Premium Times: Give Us Electricity, and We'll Build Africa, By Olusegun Obasanjo and Greg Mills
On paper Nigeria should produce 7100 megawatts, but actually only generates 4600 MW. But it does not have to be like this.
Former President of Nigeria; Chairman, The Brenthurst Foundation
Director, The Brenthurst Foundation
‘Give us electricity,’ said Peter Owyia, a cobbler, and ‘I will double my daily production.’
Peter’s calculation was common among the estimated 50,000 shoe, belt, and bag makers in Ariaria market in the city of Aba in South-East Nigeria’s Abia State. With each cobbler producing an average of 50 shoes per day, it’s a hive of industrial activity in the most unlikely place. Abia’s shoes, boots and sandals are famous throughout Nigeria and, increasingly, as the French labels on some products hint, now in parts of West Africa.
Underfoot it’s a sludge of mud, plastic, and goodness knows only what. The road outside is a slippery track, temporarily worsened by a current project to install a parallel concrete drain. Just inside the entrance is a man focused on fixing a large pile of paraffin cookers. To the left are food vendors. To the right is a team of women manually weaving the leather straps for sandals, the hands a blur of twists, turns and flicks.
Industry is everywhere; the industriousness impressive.
Yet there is one thing mostly missing amidst the sights, smells and sounds of the market: The hypnotic Grrrrrr of small generators. The margin and money is so small that the shoes are manually cut out and sewn on foot-powered treadle sewing machines.
The cost of electricity supplied by Nigeria’s grid is less than half that from generators. But the problem is there is no grid supply. A failure of the consumer to pay has undermined the production of power, the investment in the equipment and systems required and, in a vicious cycle, the supply of reliable power for which consumers are willing to pay. On paper Nigeria should produce 7100 megawatts, but actually only generates 4600 MW.
But it does not have to be like this.
A stone’s throw away from Ariaria market is the Apia power generation plant, a privately funded $500 million 141 MW facility. Its brand, spanking new – and, so far, unused.
The power plant has its origins in a group of local entrepreneurs, led by Dr. Bart Nnaji, a US university professor and, later, minister of power in Nigeria, who wanted to create a replicable model for sustainable power development in the country. Having obtained the concession for Aba from the federal government in 2005, the consortium built a state-of-the-art plant, rehabilitated the entire local distribution network, put up nearly 150 kilometres of overhead lines within the Aba metropolis, completed or refurbished 12 sub-stations, and constructed a 27 kilometre gas pipeline from Imo River to supply the three General Electric turbines.
…Aba now sits with a world class electricity infrastructure which cannot be turned on to the cost of both the investors and local industry, which is bound to turn off other investors. In this way, Nigeria’s greatest high-energy development asset is also its greatest problem: Nigerians themselves.
Then, with just 60 days work left on the project, the local Enugu Electricity Distribution Company was handed over to another party by the Bureau of Public Enterprises (BPE) without excising Aba from the sale. As Professor Nnaji notes, “The BPE, in effect, double-sold Aba metropolis. This is in spite of the very fact that the agreement we had clearly states that whenever there is privatisation, our company has first right to purchase the facility in Aba.”
Thus Aba now sits with a world class electricity infrastructure which cannot be turned on to the cost of both the investors and local industry, which is bound to turn off other investors. In this way, Nigeria’s greatest high-energy development asset is also its greatest problem: Nigerians themselves.
Yet the country’s population will more than double to 415 million in the next generation. The five states of the South-East will increase to 45 million people over this time. To create the jobs their people crave, they will need an enabling environment for business and the infrastructure to power industry and get goods to market. The government should resolve the power impasse before it expects investors to follow.
Compare this to Costa Rica, which we visited this past week with a delegation from the Brenthurst Foundation. The results of the last 30 years show that governments have consistently taken a corporate view, looked after its investors, and got things done.
In 1980, Costa Rica’s exports comprised mainly coffee, fruit and beef. Today it exports 4300 products to 150 countries, and is home to 300 high-tech companies, including Intel and Amazon. Traditional exports have fallen from two-thirds of the total 30 years ago to under 15 percent by 2016. With just five million citizens, it has similarly revolutionised its tourism sector, with the numbers growing tenfold to three million visitors over the same period, and the average stay doubling to 12 days.
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Investors speak warmly of the reasons for being in Costa Rica: the quality of the workforce, with free mandatory education since 1869; openness, with 14 free trade agreements in force to a market totalling 2.5 billion consumers; and political stability, given its 125 years of democracy. Its infrastructure is admittedly rickety in part and energy is not cheap, at US$0.17c kw/h, but like government policy, it’s wholly reliable.
The rule of law, effective government functioning and sound macro-economic fundamentals are, as they put it, ‘all taken as a given’. But they are bolstered by extremely focused and energetic export and trade promotion bodies, keen not just to attract investors, but on ‘after-care,’ says a director of their investment promotion board, CINDE, ‘given that two-thirds of investment is re-investment’.
The initial Intel investment 20 years ago, which was the catalyst for much that followed, was the result of a deliberate effort led by the president to attract the chip maker. Little wonder then that Costa Rica’s real per capita income has gone up five times in the last 35 years, to $15,000, and the country ranks #1 in education and health care in Latin America, and #2 in terms of ‘social progress’.
The elevator pitch, insists Costa Rica’s trade minister, should be all about ‘the people’. Yet it’s more than that. Skills may be critical but people also require a reliable facilitator in government, which Nigeria and much of Africa lacks.
A large sign above one of Ariaria market’s alleyways read: ‘This is Big Line, Where God Makes People Big’. Even so, government has a critical role to play in setting a competiveness vision, and acting on its promises by delivering the policies and hardware that enable business to compete. And that starts, in Abia’s case, with turning on the electricity.
Olusegun Obasanjo, the former president of Nigeria, chairs the Brenthurst Foundation; Greg Mills is its director. They are co-authors of the recent Making Africa Work: A Handbook for Economic Success.
This article was originally published in The Premium Times, Nigeria.