With Billions in New Pledges, Power Africa Gains More Power
A little over a year after President Obama first announced Power Africa, the Administration has released the Power Africa Annual Report. According to the Annual Report, the initiative has “helped facilitate the financial close of transactions which expect to produce nearly 2,800 MW of new generation capacity — more than 25% of the 10,000 MW goal.” However, as U.S. Coordinator for Power Africa Andrew Herscowitz noted in remarks on Monday, many of these deals were “low-hanging fruit” because they already were in the negotiations phase when Power Africa was launched. That point notwithstanding, pledges made during this week’s U.S.-Africa Leaders Summit indicate that the years ahead will be equally as promising for Power Africa.
The week began with the White House announcing a significant expansion of Power Africa to a goal of 30,000 MW of additional capacity to reach 60 million households and businesses across the continent. The accompanying pledge of an additional $300 million per year (to add to the already committed $7 billion over 5 years) is complemented by the Millennium Challenge Corporation’s signing of a $498 million Power Compact with Ghana. These pledges from the U.S. government were soon followed by announcements of commitments of $5 billion from the World Bank and $1 billion from the government of Sweden, both of which will involve advisory services, direct financing, grants, investment guarantees, loans and technical assistance.
As further evidence that U.S.-Africa foreign policy is shifting the role of the U.S. government from giver of aid to facilitator of investment and trade, the White House also announced “$6 billion in new private sector commitments, bringing the total private sector commitments under Power Africa to date to more than $20 billion.” These new commitments have come from both U.S. and foreign companies including Citigroup ($2.5 billion) and Standard Bank (whose current commitment is $1 billion but is looking to commit an additional $2 billion), Standard Chartered Bank (who raised its original $2 billion commitment to $5 billion). According to GE CEO Jeffrey Immelt — whose company also is invested in Power Africa — “the administration’s involvement has accelerated the pace of deals on the continent because it provides ‘a seal of approval’ that reassures investors.” There also are additional electrification efforts underway such as the $5 billion commitment to the continent’s energy infrastructure that the Dangote Group has made in partnership with the Blackstone Group and Carlyle.