Electrify Senegal
Poverty ran at more than 36% in Senegal in 2022. But regardless of this fact, the nation actually has a rather high rate of electrification at nearly 80%, which is one of the highest in Africa. These high electrification rates however mask large disparities across different geographical and income groups, made most evident by the rate of poverty. Here is some information about efforts to electrify Senegal.

The Situation

Senegal’s power generation is highly dependent on liquid fuels, with only 10% of power generation from other sources. The expensive nature of liquid fuels means that the Senegalese government must heavily subsidize electricity generation and yet Senegalese consumers still pay more costs for electricity than other African nations at 24 cents per kilowatt hour. For comparison, the average cost per kilowatt in Nigeria is 6 cents.

To address these issues, the Senegalese government has put in place the Emerging Senegal Plan which aims to diversify and modernize energy sources, as well as increase private sector involvement via relaxing some sector regulations. Several international aid programs support this plan and the wider effort to fully electrify Senegal, thereby posing unique business opportunities for foreign investors.

Power Africa

Power Africa is a U.S. government-led public-private partnership that aims to double electricity access in Africa, with Senegal being one of its focus countries, according to the International Trade Administration. The initiative aims to provide resources for companies operating in the Senegalese power sector and as a possible result, increase efficiency and innovation and bring costs down.

Millennium Challenge Corporation (MCC)

A key supporter of Power Africa is the MCC, which in 2018 signed the Senegal Power Compact worth $550 million with the Government of Senegal. The compact targets three areas: improving the transmission network, increasing electricity access in rural areas and improving the governance and financial viability of the sector, all of which could electrify Senegal to a much greater extent.

If achieved, this not only will address geographical inequality but also alleviate the financial burden on the Senegalese government, potentially freeing up finances to refocus on other important areas.

The World Bank

In 2022, the World Bank approved $150 million from the International Development Association (IDA) to increase electricity access to Senegalese households, businesses and public facilities. In practice, this will see 200,000 households connected to the grid, including 40,000 households that are deemed vulnerable or previously difficult to electrify. Around 700 businesses, 200 schools and 600 health facilities will also benefit.

Business Opportunities

Lucrative investment prospects for foreign investors cover several sub-sectors of the Senegalese power industry, including but not limited to gas technologies, new plant equipment, renewable energy, transmission equipment, smart grid technology, household solar panels and energy efficiency technology, according to International Trade Administration.

Renewable energy and related technology are particularly prominent areas for investment as the government has strongly committed to this area as a means to fully electrify Senegal.

International Trade Administration also predicted that the funding from the MCC Compact will create business and employment opportunities for construction, procurement and engineering companies in the building and deploying of new power-generating infrastructure. Furthermore, ensuring energy efficiency and determining environmental impacts will create opportunities for consulting firms.

Looking Ahead

The combination of government focus, international aid and business opportunities suggests that Senegal is in a great position to achieve more widespread, if not full, electrification. Despite a current high electricity supply rate, fully electrifying Senegal could drastically improve power access in more rural areas and as a result, reduce the high rate of over 36% poverty.

– Saul Gunn
Photo: Flickr