Last week was the first time, in my memory, that a United States’ president came to Africa with investment at the top of his agenda and prioritised meeting with the continent’s business leaders, who are the true drivers of development. President Barack Obama should be congratulated for his vision, and for providing the clearest proof yet that the rules of engagement with Africa are genuinely changing.
The age of aid is ending. The type of aid that will help Africa most, and should receive the highest priority, is aid for business. I believe that the African private sector has the power to transform the continent through long-term capital investments, creating both economic prosperity and social wealth. I call this development approach “Africapitalism,” and without a doubt, it holds the most promise for the sustainable development of Africa. So it was refreshing to see African businesses at the table, financing and investing as partners, and making sure that Africa asserts its proper role in this opportunity. I can already feel the impact of Obama’s new dialogue with Africa. In interviews I had with international media covering his trip, aid and corruption were not the focus, thankfully. Journalists addressed topics like “capital,” “investment,” and “trade.” The impact of this shift will be immense.
Power is the single biggest obstacle to Africa’s development, and as such, it is the most catalytic and strategic investment anyone can make in Africa. That is why President Obama’s focus is so timely – and so necessary. Doubling our generating capacity will double Africa’s GDP, and move us towards sustainable, domestically-led growth. Given its economic importance, the power sector also presents an attractive investment opportunity for long-term investors: there is little competition, and so the return, when it comes, will be high. It will be similar to returns that early investors in African telecommunications realised before the sector became saturated and highly competitive.
As an investor, I believe in doing well and doing good. Investing in the power sector meets both criteria. That is why Heirs Holdings has committed US$2.5 billion in investment that will expand our recently acquired Nigerian power plant at Ughelli, as well as develop new brown and green-field projects across Africa. But filling Africa’s energy gap requires long-term investment and a huge capital outlay: it will cost US$1 billion just to acquire the Ughelli plant and bring it up to its full installed capacity of 1000 megawatts. Given Africa’s huge capital requirements for the power sector, an initiative like Power Africa is essential for bringing together international investors and financial institutions to support Africa’s changing power paradigm.