank "eport, 3168,(
Countr& N$me Rel$ti
ve
r$n0s
>igeria 6
Ethiopia 3
Angola 8
=ongo, em( "ep( ;
+oDambiAue 9
Kenya C
Ghana 7
5anDania 0
=ote d4Ivoire F
Mambia 61
>amibia 66
Current #$croeconomic Clim$te
E&onomi& prospe&ts o' A'ri&an &ountries
depend largely on domesti& and global
'a&tors, whi&h are highly un&ertain(
=ontinued weakness in global e&onomy
is one o' the downside risks and the
prominent &hannels o' transmission o'
weaker global growth would be
depressed &ommodity export earnings,
de&rease in export volumes and tourism
re&eipts, redu&ed <I inGows, workerEs
remittan&es and lowered oP&ial
development assistan&e( A signi-&ant
transmission &hannel is trade and the
deepening o' debt &risis in Europe and
the politi&al instability due to tensions
between "ussia and the Europe along
with the weak global growth &an
threaten to interrupt the stable
remittan&es, <I and OA Gows(
5he evaluation &riteria 'or the presen&e
o' a stable and sound environment yet
growing investment &limate will involve
taking into &onsideration ma&roe&onomi&
indi&ators like Government -s&al budget
and the general debt levels o'
government, gross national savings,
leading and lagging e&onomi& indi&ators
su&h as &onstru&tion permits, rental
leases and inGation, unemployment and
the a&&ess to developed domesti& debt
markets and strong -nan&ial systems
whi&h &an otherwise destabiliDe a
e&onomy with sound ma&roe&onomi&
'undamentals( *5he role o' &entral banks
in ma&roe&onomi& and -nan&ial stability,
/IS paper 7C,
5he >orth A'ri&an &ountries like ?ibya,
5unisia, and Algeria whi&h have a
signi-&ant exposure to European markets
and relatively high shares o' total
exports in GP are parti&ularly exposed
to the weakness o' European e&onomy(
5he GP growth rate o' $estern A'ri&an
region having &ountries like +ali,
+auritania, and >igeria has been
proBe&ted at 7(; in 316; and has been
&onsistently higher sin&e last 'our years ,
as &ompared to =entral and Easter
A'ri&an &ountries whose &ombined GP is
proBe&ted at around 9(9 (5he GP growth
rate 'or >orthern and Southern A'ri&a is
proBe&t below ;(9( 5he top 9 &ountries in
terms o' GP growth rate were ?ibya,
Sierra ?eone, =had, =ongo "epubli& and
Ghana( *"egional E&onomi& Outlook, Sub
Saharan A'ri&a,(
5he -s&al balan&es as a per&entage o'
GP are proBe&ted to be in surplus 'or
$estern A'ri&an &ountries while 'or the
rest o' the A'ri&an regions -s&al balan&es
are expe&ted to be in de-&it with >orth
7
Exploring Investment Opportunities
A'ri&an &ountries a&&umulating largest
-s&al de-&its in the &ontinent( On the
&ontrary, &urrent a&&ount balan&e 'or
these >orth A'ri&an &ountries is positive
and proBe&ted to be at 8(6 in 316; with
East A'ri&an &ountries like Ethiopia,
Mimbabwe, +oDambiAue and Sudan
having the largest de-&it levels o' &lose
to :0(7 *Investment =limate in A'ri&a
program J =omparative "eport,(
=onsumer pri&e levels *per&ent &hange,
have been dangerously high 'or
&ountries like Ghana *66(6,, Angola *0(0,,
+alawi *37(6,, and Guinea *63,( "isks 'or
&ountries that have depended on
international &apital Gows to &ompensate
'or high &urrent a&&ount de-&it levels
and primary de-&it levels Ghana and
Mambia are high due to risk o' sudden
&apital Gow reversals( =ountries like
Ghana and Mambia are extremely
vulnerable to external sho&ks *A'ri&an
E&onomi& Outlook, 316;,(
5he A'ri&an e&onomy &ontinues to show
high degree o' resilien&e against
turbulen&es in world e&onomy( 5he
&ountries with strong linkages to world
e&onomy, espe&ially the oil:produ&ing
&ounties are relatively more vulnerable
and the growth momentum has eased in
&ountries with politi&al and so&ial
tensions( Prudent sele&tion with keeping
all these 'a&tors in mind is &riti&al in
sele&tion o' pre'erred investment
destination(
Ev$lu$ting future growth $n% its
imp$ct on power sector
5he A'ri&an &ontinent is endowed with
many natural resour&es whi&h &an be
used to promote industrial growth in
agri&ultural, industry and servi&e se&tors(
A'ri&a has about 63 per &ent o' the
worldEs oil reserves, ;3 per &ent o' its
gold, 01JF1 per &ent o' &hromium and
platinum group metals and C1 per &ent
o' arable land in addition to vast timber
resour&es *E&onomi& "eport on A'ri&a,
3168,(
$ith su&h abundan&e and the rising
global demand 'or raw materials, the
A'ri&an governments are 'orging new
partnerships and boosting in'rastru&ture
investments(
5he demand 'or ele&tri&ity in Ghana is
predi&ted to ex&eed 9,111+$ by 316C,
primarily as a result o' the +inistry o'
EnergyEs obBe&tive o' be&oming a maBor
exporter o' ele&tri&ity into the $est
A'ri&a Power Pool, &oupled with an
in&rease in demand domesti&ally, as the
government seeks to in&rease the
ele&tri-&ation rate to 01 per &ent by
316C( Around C9 per &ent o' GhanaEs
installed &apa&ity is &urrently provided
by the large:s&ale Akosombo and Kpong
hydropower proBe&ts( /iomass also
makes a signi-&ant &ontribution to the
energy mix( 5he government is targeting
to in&rease the &ontribution o' wind and
solar power to 61 per &ent o' the
&ountryEs &apa&ity by 3131 and has
re&ently ena&ted the "enewable Energy
?aw to support this obBe&tive( 5he
Government re&ognises the importan&e
o' IPPs to the a&hievement o' these
international and domesti& expansion
obBe&tives( *>orton "ose <ulbright, 3168,(
Kenya is the 7
th
most populated &ountry
in A'ri&a with an estimated population o'
;; million and an ele&tri-&ation rate o'
only 6C per &ent( 5he total installed
generating &apa&ity in Kenya is
6,;3F+$, but the peak load is proBe&ted
to grow to about 3,911+$ by 3169 and
69,111+$ by 3181( 5o meet this
demand, KenyaEs !ision 3181 reAuires
that installed &apa&ity in&reases
gradually to 69,111+$ by 3181 *>orton
"ose <ulbright, 3168,( A'ter the dis&overy
0
Exploring Investment Opportunities
o' &ommer&ial oil deposits in +ar&h
3163, the I+< believes that Kenya will
begin produ&ing &ommer&ial Auantities
o' oil in C:7 years( On >ov( 30, 3168
President Nhuru Kenyatta inaugurated
the &ommen&ement o' &onstru&tion o' a
rail proBe&t that will link Kenya4s &oast
town o' +ombasa to Kampala *Nganda,,
Kigali *"wanda,, and Kuba *South Sudan,(
$ith an average GP growth rate o'
C(32 between 3163 L 3167 and the
positive growth traBe&tory, the demand
'or ele&tri&ity is going to drasti&ally
in&rease in the &oming years *A'ri&a
In'rastru&ture Investment, P$=, 3168,(
+oDambiAue has seen an average
annual growth rate o' 72 and is
expe&ted to grow at similar or higher
rates in the &oming years as substantial
&oal and gas reserves are developed( In
3163, 'our o' the -ve largest oil and gas
dis&overies were made oIshore
+oDambiAue( Its estimated gas reserves
o' 6C15=< mean that it has the 'ourth
largest gas reserves in the world( !arious
petroleum &ompanies like Anadarko,
+itsui, /harat Petro "esour&es ?imited,
!ideo&on, P55 and the +oDambi&an
national oil &ompany Empresa >a&ional
de @idro&arbonetos *E>@,, =hinaEs =>P=,
GalpEnergia and KOGAS are developing
these oI:shores( A&&ording to estimates
say that they will be able to export ?>G
by 3160( Power proBe&ts worth an
anti&ipated NSH63 billion are understood
to be in the pipeline to support these
proBe&ts( 5he ele&tri-&ation rate in
+oDambiAue is approximately 63 per
&ent, whi&h is well below the average 'or
Sub: Saharan A'ri&a, indi&ating that
substantial growth in ele&tri-&ation is
possible( 5he Government o'
+oDambiAue is targeting 31 per &ent
ele&tri-&ation by 3131, whi&h will still 'all
well short o' the regional average
*>orton "ose <ulbright, 3168,(
>amibia &urrently has a peak demand o'
966+$, o' whi&h C; per &ent is met by
imported power, predominantly 'rom the
Southern A'ri&an Power Pool *SAPP,(
+ining a&&ounts 'or 02 o' >amibiaEs GP
and 912 'orex earnings *=IA $orld
<a&tbook, 316;,( 5he ground:breaking
&eremony 'or the Swakop Nranium @usab
mine was held on 60 April 3168, whi&h is
set to be&ome the worldEs se&ond largest
produ&er o' uranium oxide( 5he
&onstru&tion o' the mine remains on
tra&k and is s&heduled to &ommen&e
produ&tion in early 316C with ramp up to
'ull produ&tion in 3167( <urther
inaugurations o' the OtBikoto gold mine
on 3C April 3168 and 5s&hudi &opper
mine on 0 >ovember promise a great
'uture 'or the >amibian +ining Industry
*=hambers o' +ine, 316;,( 5hey
development o' the mining industry puts
an added pressure on the
underdeveloped power se&tor o'
>amibia( 5he in&reasing demand o' the
>amibian mining se&tor 'ore&asts a
power de-&it o' ;81+$ by 3169*>orton
"ose <ulbright, 3168,(
>igeria is worldEs 61th largest produ&er
o' oil( 5he se&tor &ontributed 6;(0 and
68(0
per &ent to GP in 3166 and 3163,
respe&tively( 5he largest oil produ&ers
are Shell Petroleum evelopment
=ompany ?imited, +obil Produ&ing
>igeria Nnlimited, =hevron >igeria
?imited, and 5exa&o Overseas >igeria
Petroleum =ompany Nnlimited *Industrial
development and growth in >igeria,
$IE" $orking Paper, 316;Q16F,( 5he
>igerian Asso&iation o' Petroleum
resear&hers say that the &ountry has the
&apa&ity to meet the ;1 billion barrels oil
reserves as proBe&ted by the <ederal
Government( <or this purpose the
<ederal Government o' >igeria aims to
in&rease generating &apa&ity o' the
F
Exploring Investment Opportunities
&ountry to ;1G$ by 3131 *>orton "ose
<ulbright, 3168,(
5he availability o' a se&ure and reliable
gas supply is a key ingredient in the
su&&ess'ul development o' 5anDaniaEs
power se&tor( Exploratory gas drilling in
5anDania has been highly su&&ess'ul(
"e&overable natural gas reserves are
estimated to be 88 trillion &ubi& 'eet,
with gas revenues that are estimated to
be NSH71bn as a base &ase( =urrent
predi&tions are that 5anDania &ould
be&ome the worldEs third largest gas
exporter( /G Group, in partnership with
Ophir Energy, has dis&overed more than
7 trillion &ubi& 'eet in re&overable
reserves 'rom three oIshore blo&ks(
Statoil in partnership with Exxon: +obil,
has so 'ar dis&overed F trillion &ubi& 'eet(
Statoil has announ&ed plans to work with
/G on the development o' a NSH6;
billion liAue-ed natural gas 'a&ility, to
'a&ilitate the export o' ?>G to the Asian
markets( 5he power reAuirement 'or
these proBe&ts is estimated to be around
C81 +$( Su&h developments in the gas
industry will put a huge pressure on the
ineP&ient power se&tor o' 5anDania
whi&h has an installed &apa&ity o' Bust
61;6 +$ and where only 61(92 o' the
population has a&&ess to ele&tri&ity
*>orton "ose <ulbright, 3168,(
5he leather industry o' Ethiopia is
&urrently witnessing a boom due to its
abundant and available raw material,
highly dis&iplined work 'or&es and &heap
pri&es( Ethiopia has the largest livesto&k
produ&tion in A'ri&a and the 61th largest
in the world( Ethiopia &urrently produ&es
3(7 million hides, 0(6 million sheepskins
and 7(9 million goatskins annually( 5his
advantage is 'urther underlined by the
'a&t that the &osts o' raw hides and skins
&onstitute on average 99:C12 o' the
produ&tion o' semi:pro&essed leather
*Investing in Ethiopia% ?eather and
leather goods,( NK based Pittard, who
has been trading in Ethiopia sin&e 6F31,
now has ambitious plans to grow its
Ethiopian operations( At present its Addis
Ababa:based 'a&tories and tannery to
the south o' the &ity employ about 6,311
lo&als, a number expe&ted to grow to
about 9,111 within -ve years(
5he development o' new mines and the
rapid growth o' the Mambian e&onomy
a'ter the year 3111 saw a 8C2 demand
in&rease 'or power between 3116 and
3119( <rom 3119 to date, the demand
growth has been in line with MES=OEs
311CJ6C proBe&tion o' a 'urther 611+$
per annum( 5he power short'all means
that 3C2 o' the &ountry is now aIe&ted
by load shedding at peak times and, to
bridge the short'all, Mambia relies on
imports with 611+$ o' power &oming
'rom the South A'ri&an grid( /y the
se&ond week o' <ebruary 3163, Mambia
had already imported 611+$ o' power
'rom +oDambiAue to oIset the de-&it(
A&&ording to @anson Sindowe, =hairman
o' =opperbelt Energy =orporation *a
distributor o' power to MambiaEs mining
industry,, the &ountry will reAuire an
additional NSH63 billion o' ele&tri&ity
investment or ;,;11 additional
megawatts by 3181 *Mambian =ountry
Guide, 3168,(
61
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S=@$A/ K, *316;,, 5he Global =ompetitiveness "eport 3168:6;, World Economic Forum
$orld /ank *3168,, The African Competitiveness Report 2013, $orld E&onomi& <orum
/@O"A5 et al( *316;), Foresiht Africa, Africa !ro"th #nitiative
I+< *316;,, Reional Economic $utloo% on &u' &aharan Africa
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APPENDIX
?ist o' tables%
T$'le 12 RO3ECTED -HARE O, UR!AN OU"ATION ,OR DI,,ERNT A,RICAN RE.ION-4
T$'le 5
-ource2 O4 Rosnes6 H4 (ennemo 7 Energ& Economics89:; pg 1951
T$'le 9
T$'le :
T$'le <