Economy
How to Solve Africa’s Power Distribution Problems
By Anastasia Walsh
Electrification is an on-going and foundational investment, and a necessary one to realize all modern-day development objectives. Despite bullish policies, the fact remains that over 640 million Africans lack access to electricity. The effect of this is apparent. It impedes economic growth; it inhibits the advancements of self-reliant local communities, and it threatens national security. African governments are beginning to rethink their electrification plans. Grid modernisation, specifically the deployment of microgrids in rural areas, provides a promising strategy.
The Centralized Utility Model Is Not Adequately Serving Africa’s Needs
Attempting to replicate the centralized utility models implemented in the U.S. and Europe has not succeeded in improving energy access across the continent. Despite this, it seems many governments and utilities wrongly maintain the position that the expansion of the traditional grid infrastructure is the solution. In areas where communities have access to the central grid, they still have to supplement the intermittency of the power with diesel generators. On the flip side, the utilities are financially strained because they are unable to collect revenues from their customers. The low rate of revenue collection is due to the unsustainable tariffs the providers impose on customers as a result of the political pressure exerted on them. This results in the utilities being unable to finance upgrades in infrastructure, further exacerbating the issues.
Those who favor the expansion of the central grid as the most effective means of increasing rates of electrification face the challenge of reconciling two contradicting positions. The first position is that increasing access requires lowering tariffs. The second position is that lowering tariffs will intensify the financial stress utilities are currently under. Neither of these positions is sustainable. The incorporation of microgrids into a hybrid system of electrification is the best solution.
Grid Modernisation and Microgrids
Microgrids are small-scale power grids that run on a combination of solar, wind, or biomass or fossil fuels to provide reliable power. They operate either independently from the main grid or can be synched to it at the same voltage to shift the energy and respond to peaks and troughs in supply and demand. This ensures there is no interruption in power supply, allowing communities to be more energy independent by cutting costs and providing reliable energy access.
Productive Use of Energy (PUE) is Key
The off-grid solar lighting market is thriving thanks to the falling prices of renewable energy equipment. The solar lighting market has been further bolstered by widespread deployment of pay-as-you-go (PAYGO) payment systems that utilize mobile-money technology. These solar devices provide sufficient generation for low consumption needs like household lighting, charging cell phones, and the use of small household appliances. Despite its attractiveness to householders, off-grid solar lighting is currently not scalable. The deployment of microgrids will be necessary to provide the adequate output required to power commercial businesses, hospitals, schools. Demand for electricity from small industry and business, which is classified as the productive use of energy will determine the success of microgrids; without this demand, the deployment of microgrids will not be financially viable. Ensuring the Productive Use of Energy enhances the economic and social development impacts of microgrids and rural electrification in the wider context.
Leading The Way: Kenya and Nigeria
Africa is forecast to be the world’s fastest-growing market for microgrids at a Compound Annual Growth Rate of 27%, representing 1,145MW by 2027. Within the continent, Kenya and Nigeria are at the forefront of the grid modernisation revolution.
With strong renewable energy and microgrid policies, Kenya has doubled its energy access rates since 2014. To reach its goal of 100% electrification by 2030, Kenya should implement a hybrid-decentralized system. This entails a combination of traditional utility distribution and the deployment of an extensive network of microgrids. The prevalent use of mobile money in the region, if harnessed correctly will provide the best means of collecting payment of energy bills. Nigeria similarly has ambitions to drastically increase their generating capacity by 2030 with 30% of that planned to be from renewable sources. Microgrids are expected to provide 5.3GW of this increased generation capacity.
Nation-Specific Policies
To improve energy access, African nations should consider incorporating the following into their policies: First, targeting rural populations for distributed energy via microgrids; then implementing low-cost and low-barrier permitting and licensing rules with standardized quality control and operating requirements; and finally ensuring that electrification strategies are financially viable.
Decentralized/hybrid solutions such as microgrids are the most cost-effective solution. The PAYGO business model provides an efficient means for project developed to collect revenues from their investments. Despite the tendency to paint all sub-Saharan countries with the same brush, as it relates to electrification rates, this is especially inappropriate. When it comes to implementing electrification and grid modernisation strategies, policymakers should consider their countries unique geography, natural resources, climate, population density, and power demand patterns.
Anastasia Walsh is from International Energy Consultant in Johannesburg
By Adedapo Adesanya
The Minister of Finance, Mr Taiwo Oyedele, has disclosed that Nigeria’s savings from the removal of fuel subsidies and foreign exchange market reforms have largely been absorbed by higher debt-servicing costs and increased government spending.
Speaking at the Seventh Africa Emerging Markets Forum in Abuja, Mr Oyedele said the reforms introduced by President Bola Tinubu’s administration in 2023 were painful but necessary to restore macroeconomic stability after years of fiscal distortions.
President Tinubu’s subsidy removal and exchange rate liberalisation have won the backing of investors and international lenders but triggered a sharp rise in living costs, prompting questions over how the resulting savings have been utilised.
Mr Oyedele said fuel subsidies and what he described as an implicit subsidy on foreign exchange had previously cost Nigeria about five per cent of its Gross Domestic Product (GDP).
Responding to concerns over the fate of the savings, he acknowledged the public’s demand for accountability.
“I’ve heard this question so many times, and guess what? It’s a valid question,” he said, announcing that the government will soon publish a comprehensive account of how the savings had been spent.
In the meantime, he said, a significant portion had gone into servicing public debt, implementing the new national minimum wage and expanding social intervention programmes.
According to the minister, debt-servicing costs have risen sharply following the reforms, with borrowing rates increasing to as much as 24 per cent from around eight per cent previously.
“Instead of paying about eight per cent on our debts, we’re paying as high as 24 per cent. When you need to service debt, you don’t debate it. You pay, and you pay on time,” he said.
Mr Oyedele also said the government’s wage bill almost doubled after the national minimum wage was raised from N30,000 to N70,000 monthly.
He added that substantial funding had been committed to the Nigerian Education Loan Fund (NELFUND), which now provides tuition support and monthly stipends to more than 1.5 million students.
The minister rejected criticism that the reforms had failed because poverty initially worsened, arguing that temporary hardship was unavoidable after years of economic distortions.
“Before the reforms, we were printing money to spend. If you stop printing, the spending doesn’t disappear. You need to finance the money you were printing before,” he said.
He also dismissed suggestions that continued government borrowing contradicted improved revenue performance, explaining that borrowing remained necessary where approved expenditure exceeded revenue.
“If your budget is 10, your revenue target is six, and you eventually collect seven, you have exceeded your revenue target, but you still need to borrow three,” he said.
Responding to the International Monetary Fund’s 2026 Article IV assessment, Mr Oyedele maintained that the removal of fuel subsidies and adoption of a market-determined exchange rate were necessary reforms to reduce economic risks.
He said the government would measure progress through reductions in multidimensional poverty, improvements in real per capita income and declining income inequality rather than headline GDP growth alone, while insisting the reforms would ultimately translate into better living standards for Nigerians.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange further rose by 1.46 per cent on Thursday, July 30, with the index up by 63.29 points to 4,388.17 points from the preceding day’s 4,324.88 points, and the market capitalisation adding N37.99 billion to end at N2.633.84 trillion, in contrast to Wednesday’s N2.595 trillion.
The growth recorded yesterday was influenced by three securities, which overpowered the losses printed by five price losers, led by MRS Oil Plc, which shed N16.25 to close at N146.55 per unit versus N162.80 per unit.
Further, NASD Plc lost N3.26 to settle at N34.10 per share compared with the preceding session’s N37.36 per share, Nitrox Industrial Gases Plc eased by N1.00 to N19.00 per unit from N20.00 per unit, Geo-Fluids Plc depreciated by 25 Kobo to N2.28 per share from N2.53 per share, and Industrial and General Insurance (IGI) Plc decreased by 3 Kobo to 49 Kobo per unit from 52 Kobo per unit.
But Okitipupa Plc advanced by N22.43 to N280.00 per share from N257.57 per share, Central Securities Clearing System (CSCS) Plc appreciated by N6.46 to N101.46 per unit from N95.00 per unit, and Afriland Properties Plc improved by N2.05 to N22.68 per share from N20.63 per share.
The volume of securities bought and sold on the platform went up by 1,096.6 per cent to 2.6 million units from 213,893 units, and the value of securities rose by 494.9 per cent to N88.3 million from N14.8 million, while the number of deals depleted by 13.6 per cent to 38 deals from 44 deals.
Great Nigeria Insurance (GNI) Plc ended the session as the most traded stock by value on a year-to-date basis, with 3.4 billion units transacted for N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units exchanged for N6.5 billion, and CSCS Plc with 76.5 million units traded for N5.5 billion.
GNI Plc also closed the day as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units valued at N6.5 billion, and Resourcery Plc with 1.1 billion units sold for N415.7 million.
By Adedapo Adesanya
The Naira was relatively stable against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, July 30, after declining for three straight sessions.
Yesterday, it depreciated by 3 Kobo against the greenback in the official market to sell for N1,366.73/$1 compared with the previous day’s N1,366.71/$1.
It also depreciated against the Pound Sterling in the same market segment during the session by N18.47 to quote at N1,834.29/£1 compared with the preceding session’s N1,815.82/£1, and lost N17.65 on the Euro to close at N1,572.97/€1, in contrast to Wednesday’s closing rate of N1,555.32/€1.
At the parallel market, the Nigerian Naira maintained stability against the US Dollar on Thursday at N1,400/$1, and also at the GTBank forex desk, it traded flat at N1,370/$1.
The Nigerian currency witnessed a slight pressure yesterday, as demand for FX by financial institutions impacted the trajectory of the local currency, with some unable to clear their bids.
The interbank FX turnover fell below the previous day’s record, settling at $58.423 million, representing more than a 4.2 per cent decline from $61.034 million reported the previous day.
Also, the number of deals executed by financial institutions acting as market makers at the NFEM window fell by 71, from 86 previously recorded.
The latest update from the CBN showed that Nigeria’s foreign reserves declined further, settling at $51.922 billion from $51.938 billion the previous day.
Meanwhile, major cryptocurrencies rebounded following a powerful rebound in global equity and chip stocks, as investors saw a boost in the Asian market as South Korea’s Kospi index surged as much as 17 per cent, led by big gains in Samsung, SK Hynix and Taiwan Semiconductor after a sharp two-week selloff.
In the US, there was the largest rally in chip stocks in more than a year, with the Nasdaq 100 snapping a six-day losing streak. Amazon rose nearly 10 per cent after hours on strong cloud earnings, while Apple fell 6 per cent as supply shortages hit its sales forecast.
Cardano (ADA) appreciated by 4.1 per cent to $0.1691, Binance Coin (BNB) grew by 3.4 per cent to $591.74, Solana (SOL) jumped by 1.1 per cent to $74.34, Ripple (XRP) rose by 0.8 per cent to $1.08, and Bitcoin (BTC) added 0.7 per cent to sell at $64,432.11.
Further, TRON (TRX) improved by 0.6 per cent to $0.3284, Dogecoin (DOGE) soared by 0.5 per cent to $0.0712, and Ethereum (ETH) climbed 0.3 to $1,907.80, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
