More than two-thirds of sub-Saharan Africans—about 600 million people—are without electricity. Inadequate, unreliable and unequal access to energy constrains the continent’s ability to connect globally, drives up the
cost of business, hinders investment and negatively impacts quality of life. To meet the continent’s electrification goals, it has been estimated that approximately $40 billion per year in power sector investments will be needed.
To address the concerns of low electrification rates and high investment requirements, the U.S. Government launched Power Africa in 2013 to increase investment and access. This effort, which combines the expertise of 12 federal agencies, works with African governments, the private sector and other partners to increase investment to improve energy security, generate economic growth and fight poverty.
The Millennium Challenge Corporation is playing a critical role in Power Africa. The agency expects to invest approximately $2 billion to support Power Africa through compacts that improve the quality and reliability of electricity and promote climate-smart measures, such as energy efficiency and renewable energy.
Working hand-in-hand with partner countries and the private sector, MCC is helping lay the foundation for businesses to invest in power projects that will grow economies and fight poverty across the continent. MCC is assisting governments in preparation of potential projects, while also helping establish regulatory and institutional structures that are required to promote private investments. By pursuing fair, open and transparent procurements, MCC is helping companies invest in some of the fastest-growing economies in the world.
MCC and the Government of Benin are designing a compact that invests in electricity infrastructure, a binding constraint to economic growth in a country where only one-third of the population has access to grid electricity.
The compact will address the lack of electricity through policy reforms, institutional strengthening and large-scale investments in energy generation and distribution infrastructure. The energy generation project will focus on increasing on-grid electricity through utility scale solar plants and off-grid electrification using renewable energy. It will also upgrade Benin’s electricity distribution infrastructure to reduce losses and outages, improve reliability, and expand grid capacity for future growth. The program is expected to expand business production, increase economic opportunities for households and enhance the capacity to provide public services.
The five-year, $498 million compact Ghana Power Compact—the largest U.S. Government transaction under Power Africa to date—will help create a financially viable power sector that will meet the current and future needs of businesses and households.
The compact takes a system-wide approach with six projects across three areas: distribution, generation and access to energy. The compact also supports Ghana’s efforts to mitigate climate change by funding major energy-efficiency initiatives and improving the investment climate for renewable energy.
At the heart of the compact is a strong commitment from the Government of Ghana to implement reforms needed to transform its power sector and put it on a path to solvency and sustainability, ultimately creating an investment climate that will attract private investment. The government has also pledged to invest at least $37.4 million of its own money, and the compact is expected to catalyze approximately $4 billion in new private investment and activity in the coming years.
MCC’s five-year, $350.7 million compact with Malawi is designed to increase incomes and reduce poverty by revitalizing the country’s power sector and improving the availability, reliability and quality of the power supply. MCC is investing in increasing the capacity and stability of the national electricity grid and bolstering the efficiency and sustainability of hydropower generation.
The compact also invests in strengthening power institutions and enhancing sector regulation and governance. MCC’s investments are designed to reduce energy costs to enterprises and households and improve productivity in the agriculture, manufacturing and service sectors.
Reliable and affordable electricity is a key constraint to broad-based economic growth in Liberia. MCC is working with the Liberian government to develop a compact to strengthen the energy sector through a set of infrastructure investments and implementation support to new energy-related policies and regulations.
While the compact is still under development it is expected to include the rehabilitation of the Mount Coffee Hydro Power Project and associated infrastructure including transmission lines. This project has already received investments from the Government of Norway, the Government of Germany and the European Investment Bank. MCC is also studying complementary investments in capacity building for the energy sector and technical assistance to the Ministry of Land, Mines and Energy and to the Liberia Electric Corporation.
MCC and the Government of Tanzania are working together to identify and develop a high-impact compact to address the country’s inadequate supply of reliable power, which constrains the country’s long-term economic growth. The proposed energy investments would improve the availability, reliability and use of electric power by supporting broad reforms in the power sector. They will primarily focus on the technical, financial and operational turnaround of the public utilities and will increase access to electricity, mainly in rural areas.
MCC’s previous compact with Tanzania, which was implemented from 2008 to 2013, included a project to raise Tanzania's electrification rate. Among other investments, the project funded the installation of a new 100-megawatt submarine transmission cable connecting Zanzibar to the mainland’s electrical grid and the construction of approximately 2,700 kilometers of transmission and distribution lines in seven regions.