MCC: Powering Africa for a Brighter Future
As partner countries in Africa identify energy insecurity as a binding constraint to economic growth, they are developing their compacts funded by the U.S. Government’s Millennium Challenge Corporation to address this pressing challenge. Increasingly, MCC compacts in Africa are being designed to increase and improve access to reliable and sustainable electricity. This means investing in energy infrastructure, policy and regulatory reforms and institutional capacity building in the power sector.
In these ways, MCC is already contributing to Power Africa, President Barack Obama’s initiative to double access to power in sub-Saharan Africa. More than two-thirds of the population of sub-Saharan Africa is without electricity, and more than 85 percent of those living in rural areas lack access. Power Africa expects to build on Africa’s enormous power potential, including new discoveries of oil and gas, and tap into other forms of energy, including clean geothermal, hydro, wind, and solar sources. It will help countries develop newly discovered resources responsibly, expand power generation capacity, build out transmission infrastructure, and expand the reach of the grid as well as mini-grid and off-grid solutions.
Of the six initial Power Africa countries, three—Ghana, Liberia and Tanzania—are MCC partners. MCC is working with the Ghanaian and Tanzanian governments to identify potential projects that seek to address inadequate and unreliable power supplies. These countries have set ambitious goals in electric power generation and are taking the steps to reform their energy sectors and electricity utilities to pave the way for investment and growth. Liberia is still in the early stages of developing its compact, and the government has not yet decided whether it seeks MCC investment in the power or some other sector.
Power Africa will build the capacity of partner governments to develop, finance and ultimately bring power projects online. Through Power Africa, MCC will continue working with its partners to help increase technical skills and accelerate energy sector regulatory, market structure and enabling environment reforms that are critical to the sustainability of projects and the sector.
To date, MCC is projected to invest up to $1 billion in African power systems through compacts with partner countries. Examples of MCC-funded energy projects include:
Ghana Compact II
MCC is working with the Government of Ghana to define potential projects for a second compact that seek to address Ghana’s inadequate and unreliable power supply. MCC is also collaborating with other U.S. Government agencies to coordinate objectives and resources in the energy sector through Partnership for Growth to create the next generation of emerging markets.
Ghana Compact I
The $101.3 million Rural Development Project in Ghana’s completed first compact provided such community services as education, water and sanitation and rural electrification infrastructure in targeted districts. The project also enhanced the capacity of local governments to deliver these and related services.
The $350 million Power Sector Revitalization Program in Malawi’s MCC compact is comprised of the following projects:
The Infrastructure Development Project focuses on the most urgent rehabilitation, upgrade and modernization needs of the power system. The project will preserve and stabilize existing generation capacity, improve capacity of the transmission and distribution network and increase the efficiency and sustainability of hydropower generation. The Government of Malawi has committed to investing in additional capacity by completing the construction of new hydropower generation.
The Power Sector Reform Project complements the Infrastructure Development Project by providing support for the Government of Malawi’s policy reform agenda and by building capacity in critical sector institutions. This project will build capacity and provide technical assistance to the Electricity Supply Corporation of Malawi, the Malawi Energy Regulatory Authority and the Ministry of Energy.
The Environment and Natural Resource Management Project is designed to help the Government of Malawi address environmental and social factors that negatively impact Malawi’s hydropower plants.
Tanzania Compact I
The $205 million Energy Sector Project in Tanzania’s completed first compact improves electricity service and coverage by adding new power generation, transmission and distribution capacity and by reinforcing the existing network. The project will increase investment and economic activity among businesses and communities, some of which will receive electricity for the first time. This was made possible by laying a 100 megawatt submarine electric transmission cable from the Tanzanian mainland to Zanzibar and strengthening the transmission network; rehabilitating the existing distribution infrastructure and approximately 2,700 kilometers of distribution line extensions to unserved areas in the seven regions of Mwanza, Iringa, Mbeya, Dodoma, Tanga, Kigoma, and Morogoro; and providing solar photovoltaic systems in Kigoma.