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Africa's creaking energy sectors holding back an industrial revolution.

Satellite imagery of African cities compared to satellite imagery of Western cities at night, you can see the darkness versus the light.

As public and development funding falls, can Africa build the energy infrastructure it urgently needs to grow?

Electricity is a fundamental right?

Is that that you can't have health, education, anything delivered a country industrialized using diesel pod generators because it's expensive.

It's a very expensive option with which to operate factories and it makes you uncompetitive.

On today's podcast, we'll look at what's holding back the African energy sector and where the funding might come from.

To turn it around.

I'm Jennifer's Abasaga and this is the Next Africa Podcast, bringing you one story each week from the continent driving the future of global growth with the context only Bloomberg can provide.

Later on we will hear from doctor Owen Omogafo, chief executive of Nigeria Energy Investor Transport.

But first we're going to start with our Bloomberg.

Energy reporter Paul Burkhart, who is joining us on the podcast.

Paul, Thanks so much for joining us this week.

Let's just start with your piece that is now available on Bloomberg platforms now, which really takes a look at the extent of Africa's energy grid and perhaps also what it's lacking.

Can you talk us through some of the numbers that you found and how much energy Africa actually needs right now and then when it's actually generating.

So what we started out with this piece was actually the question of why isn't Africa industrializing faster?

And when you look at those numbers, it's only eleven percent of GDP and Africa is manufacturing compared to like twenty two percent in East Asia.

There's also this measure called global manufacturing added that's actually shrunk on the continent from three percent to two percent over the last decade.

And you have to keep in mind that Africa is the continent where that'll make up a quarter of the world's population by twenty fifty, So big population.

A lot of jobs needed.

And the answer to industrialization issue is electricity.

And so the difference between African countries and other nations outside of Africa is quite stark.

So consumption, for example, per capita in Congo is like one percent of US consumption, and Nigeria's grid only provides the equivalent of like a very small European countries have, So that that's the problem.

And if you don't have power, you can't manufacture.

Right, and especially with the magnitude of the populations that we see across the continent.

Into the success I think we can call it of Ethiopia's Grand Renaissance Dam, which we saw switched on earlier this year.

But in the piece you described this as an outlier.

Why why has it been so hard to replicate this model?

We know, we know it took quite a long time for them to get this up and running, but why an outlier?

Yeah, I mean that that kind of gets into the problem that's faced by most countries, and that that is because you know, the typical usually you would you'd get your electricity from the state utility, but state utilities are often broke, they haven't been able to expand, and they haven't privatized like many have abroad, and so that's the first stop for supply.

Also, financing came up as like a like a huge obstacle due to risk.

Another issue is like the end user, do you build the power station on the expectation that there will be enough demand.

So the Grand Ethiopian Renaissance Dam was really championed and financed by the state and the people, and now they have to pay that back.

But they also found a major off taker, interestingly with crypto minors, so that takes up about thirty percent of what the dam produces.

So and that's in that sense it worked out.

Of course, it's like a very charged issue because only like one in five Ethiopians have power.

So again it's kind of this trade off like do you industrialize first and then create jobs from that or do you try to connect people to power first.

It's just like not is it becomes very complex?

Is that a similar picture?

Or in what ways are is that similar to what we're seeing in Nigeria because a population of two hundred and fifty million and still only a fraction of the population actually has energy.

What are we seeing there that stood out to you?

I think what we see in Nigeria is like a major workaround that isn't really sustainable.

So what's happened is the grid just like doesn't work that well, so people rely on generators and some of my colleague Duka or Geneo visited a garment factory and it's just one of countless examples where generators are always like starting up when the grid turns off.

Roughly eighty six percent of Nigerian businesses rely on gasoline diesel generators, so that creates a huge cost, like between the outages and the fuel that is between like five and seven percent of GDP, So it really takes its toll even that workaround.

And what you need is, you know, just a bigger power source for cheaper and accessible and reliable.

Power when it comes to solutions, then is there any cause for optimism?

I mean, we also have to point out that there's still a lot of talk about the transition right and yet a number of these countries still need to industrialize.

So what would you say, where are we at right now in sort of solving some of these issues here?

Yeah, So again it's bring this argument of like finding the off taker.

That's like a very progressive view on the spectrum of approaches.

So critical minerals could really be a catalyst and bringing more electricity to a place like Congo that has some of the richest deposits of cobalt copper.

If they process some of those minerals further by using electricity, that's jobs and revenue.

And so what we're seeing our minds run on generators like this same example as Nigeria that require a massive amount of fuel, and we're starting to see projects that want to connect transmission lines to hydro projects that are nearby, and the investment in the critical minerals could drive this expansion of the power system.

So that's very much upright spot.

The Renaissance Dam is a bright spot, and Morocco was also a country that came up in terms of just being able to draw a lot of investment in renewables there.

So one expert that we spoke to so Blimbog's was a former World Bank economist, said that if the Ethiopian dan works out, and there are a couple more examples like that African success stories, that momentum will really build from there on the continent.

Thanks so much, Paul.

After the break, we're going to dig a bit deeper into Nigeria's energy problems and possible solutions as well with Transcorp CEO doctor Owen Omogifo.

We'll be right back.

Welcome back.

Today.

We're talking energy and how the continent's creaking energy grid is holding back an industrial revolution.

At Bloomberg's Africa Business Summit this week, one of the speakers was doctor owen Omogiafo.

She's the Group President and CEO of Nigeria's Transcorp, a major operator of power plants in the country.

Doctor owen Omogiafo, thank you so much for joining us.

Maybe we just start here.

We're just given a pretty shark picture of Nigeria's energy grid.

Can you give us some insight into what's really held back reliable energy in the country, what's behind a lot of this.

Like you said, there's a stock picture a country that has a need for about forty five to fifty gigawatts of power and our greed today can only do about six gigawats of power.

But that is not to imply that the country is in darkness because the greed can only do so much.

But it just shows that you have people who are generating in their own power independently.

So historically, power system Nigeria was one hundred percent as a state owned enterprise, meaning that the government managed the generation, transmission and distribution of power in Nigeria.

In twenty thirteen, a privatization exercise took place whereby the value chain was broken into three segments, generation, transmission and distribution.

Now for the privatization, the generation site was one hundred percent privatized.

So we in Transcrip we have three power generating plants that we obtained through the privatization exercise.

The distribution company was privatized as sixty percent private sector new investors and forty percent still managed by the government, whilst the transmission on the other hand, one hundred percent stayed on the federal the federal government.

So you see that on the generation side, naturally the discipline of private sector we run businesses looking at maximizing efficiency and value.

The generational capacity has increased in the past ten years.

If I look at TransCore as an example, the power plant that we bought in twenty thirteen, at the time of procurement, the available capacity was one hundred and sixty megawards.

We've taken it up to about seven hundred megawards.

If we look at our a firm plant from thirty five megawak, but we've taken out to three hundred and forty eight megawards.

And this story I'm telling cuts across other generation companies as well, orbeit's not at the same level of performance for some now when you now look at the transmission there's been practically no investments at all in the transmission side, beyond the limpsy system maintenance.

Right a country that has an installed capacity of fourteen thousand megawards of power, your grid cannot be six thousand megawards?

Now, what are the o our wall challenges?

We have the infrastructure issues that are in there.

There is also liquidity.

We've had some conversations with the government.

We will owe quite a bit of money right now.

But under the government of President Bola Medinubu, we are having conversations right now with the Minister of Power, Ministry of Finance and the Office of the Special Advisor to the President and Energy where we're having some discussion on how the historical debt will be paid.

And this is the most we have, most progress we've made in a long time.

The sector is one that is profitable, is one that creates impact and truly for us to drive the intoestralization of Nigeria, we must fix that PAS sector.

You know, just speaking to that because a lot of the discussions that I've been having over the past few days around B twenty is about the private sector becoming more involved in some of these projects and development across the continent.

When we talk about Transcorp, you're planning a few new projects, but how quickly do you see them being able to kickstart and support some of the energy gaps that we're seeing in Nigeria And I guess maybe you can speak to how quickly other private producers can do so at this point or if there are still a few bottlenecks and red tape that's getting in the way.

I'm glad that the g twinds heavenliest conversation about the role that the private sector must play in the developments of Africa as well as subalances out as well the rule of governments in create it in an enabling environment for US private sector players to thrive.

And frankly, that is the principle of Africa capitalism that our group chairman, mister Tony Limelo talks about, which is simple that private sector has to lead in the development of Africa and for Transco, it's called our purpose is to improve lives and transform Africa in everything that we do, and energy is at the core of it.

Because the more you get part to your location.

You just development will follow infrastructure challenges.

You find that businesses to situate.

And when businesses situate, what do you do.

You're creating jobs.

You create jobs, you create economic opportunities, and we're driving these very very strongly.

Nigeria is rich, very rich in oil and gas.

We need investments in that gas space and this is what other private sector players are also doing.

There's more investment going on in there so that we're able to generate more power and within the next I mean, I look forwards when there's Lulu in Nigeria and just being in South Africa and listening to the minister speak two days ago about this and that's what I want.

Where every Nigerian can have that access to electricity, you have that confidence that you know what, I can plan my business, I can drive my business, I can grow because electricity is not a problem.

And that was Transcorps.

Doctor owen Omojiafo.

Thank you so much for joining us, and thanks again to Bloomberg's Paul Burkhard, who you heard from earlier in the podcast.

You can read his report on Bloomberg platforms.

Now we'll put a link to that in the show notes.

Here's some of the other stories we've been following across the region this week.

The US formally warned.

South Africa against pushing for a joint statement at this weekend's Group of twenty summit in Johannesburg that the Trump administration is boycotting.

That's according to a document seen by Bloomberg.

And Chinese companies plan to help Morocco establish a competitive production base for electric mobility products such as motor scooters, small tractors and motorbikes.

That's according to an interview with Morocco's Industry and Trade Minister Riad Mazour.

Several Chinese manufacturers quote have the intention to localized manufacturing or the assembly of their products in partnership with local companies, he told Bloomberg.

And you can follow these stories across Bloomberg, including the Next African Newsletter.

We'll put a link to that in the show notes.

This program was produced by Adrian Bradley and tiwa Adebayo.

Don't forget to follow and review this show wherever you usually get your podcasts, But for now I'm Jennifer's Abasaja.

Thanks as always for listening.