Distributive energy systems: Best path for poverty reduction

The closing event of the Nelson Mandela International Day for 2018 was marked together with the centenary of the famous South African’s birthday at the Global Citizens Festival held this past weekend. The Nelson Mandela Foundation dedicated this year’s celebration to the fundamentally important issue of the eradication of poverty in Africa.

During this festival, key development partners, including the Gates Foundation and the World Bank, pledged support for Africa with a particular focus on the education and health sector. This will make a major contribution toward building the required social capital for development in the region.

However, if we wish to make any meaningful dent on poverty in the region, such efforts by foundations, governments and international institutions on building social capital need to be coupled with addressing the prevailing energy poverty in the region. More than 600 million people in Africa do not have access to electricity, and approximately 730 million people rely on traditional uses of waste material from plants and animals, according to the International Energy Agency. This is despite Africa being a continent endowed with relatively abundant renewable energy resources that are yet to be developed.

Renewable energy is the oldest form of energy in our planetary system and pre-exists any form of life, including the evolution of homo-sapiens. As such, it was also the source of many sources of energy known to modern society. Until the introduction of coal as a source of energy, the economic and social life of pre-industrial society had been almost wholly dependent on the use of renewable energy sources, including biomass and wind energy.

The global socio-ecological and socio-economic crisis that humanity is currently faced with as a result of climate change and unsustainable consumption and production patterns have once again brought renewable energy resources to the forefront. The transition to a renewable energy system is driven by key techno-economic drivers that lead to an enhanced capacity of competitive renewable energy generation. Significant progress has also been made in recent years in the area of energy storage.

A number of African countries have started investing in developing their renewable energy resources with a primary focus on the provision of light and cooking energy, which is an important first step. This effort should, however, go beyond lighting and cooking and focus more on catalysing broader development at the local level through productive value additions.

Given the dispersed pattern of human settlement in the region, renewable energy can provide multiple benefits if it is developed with the right scale and has strong symbiotic relationships with the local economy. This would require ensuring an optimal mix of grid and off-grid renewable energy development during the planning and development of power infrastructure.

Developing such plans takes into account the specific settlement pattern, resource availability and broad impact at the local level. Beside promoting the fair distribution of energy, such an approach could also result in a cost-efficient utilisation of existing grid-based energy infrastructure through a reduction of transmission loss.

Harmonising the development of distributed energy systems with possible job creation and economic value addition at the local level through integrated planning is key for maximising its distributive impact.

African countries can also make significant progress toward poverty eradication through the development of community-owned renewable energy service cooperatives. Such cooperatives could serve as key vehicles for maximising the productive linkage of distributed renewable energy systems to the local economy and promote distributional justice through an inclusive planning and implementation process. They could also serve as an important platform for empowering women and youth through the creation of jobs and the provision of sustainable livelihoods at the local level, thereby promoting social inclusivity.

Recent progress made in renewable energy technologies and the favourable policy environment at the global and regional level provide unique opportunities for transformational energy transition in Africa. Making the best out of this opportunity though largely depends on having a good understanding of the emerging techno-economic regimes and making informed policy decisions on the optimal mix of scale and renewable energy resources.

Investing in distributed energy systems is key for maximising the return from the investment on human capital and eradicating poverty from the region. It is about time that African governments and development partners consolidate their support to promote distributed energy systems in the region.



By Desta Mebratu (Prof.) (desta@africaleapfrog.org)
Desta Mebratu (Prof.) (desta@africaleapfrog.org), CEO of African Transformative Leapfrogging Advisory Service.

Published on Dec 08,2018 [ Vol 19 ,No 971]

From ‘Voodoo Economics’ to a Well-being Economy, Africa’s Choice

Neo-classical economics, with its different forms and scope and with market and trade liberalisation at its core, has been the dominant economic theory since the first industrial revolution. Despite all its inherent theoretical and practical limitations, it has been successful in driving economic growth in some parts of the world.

It has also been key in the globalisation of national economies in the second half of the 20th century. In recent decades, however, its dominance was significantly challenged by prominent economists, including some Nobel Laureates in Economics.

The challenge took a new dimension and scope with the growing inequality observed within and between countries as its trickle-down effect failed miserably. This has been mainly caused by the exclusive focus on economic growth as measured by the growth rate of gross domestic product (GDP).

The emergence of global environmental challenges, such as climate change and biodiversity loss, has also been another source of challenges faced by the dominant economic thinking. This was again mainly caused by its principle of externalising all costs related to environmental pollution and degradation.

Since independence from European colonial powers, international development organisations led by the World Bank and the International Monitory Fund have been at the forefront of promoting and stipulating neo-classical economic principles of market and trade liberalisation on African countries.

The infamous structural adjustment programs that were imposed by these institutions in the 1970s and 80s led to extensive socio-economic havoc in many African countries. Despite the enormous effort made by these organisations and the stated commitment of successive African governments to laissez-faire market economies, not a single African country that took a Bretton Woods’ prescription succeeded in becoming a developed or a transitional economy.

As it was eloquently stated by the prominent Pan-Africanist and Kenyan Lawyer P.L.O. Lumumba, what we have in the region is more of a “voodoo economics,” which is an African version of neo-classical economics. Hence, we saw for decades economies that are either in shambles or seemed to be developing but are under state capture, benefiting a small group of people.

Experiences of the last half a century have clearly shown that neither neo-classical economics nor its African version, “voodoo economics,” helped Africans to achieve an economic development that meets the needs of their people.

Today, Africa is faced with multitudes of economic, social and environmental issues which have made the development challenges more complex. These challenges are expected to be further aggravated in the coming decades as a result of the extremely high rates of population growth coupled with an increasing percentage of youth.

In this context, African countries and their development partners need to recognise that existing and emerging socio-economic challenges could not be resolved with the same approaches and prescriptions of the twentieth century. That is why it is important for African countries to channel their effort toward the development of a “well-being economy” that responds to the reality of the region.

A well-being economy is an economy that strives for the continuous fulfillment of basic human needs and aspirations of its people within the limits and possibilities of its resources and available external opportunities. This would require deploying a national development strategy that is home-grown and organic but at the same time adaptive to global dynamics.

It also requires governance mechanisms that are equipped with transformative leadership that is based on adaptive learning and inclusivity. A well-being economy addresses both the distributive and participatory justice of its people through their active involvement in the planning and management of the development process.

Progress toward a well-being economy is measured by actual and perceived improvement in the well-being of its people rather than solely relying on the growth rate of GDP and foreign direct investment. Achieving this would require the development of distributed local economy networks in combination with national backbone industries that are low-carbon and resource efficient.

Its primary operational objectives would be job creation and value addition at the local level, which are extremely crucial for African countries. Such an economy also recognises the critical importance of maintaining the well-being of the natural ecosystem as the foundation for the fulfillment of its developmental objectives on a sustainable basis.

In essence, the Well-being economy provides a fundamentally new vehicle for the effective implementation of Agenda 2030 on sustainable development goals with a qualitatively higher outcome. Hence, it is time for African leaders and policymakers to provide the creative space for the development of a Well-being economy in Africa rather than continuing with the same versions of ‘voodoo economics’ and expect a different outcome.
By Desta Mebratu (Prof.) (desta@africaleapfrog.org)
Desta Mebratu (Prof.) (desta@africaleapfrog.org), CEO of African Transformative Leapfrogging Advisory Service.

Published on Nov 24,2018 [ Vol 19 ,No 969]

Lessons, Priorities for Africa’s Future Industrialisation

Time and again, industrialisation has been a major policy objective of African governments but with little to show for it. This is because the focus should not only be on building physical infrastructure or aiming to bolster exports, argues Desta Mebratu (Prof.) (desta@africaleapfrog.org), CEO of African Transformative Leapfrogging Advisory Service.

It has been almost three decades since the United Nations General Assembly proclaimed November 20th as Africa’s Industrialization Day. This was done as part of the first Industrial Development Decade for Africa.

African countries have been aspiring to industrialise their economies since their early days of liberation. By the mid-1960s, many African governments conceived bolder plans and programs on industrialisation. This was further given a regional scope with the adoption of the Lagos Plan of Action in April 1980 for the collective industrialisation of Africa.

Since the 1970s, more specifically as a follow-up to the Lagos Plan of Action, many African countries embarked upon ambitious industrial development programs that were largely driven by massive public investment. Nevertheless, except for a couple of North African countries and South Africa, most of them failed to achieve their stated goals. As a result, Africa’s share of global manufacturing output is still around two percent.

Over the last decade, Africa has seen a renewed interest in industrialisation both from within and the outside world. As we get ready to celebrate Africa’s industrialisation day of 2018, it is crucial for governments to reflect on key lessons from past failures and look at existing and emerging challenges and opportunities.

Primarily, African countries should recognise that industrialisation does not involve an either-or choice between import substitution and export promotion. Rather than focusing on such false dichotomy, countries should pivot to an industrial strategy that improves the well-being of people through job creation and higher value addition to local resources.

Secondly, the most critical infrastructure prerequisite for industrialisation is the institutional infrastructure that includes creating the required human skill sets and institutional systems that drive the industrialisation process.

Development of an effective industry-university linkage is one such institutional system besides having a sound and context-relevant policy environment. Most of the investment that went into the development of huge physical infrastructure across the region thus far largely failed to deliver due to limitations in such key areas.

When it comes to physical infrastructure, public sector investment has a key role to play, particularly in developing energy, transportation and communication infrastructure. However, such investment needs to be coupled or preceded by investment in institutional infrastructure.

Most African countries spend significant resources and time on attracting Foreign Direct Investment (FDI). Even if FDI has a key role to play in facilitating industrialisation, its effectiveness is largely dependent on having the right mix of institutional and physical infrastructure.

Most importantly, African countries need to recognise that they can never industrialise by becoming a dumping ground for obsolete and inefficient industrial production processes in the name of FDI. This is particularly a critical issue now when we consider the progress in different parts of the world, including China, toward a more resource-efficient industrial system.

Moreover, African countries need to prepare themselves to contain the adverse impact and maximise the benefits from the opportunities of digitisation of the global economy.

Last but not least, African countries should make a maximum effort to exploit the emerging opportunities created by recent development in disruptive technologies. These include the opportunities from development in the application of artificial intelligence including block-chain technologies, distributed energy systems driven by renewable energy resources, and distributed manufacturing systems that include modularisation of industrial processing technologies.

These are crucial not only for their exponential economic impacts but also because of their significant distributional outcomes that can promote inclusivity or discourage it.

It has been said that Africa has largely missed all three stages of the industrial revolution of the past two centuries. As we approach the closure of the third industrial development decade for Africa, it is hoped that African leaders and its young and creative generation will make their respective countries part of the industrialisation of the 21st century by taking such lessons into consideration.

By Desta Mebratu (Prof.) (desta@africaleapfrog.org), CEO of African Transformative Leapfrogging Advisory Service.
Published on Nov 10,2018 [ Vol 19 ,No 967]
https://addisfortune.net/columns/lessons-priorities-for-africas-future-industrialisation/

Repi Waste-to-Energy Plant: Sunk, Misguided

The Repi Waste-to-energy facility is located at an open-dump site in Addis Abeba. The plant was officially inaugurated a couple of weeks ago and has received significant media coverage at the national and continental level.

The facility required about 2.6 billion Br to construct and was initially planned to generate up to 50 MW of electric power a year, covering a third of household electricity consumption in Addis Abeba, according to information released during its inauguration.

Aside from the coverage it received in the national media, the plant was highlighted by a number of regional and international media outlets as an environmentally friendly investment that needed to be replicated by other African countries.

“The development of Reppie represents Phase I of a wider rollout program to develop multiple waste-to-energy plants across SSA’s major cities,” a statement on the website of Cambridge Industries, the project contractor, reads.

Despite the accolades though, it was a misguided investment beginning with the initial decision-making process.

It is crucial to understand the historical background of the technology. Waste incineration was developed in the 1960s and ‘70s as a solution to the increasing volume of waste generated, which created disposal challenges at sanitary landfills by shortening their lifespans.

While finding a more cost-effective disposal of the growing volume of waste was the primary driver, generation of energy and hot water production were the other factors that expedited the proliferation of waste incineration facilities in European urban centres in the 1980s and the ‘90s.

From the perspective of operational efficiency, there are a number of fundamental prerequisites for the technology to be economically viable. Primarily, a significant proportion, about 40pc, of the domestic waste, has to consist of energy-rich combustible waste.

The city also has to have relatively efficient waste segregation and collection infrastructure that ensures collection and sorting of the waste at a minimal cost. Just as crucial is the necessity of the plant having a co-generation possibility that will enable it to make use of the steam and hot water that comes out after driving the turbine.

Such waste incineration systems were quite effective until the mid-90s in Europe but were later considered to be white elephants as the waste management practice shifted from disposal to “Reduce, Reuse and Recycle.”

Addis Abeba does not meet most of the fundamental prerequisites outlined above. As a matter of fact, with the exception of a couple of cities in South Africa, none of the urban centres in Sub-Saharan Africa would fulfill the operational requirements.

Even for those cities which may have a higher percentage of combustible waste, they can make higher values from such waste through recycling and reuse rather than incineration for energy generation.

Of course, African countries would need to have small-scale incinerators to handle hazardous waste generated in medical and industrial processes, for example. However, considering the composition of domestic waste of most African urban centres, which is 60pc to 75pc dirt and biodegradable waste, incineration for energy generation is a fundamentally wrong and misplaced choice of technology. Furthermore, the mining of combustible waste from the existing dumping site at Repi would significantly increase the embedded energy that would be consumed to generate every megawatt of energy.

The most disappointing fact is that, for the same amount of investment that was spent on this project, the Addis Abeba city administration could have had an efficient Integrated Solid Waste Management System that would have created thousands of jobs.

The whole idea of the project is a typical case of taking Africa as a dumping site for obsolete technologies. Promoting it as the future direction for African urban centres, in the presence of other resource efficient waste management techniques and technologies, is offensive to the region.

African countries should avoid making similar mistakes and make more informed and rational decisions on their future infrastructural investment including their waste management infrastructure.

By Desta Mebratu
Desta Mebratu (Prof.) is the CEO of African Transformative Leapfrogging Advisory Service (ATLAS). He can be reached at desta@africaleapfrog.org.

Published on Sep 29,2018 [ Vol 19 ,No 961]
https://addisfortune.net/columns/repi-waste-to-energy-plant-sunk-misguided/

Transformative Infrastructure: Route to Better Growth Output

b>The 2018 African Economic Outlook suggests that African countries will continue to develop. Such a growth outlook would be supplemented if the nations matched it with transformative infrastructure development, which takes renewable energy and digitisation into consideration, writes Desta Mebratu (Prof.) (desta@africaleapfrog.org), CEO of African Transformative Leapfrogging Advisory Service.

The African Development Bank recently released the African Economic Outlook report for 2018.

The report noted that overall economic real output growth of African countries is estimated to have increased by 3.6pc in 2017. By this year and the next, it is projected to accelerate to 4.1pc. It also concluded that the recovery of growth had been faster than expected, especially among economies that are not resource intensive.

The report further highlighted some of the significant policy measures that need to be taken by African countries to achieve structural transformations that would create more jobs and reduce poverty.

Beside providing an overall annual review of macroeconomic developments and structural change, the report mainly focused on financing infrastructure development in the continent.

In this context, the report highlighted the existing major infrastructure gaps that impeded the highly required economic diversification that may lead to structural transformations. The report talks about the insufficient stock of productive infrastructure in Africa.

It also underlines the critical importance of developing high-quality infrastructure to achieve the Sustainable Development Goals, which are globally targeted for attainment by 2030, and other related regional goals.

Overall, the report provides valuable analysis and recommendations on the importance of addressing existing infrastructure gaps. It also provides useful suggestions on possible strategies that need to be considered by African countries and its development partners on how to finance infrastructure development in Africa.

However, it falls short in highlighting the key considerations that African countries should make in terms of building high-quality infrastructure.

Primarily, the fourth industrial revolution, aka “Industry 4.0”, is driven by increased digitisation and robotisation. It is one of the significant disruptive developments that will redefine the global economy of the 21st century. This development will obviously result in some key challenges that need to be addressed, both individually and collectively, by countries.

There are also major opportunities that may positively influence the quality of the infrastructure we develop in the 21st century. This ranges from the development of smart grids for power infrastructure to the development of distributed manufacturing systems supported by more efficient supply chain management.

Another major development that will determine the character of the 21st-century economy is the inevitable transition in the global energy system that is driven by progress in the renewable energy sector.

The distributed nature of renewable energy resources coupled with the potential empowerment of individuals and communities due to the development in the ICT sector could provide a strong basis for an economy that fosters job creation and value addition at the local level.

This would require developing a new generation of energy infrastructure that has an optimal scale and resource efficiency combination.

Just as important a factor that African countries should consider is that the decision they make on the kinds of infrastructure they build today has huge potential to lock them in for the coming decades.

This is particularly true if they continue investing in the conventional infrastructure of the 20th century, which may not be responsive to developments in the 21st century. In this regard, applying life-cycle planning and management of infrastructure development is key to ensuring the development of quality infrastructure that reduces or eliminates such lock-in possibilities.

Quality infrastructure of the 21st century is ultimately characterised by its potential to create an inclusive, low-carbon and resource-efficient economy that results in multiple economic, social and environmental benefits to society.

This is, in essence, the aim of the SDGs and the aspirations of the African Union’s Agenda 2063, which call for transformational change. Africa, as a region that is yet to develop a large proportion of its infrastructure, has a huge leapfrogging opportunity if it sets a goal of developing a transformative infrastructure for the 21st century by considering the future first.

By Desta Mebratu (Prof.)
Desta Mebratu (Prof.) (desta@africaleapfrog.org), CEO of African Transformative Leapfrogging Advisory Service.

Originally published: https://addisfortune.net/columns/transformative-infrastructure-route-to-better-growth-output/