An IDS Working Paper, Chinese-Funded Electricity Generation in Sub-Saharan Africa and Implications for Public Debt and Transition to Renewable Energy, was published on 10 November 2021. The paper is authored by Seife Ayele (Research Fellow, Institute of Development Studies) and Vianney Mutyaba (Manager of Pricing, Electricity Regulatory Authority, Uganda), and was developed following the webinar China-Africa Cooperation on Green Energy Transition: Potentials and Barriers: African Perspectives, part of the China and Global Development Seminar Series convened by the UK Anchor Institution for the China International Development Research Network project.
Drawing on secondary data, combined with deep dive studies of Ethiopia and Uganda, this paper shows that despite significant liberalisation of the power sector in Sub Saharan Africa (SSA), Chinese investments in the electricity industry continue to follow state-led project contract-based models. The paper shows that this approach has failed to encourage Chinese firms to build compelling investment portfolios for competitive procurements within the region and, instead and inadvertently, it has exacerbated the debt burden of host country governments. Second, in spite of the global drive towards climate resilient energy generation, Chinese funding of electricity generation in SSA is not sufficiently channelled towards modern renewable energy sources such as wind and solar power that could reduce vulnerability to climate change.
While recognising that the private sector-led competitive model of power generation is not without limitations, the authors argue that SSA’s electricity generation strategy that leads to less public debt and more climate resilience involves increased involvement of Chinese investment in the competitive model, with more diversification of such investment portfolios towards modern renewables such as wind and solar energy resources.
Download the working paper here.
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