July 1 (Bloomberg) -- President Barack Obama, putting his mark on U.S. aid to Africa, announced a plan to boost access to electric power in the sub-Sahara and said America stands to benefit if the continent reaches its full economic potential.
Obama unveiled the $7 billion initiative dubbed Power Africa at the University of Cape Town in a speech that his aides billed as the centerpiece of his three-country tour through Senegal, South Africa and Tanzania to promote trade and investment on the rapidly growing continent.
The president’s goal is to double access to electricity across six countries that the White House has singled out for promoting good governance -- Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.
“I’m calling for America to up our game when it comes to Africa,” he said. “There’s no question Africa’s on the move, but it’s not moving fast enough for the child still languishing in poverty in forgotten townships.”
American companies see growing opportunity in Africa. U.S. merchandise exports to the 49-country region were $21 billion in 2011, up 23 percent from 2010, according to the Office of the U.S. Trade Representative. Imports from sub-Saharan Africa were worth $74 billion in 2011, up 14 percent from 2010. Most of that, about $60 billion, was crude oil.
Africa has 15 percent of the world’s population yet it accounts for only 3 percent of energy consumption, according to a 2011 report by the African Union and other organizations.
With Nelson Mandela’s fragile health weighing heavily throughout the African trip, the U.S. president has invoked the anti-apartheid icon’s legacy to draw the connection between democratic values and economic growth.
Obama’s speech included a tribute to Mandela and he and his family toured the apartheid-era prison at Robben Island, finishing in a courtyard near Mandela’s former prison cell. He then visited a community center that provides HIV education and treatment run by Archbishop Desmond Tutu’s foundation.
While Africa is rising, progress is “fragile,” vulnerable to “the rot of corruption” and “the undertow of conflict,” Obama said in his speech.
He will travel today to Tanzania for the last stop of the three-nation tour. In the country’s fast-growing metropolis of Dar es Salaam, he’ll convene a roundtable of company executives and promote investments in electrification projects.
Recognizing Africa’s rapid growth -- as well as domestic budget constraints -- Obama said yesterday the U.S. is moving beyond the kind of direct financial assistance its provided in the past. Instead, he said he wanted to promote a new model that focuses on Africa’s “capacity to solve problems.”
The power initiative follows the public-private partnership model and builds on his administration’s efforts to enhance food security, fight malaria and attempt to eradicate the spread of HIV/AIDs for Africa’s next generation, he said.
Power Africa’s $7 billion in government assistance will complement $9 billion in private funds to double access to power in sub-Saharan Africa, where more than two-thirds of the population is without electricity, according to the White House.
During the first, five-year phase, the project’s goal is to add more than 10,000 megawatts of cleaner, more efficient electric generation capacity and to expand electricity access to at least 20 million new households and commercial entities, according to the White House.
General Electric Co. is among the companies that have contributed to the $9 billion in private-sector funding for the program’s first phase. It has committed to help bring 5,000 megawatts of new energy to Tanzania and Ghana.
Increasing access to power will “plug Africa into the grid of the global economy,” Obama said.
Officials declined to put a price tag on the total effort and didn’t specify how much of the $7 billion in government resources Congress would need to appropriate for the initial phase. The sum isn’t all straight assistance and includes money from the U.S. Agency for International Development, the Overseas Private Investment Corp., the Export-Import Bank and other agencies, they said.
“The program is welcome support to the continent where energy access and energy poverty remain significant concerns,” said Taryn Wilkins, an analyst at Bloomberg New Energy Finance in Cape Town. “Key to the success of the implementation of the program is the support of local governments and policy regulation. To date this has been fragmented and inconsistent and resulted in slower development of energy infrastructure programs.”
The announcement came amid criticism that Obama’s engagement with sub-Saharan Africa has lagged behind his predecessors, Bill Clinton and George W. Bush, giving China an opportunity to tap the region’s resources.
Bush, who took U.S. spending on Africa to new levels, made a six-country visit in 2008 and a three-country stop in 2011 after he left the White House. His Africa legacy includes PEPFAR, a $15 billion commitment to prevent and treat AIDS infections, credited with saving or extending millions of lives.
Clinton signed the African Growth and Opportunity Act, a trade agreement with countries in sub-Saharan Africa.
Obama may meet his Republican predecessor while in Dar es Salaam. Bush will be there at the same time for a summit to empower Africa’s first ladies, sponsored by the George W. Bush Institute. First lady Michelle Obama will join Laura Bush at the event.
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