Power to the people

Obama's African power plan echoes 1930s US moves

President Barack Obama is making like 1930s predecessor Franklin Roosevelt - only in Africa, not the United States. Roosevelt's electrification projects, including the Tennessee Valley Authority, eliminated much rural poverty in America. Now Obama intends to provide $7 billion to develop power generation in Africa, boosting access to electricity in a continent where under a third of people can plug in and charge up at present.

That drops to only 14 per cent in rural areas of sub-Saharan Africa, according to 2009 statistics from the International Energy Agency. By contrast, 69 per cent of the population had access to electricity in South Asia and penetration was 90 per cent-plus in other big regions.

Power has become even more critical to economic advancement since the advent of cellphones, which are common in rural Africa - there were 160 million of them in Nigeria in 2011, roughly one per head of population. Cellphone infrastructure investment is generally on a smaller scale than is needed for power, and it is typically carried out by the private sector. But reliable electricity is needed alongside that for cellphones to reach their full potential.

Obama's program consists mostly of providing backing through the US government's Overseas Private Investment Corp and the Export-Import Bank of the United States. That partly benefits US firms like General Electric, and the red tape involved may limit how effectively the program could be implemented. Even so, finance is an essential component of capital-intensive power projects, and in Africa it is scarce because domestic capital is limited and foreign bank and capital market funding is available only in periods of free credit availability.

Roosevelt's public power projects are credited with providing electricity - and therefore economic opportunities - to rural areas that the private sector did not have sufficient resources or incentives to reach, at least not as quickly. In rural Africa, capital may be in even shorter supply than in Depression-era America. Obama's initiative looks well aimed.