New move to bring electricity to Africa

A World Bank contest seeks to spur businesses to provide light for the poor.

Like most African towns, Abéché in eastern Chad goes dark when the sun goes down. Students close their books. Families finish their chores and settle down to sleep, or to an occasional gossip session by kerosene light.

Fewer than 25 percent of Africans have access to electricity. In Uganda, only 5 percent of the population has access to electricity; in Kenya, 15 percent; in Congo, 6 percent. In oil-rich Nigeria, the energy demands are nearly twice what the country's creaking power plants can produce. It's one of the continent's biggest obstacles to development and a big turnoff for foreign investors.

Building enough hydropower dams to meet the need would take decades, but the World Bank has launched a smaller, but potentially powerful program in September to meet the growing demand for light from the 250 million poorest Africans by 2025.

The "Lighting Africa" initiative, including a $12 million competition to design the best business model for providing light for Africans, hopes to do for cheap low-energy lighting what entrepreneurs have already done for cellphones.

"The impact would be huge," says Russell Sturm, head of the Lighting Africa initiative for the International Finance Corporation, a branch of the World Bank in Washington. "Globally, there are 1.7 billion people who lack reliable access to electrical services. You've got some technologies already in the market, but what you don't have are manufacturers who understand the needs of the African market. What does the consumer need? What can he afford?"

Linking businesses to consumers

In theory, the competition to design the best model for providing reliable, cost-effective lighting to Africans should help technology businesses serve 1.7 million potential customers.

Once the winners are chosen in the competition, the World Bank, together with the IFC, will help make the products both affordable to Africans and profitable for the entrepreneurs.

"For a long time the World Bank was promoting a solar home system ... able to power lights and a TV and battery," says Mr. Sturm. "What struck us is that there wasn't a match between the price of this system and what many Africans were able to pay."

But in recent years, there have been technological breakthroughs – the "great light hope" – of low-wattage light emitting diodes.

LEDs can be found as miniflashlights on key chains or certain mobile phones, but LEDs can also be made powerful enough light to read by, and even light up a small room. Unfortunately, the prices of today's LED lights are out of the range of most African customers and too fragile for the rough-and-tumble life of a typical agrarian African family.

"The impact of LEDs on African entrepreneurs would be huge," says Sturm. "There are hundreds of thousands of fishermen on Lake Victoria, and they typically spend $1,000 per year on kerosene so that they can fish at night and attract fish up to the surface. Imagine a business where half of your resources go to a fundamental cost of operation. Now imagine if you can do it cheaper and create bigger margins."

But no single solution suits all of Africa's needs, and with annual growth rates of 6 percent in many African countries, the continent will need to go on a monumental building spree of power plants to meet the growing energy needs of its citizens.

Lack of light can have devastating social effects. In the Senegalese town of Thiancone Boguel, a school used to provide free kerosene light to allow local students to study after their chores.

The effort paid off. By 2005, 100 percent of the graduating students passed, and all went on to college. But as oil prices rose, the school was forced to stop the program. Last year, the school had only a 60 percent graduation rate, and only 10 percent of those students went on to college.

At a modern shopping mall in Nigeria's biggest city, Lagos, the first mall built in the country, you can find all the trappings of a comfortable European life: Fresh lunch meat at the deli section of a supermarket, an Italian-style coffee shop with free wireless Internet. But frequent power cuts turn all that apparent modernity into a deferred dream. [Editor's note: the original version of the story misstated the status of Lagos.]

In Nigeria, a dream deferred

"What this shows," says John Adaleke, a leading economist in Lagos, referring to the shopping mall itself, "is that it is possible to build this in Nigeria without compromising standards. It shows the yearning that people have for the kind of lifestyle they thought they could only get outside of Nigeria."

After a half dozen power cuts in a half hour, Mr. Adaleke shakes his head. "It's like there's somebody switching things off with their toes," he says.

Even in South Africa, with its first-world infrastructure and booming economy, power cuts have become increasingly common, and the country plans to spend 150 billion rand ($23 billion) over the next five years just to keep pace with current demand.

At present, it produces 39,000 megawatts of electricity through its coal-fired and nuclear power plants. That's just 8 percent over the peak demand. Last month, power cuts rolled across Johannesburg, because colder temperatures prompted many South Africans to turn on their electric heaters.

South Africa's power crunch has been anticipated for years, after nearly a decade of 5 percent growth, says Azar Jammine, chief economist at Econometrix, a Johannesburg economic think tank. "Nothing happened for five years," he says. "No one put their thinking cap on to the needs for more power."

Few private firms are willing to take the risk of building a power plant that won't deliver a fair rate of return, notes Mr. Jammine. "Who's going to generate the 150 billion rand in investment?" he says. "Who's going to pay for it?"