With energy representing the backbone of every economy, enhancing domestic and regional energy systems has long been a priority of many African governments continent wide, and now, with several regional energy networks in place, a new era of improved access and distribution is in sight.
The African Continental Free Trade Agreement
Implemented in January 2021, the African Continental Free Trade Agreement (AfCFTA) represents the largest free trade area in the world, connecting 1.3 billion people across 55 countries.
Expected to bring 30 million Africans out of extreme energy poverty and raise the incomes of 68 million people who live on less than $5.50 per day, the agreement is set to facilitate long-term socioeconomic growth on the continent through improved and strengthened trade.
For energy producers, the introduction and implementation of the AfCFTA marks a new era of revenue generation and product distribution, with tariff reductions, free access to continental markets and the removal of trade barriers allowing producers to tap into new customer bases. With the improvement in intra-African trade, both small-scale and major producers now have the opportunity to tap into high-demand regional markets, thereby enabling production increases on the back of regional trade networks.
Meanwhile, for consumers, by easing the process of importing, simplifying and reducing the costs of trade, the costs of energy products are not only expected to be lowered but to remain highly competitive as supplies become more easily attainable. At a time when global markets are in a constant state of flux and fuel prices are at an all-time high, leveraging the AfCFTA will usher in a new era of energy security and independence on the back of intra-African trade.
As countries begin to capitalize on the opportunities presented by the AfCFTA, and policies, regulations and procedures are put in place to scale-up the utilization of the agreement, the trajectory of Africa’s energy development has only been strengthened.
Regional Power Pools
For years, African countries have benefited from regional power networks such as the five established African power pools: namely, the Southern African Power Pool (SAPP); the Eastern; Central; West; and North African Power Pools. The significance of these pools is their ability to connect low-power producing countries with electricity supplies from major producers. In Southern Africa, for example, SAPP, the first international power pool in Africa, was established in 1995 and has brought with it new and critical opportunities for power distribution across the region.
By leveraging the power pool networks, power deficit countries can tap into regional supplies, thereby powering their economies while creating revenue for the producers.
Against a backdrop of the success of these power pools, stakeholders are going as far as to discuss opportunities for a continental power pool, one that would connect regional pools and significantly scale-up generation, transmission and distribution. While the concept is still in its infancy, its reality is not far off.
The Central African Pipeline System
Representing one of the most recent regional energy networks in Africa, the Central African Pipeline System (CAPS) – launched in September of this year by H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea – will be spearheaded by the African Petroleum Producers Organization. Centered around the need to strengthen distribution and processing systems regarding energy in Africa, the CAPS will comprise three multinational pipeline systems linking Africa’s producing and non-producing countries with the aim of scaling up job creation, energy access and industrialization.
The systems comprise the Central North Pipeline System – linking Cameroon, Central African Republic and Chad -; the Central West Pipeline System – linking Equatorial Guinea, Gabon and the Republic of Congo -; and the Central Southern Pipeline System – linking Angola, the Democratic Republic of the Congo, Rwanda and Burundi. Through the development of terminals in select countries, the CAPS will interconnect these African countries, creating regional hubs so as to improve resource monetization, exploitation and distribution. As such, with the CAPS, new opportunities for investment and intra-African energy trade and connection have emerged.