On February 8, 2016, President Obama signed into law the Electrify Africa Act of 2015 (Act). The Act codifies the Obama Administration’s “Power Africa” initiative by establishing a comprehensive U.S. government policy to increase access to affordable and reliable electricity in sub-Saharan Africa. The Act requires the President to develop a multi-year strategy “to encourage the efforts of countries in sub-Saharan Africa to develop an appropriate mix of power solutions, including renewable energy, for more broadly distributed electricity access in order to support poverty reduction, promote development outcomes, and drive economic growth, and for other purposes.”
The Act encourages the U.S. government to partner with the governments of sub-Saharan African countries, international financial institutions, and African regional economic communities, cooperatives, and the private sector to achieve a number of policy goals for the power sector in sub-Saharan Africa.
These policy goals include promoting and encouraging:
- first-time access to power and power services for at least 50 million people in sub-Saharan Africa by 2020 in both urban and rural areas;
- the installation of at least 20,000 MW of electrical power in sub-Saharan Africa by 2020 using a broad mix of energy options;
- non-discriminatory reliable, affordable, and sustainable power in urban areas;
- necessary in-country reforms, including facilitating public-private partnerships specifically to support electricity access projects;
- an all-of-the-above energy development strategy for sub-Saharan Africa that includes the use of oil, natural gas, coal, hydroelectric, wind, solar, and geothermal power; and
- the removal of barriers to private financing and assistance for projects, including through charitable organizations.
To support the policy goals, the Act encourages a number of government entities to prioritize loans and assistance to power projects in sub-Saharan Africa. These include the U.S. Agency for International Development, the Overseas Private Investment Corporation, the Trade and Development Agency and the Millennium Challenge Corporation.
The Act builds upon the public-private partnerships of the Power Africa initiative, which was announced by President Obama in 2013. The goal of the Power Africa initiative is to improve energy access and production in sub-Saharan Africa, in order to double the number of people in that region with access to electricity. Power Africa focuses on leveraging private investment to increase the availability of financing. The U.S. government has announced it will commit up to approximately USD 7 billion for sub-Saharan Africa power projects, with the majority (USD 5 billion) to be supplied through the Export-Import Bank of the United States (U.S. Ex-Im). Additionally, more than 100 private sector partners have already pledged to develop nearly 16 GW of critical generation projects as part of Power Africa, resulting in over USD 20 billion in commitments for power projects in sub-Saharan Africa.
U.S. Ex-Im Reauthorization
The Act comes on the heels of the reauthorization of U.S. Ex-Im. In December 2015, the U.S. Congress acted to reauthorize the U.S. Ex-Im charter through September 30, 2019. The financing authority of U.S. Ex-Im had expired in June 2015. Changes to U.S. Ex-Im’s authority were made in the reauthorization legislation. These changes include a reduction in the cap on U.S. Ex-Im’s outstanding total loans, guarantees and credit insurance from USD 140 billion to USD 135 billion and an increase from 20% to 25% in U.S. Ex-Im’s required lending to small businesses.