More policy certainty is required to support energy projects and to build a strong manufacturing sector in Africa, says engineering and infrastructure advisory group Aurecon African market energy director Elekanyani Ndlovu.
Speaking as part of a panel discussion at the Africa Energy Indaba, on Wednesday, she said demand for energy projects in countries across the continent could determine the sustainability of various manufacturing sectors.
“We have seen that, within the energy sector in sub-Saharan Africa, growth certainty determines if the manufacturing sector will be sustainable or not. South Africa’s Renewable Energy Independent Power Producer Procurement Programme, for example, gave a lot of certainty in terms of what would happen in the renewable energy space,” she said.
Ndlovu added that South Africa’s Industrial Development Corporation invested into the programme, seeking to bolster the country’s manufacturing sector.
“However, uncertainty has come into this space and means that the projected numbers for demand have not been met, which has resulted in instability in many local manufacturing businesses.”
Protracted delays in South Africa’s renewable-energy sector have impacted on the domestic manufacturing industry, with several companies having closed manufacturing capacity that was established to support the renewable energy programme.
Ndlovu said that 1.3-billion people in the world still needed access to energy and that three-quarters of those people live in Africa.
“We should be able to drive strong manufacturing growth across the continent,” she said, but added that policy certainty remained an issue regarding sustainable renewable energy production, which impacts on manufacturing.
Ndlovu also noted that energy access requirement trends were moving to decentralised off-grid solutions, especially on the African continent, and said that the majority of large funding institutions still focused on funding large projects, such as transmission grids.
“Without policy coming into play with some sort of subsidy, Africa will find it hard to develop a strong manufacturing sector to support its energy sector developments,” she said.
Meanwhile, Clifford Mulenga from Chota CM and Associates said that manufacturing challenges across the continent were fairly obvious, noting that access to capital was key because “manufacturing is not cheap and requires a fair amount of funding".
“You also need a playing field in an economy that is enabling, and most African countries are faced with policy challenges,” he said.
Mulenga added that Africa needed policy that could speak to players in both the private and public sector.
“The type of energy that we are looking at now has caused many countries to address their legacy issues regarding their energy infrastructure. They have also started looking into investing into new forms of energy that is clean and able to cut across the various kinds of population groups,” he said.
Renewable Energy and Adaptation to Climate Change Technologies portfolio manager Victor Ndiega also believes that Africa’s population growth will create opportunities for the manufacturing sector.
“The more a population grows, the larger the market for products and services becomes. It is important to respond to this growth with sustainable development projects, keeping in mind that some of these projects take a long time to operationalise,” he said.
Ndiega added that population growth created business opportunities and could potentially stimulate manufacturing across the continent.