UK-Kenya Renewable Energy Conference
Kenya’s renewable energy sector is on the cusp of big things. With a Government committed to a 5000Mw plan by 2017; an established feed-in-tariff; and an increasing demand for electricity as industrialisation continues at pace, the conditions are set for geothermal, wind and solar power to take off in a big way.
Two main forces are driving this change.
First is the enviable economic growth that Kenya has enjoyed in recent years, and is forecast to maintain in the future.
Rapid economic growth will drive greater demand for power: from businesses, to produce goods and services; and from consumers as they buy more TVs, fridges, freezers and other goods.
Kenya already has a renewable-rich energy mix, and is looking to continue this.
The second driver is that global climate change policy is stimulating increased take up of renewable energy around the world. This is leading to extraordinary and enormous economies of scale and efficiencies.
Last year the Paris climate negotiations sent a clear message to the world – to governments, to businesses, investors and citizens – that the future is low carbon. It created a surge in market demand for renewable energy.
You would expect rising demand to drive prices up. But technology and innovation are doing the opposite, so increasing demand further. In the world of computers we’re familiar with Moore’s law: namely that processing speeds for computers will double every two years, with prices falling. We’re seeing something similar in renewables. 30 years ago, wind turbines were generally rated around 50kw. 15 years ago we were getting used to 2000kw (2Mw) turbines. Now, in the North Sea, we’re expecting 8Mw monsters offshore.
Prices are falling similarly: solar panels now make up less than half the cost of the average PV installation. My Deputy High Commissioner is still fuming at the £13,000 he paid to put 4kw on his roof in 2011 – something that might now cost only £5,000. Offshore wind costs are another example of this. The UK agreed a strike price of £140 per Mw/hour for offshore wind as recently as 2014. In the Netherlands the most recent auction saw suppliers coming forward to supply offshore wind for just £70 per Mw/hour.
As a result of these changes, the UK now has three times more offshore wind – over 5000 Mw – than the entire generating capacity of the Kenyan grid. UK installed solar capacity – and let’s face it, the UK isn’t a sunny country – is over 10Gw – a 1400% increase on as recent as 2011.
As innovation pushes costs down, the implications for Kenya are clear. Renewables will not simply be environmentally beneficial, but economically advantageous. In time, they will push out hydrocarbons.
The UK and Kenya are together at the vanguard of this renewable energy, clean technology and innovation revolution. Kenya has one of the most active renewable energy sectors in Africa – second only to South Africa in terms of investment. The UK is a global leader in many of the sectors for which Kenya has greatest demand, as well as leading the way in innovative new technology such as wave power, tidal stream, pump storage and grid-scale flow batteries.
Kenya has set ambitious targets to boost its energy mix as part of the Energy Pillar in Vision 2030. As it continues to strive with regional competitors like Ethiopia, it wants to keep energy costs down. Renewables will enable this. And UK companies should be at the heart of this. From project development to design, finance and investment, legal and security, R&D and consulting; to grid development, transmission and distribution – UK companies have the expertise to help Kenya achieve success.
The energy market of tomorrow will – and must – look fundamentally different to yesterday. Out goes an industry dominated by giant utilities; a monopoly of centralised energy models. In comes a new, diverse market; driven by innovation, with an entrepreneurial, dynamic set of market participants. Put simply, new actors, new investors, new technology.
Let me say something about how all this connects to Kenya’s development agenda, of which the UK is such a strong supporter. A reliable electricity supply is one of the most powerful tools for helping people lift themselves out of poverty. Yet two out of three people in Sub-Saharan Africa are currently living without electricity access.
Twenty years ago, there was a nine month wait in Kenya for a monopoly provided land telephone line. Then Safaricom arrived on the scene. In just ten years we have seen a total transformation of the way in which Kenyans communicate – the mobile revolution. Now we need – and I am convinced that we will see – a similar revolution in access to affordable clean energy over the next ten years.
This will require governments, investors and aid agencies to tear down regulatory barriers and attract new finance. It will require us to develop markets where lower costs for renewable energy filter through to consumers because of genuine competition between suppliers.
The private sector has an opportunity to show the way in turning development challenges into business opportunities. A few years ago, seed funding from UK Aid working with Vodaphone and Safaricom helped create a mobile payment platform called M-PESA. Today that platform processes nearly half of Kenyan GDP, and means three in four Kenyans have access to the financial system.
This is the kind of country where those transformational things can be done. Let’s work together to make them happen.
Stock Market Gains N1.5trn After Tinubu Vows to Jump-Start Economy
By Dipo Olowookere
The first trading session on the floor of the Nigerian Exchange (NGX) Limited after the inauguration of Mr Bola Tinubu as the new President of Nigeria closed higher by 5.22 per cent on Tuesday.
Yesterday, the stock market did not open its doors to investors due to the public holiday declared by the federal government for the inauguration of the country’s 16th President.
During his inaugural speech, Mr Tinubu promised to make the business environment friendly to investors, stating that he would ensure a minimum of 6 per cent economic growth, unify the exchange rate regimes, address multiple taxes, improve the electricity supply, and others.
These assurances touched the right places and spurred stock investors to buy up some equities in anticipation of good times ahead.
It was observed that most of the sectors of the bourse leapt to levels last seen in years, as the banking space rose by 8.20 per cent. The consumer goods improved by 6.48 per cent, the industrial goods sector appreciated by 6.08 per cent, the energy index increased by 4.04 per cent, and the insurance counter grew by 2.29 per cent.
Consequently, the All-Share Index (ASI) jumped by 2,764.47 to 55,738.35 points from 52,973.88 points, and the market capitalisation rose by N1.495 trillion to N30.340 trillion from N28.845 trillion.
Business Post reports that 64 equities appreciated in price at the close of business today, and 12 shares ended on the losers’ table, indicating a very strong investor sentiment boosted by a positive market breadth index.
The strong demand for stocks on Tuesday pushed the prices of Deap Capital, FCMB, Nigerian Breweries, Jaiz Bank and Eterna higher by 10.00 per cent to 22 Kobo, N4.62, N42.35, N1.10, and N7.70, respectively.
On the flip side, Ikeja Hotel lost 10.00 per cent to trade at N2.16, NCR Nigeria depreciated by 9.80 per cent to N2.76, Tantalizers fell by 8.00 per cent to 23 Kobo, International Energy Insurance went down by 6.98 per cent to N1.20, and Consolidated Hallmark Insurance depleted by 6.56 per cent to 57 Kobo.
The most active stock of the trading session was Access Holdings, transacting 199.6 million units valued at 2.5 billion, FBN Holdings traded 127.9 million units worth 1.8 billion, Transcorp sold 95.7 million units worth N309.2 million, UBA exchanged 82.0 million units valued at N831.5 million, and GTCO transacted 76.4 million units worth N2.2 billion.
Data showed that a total of 1.1 billion stocks worth N15.8 billion exchanged hands in 9,916 deals on Tuesday compared with the 461.8 million stocks valued at N7.7 billion traded in 6,520 deals last Friday, implying an increase in the trading volume, value and number of deals by 133.49 per cent, 105.20 per cent, and 52.09 per cent, respectively.
Adesina Tasks Tinubu on Fiscal Stability
By Adedapo Adesanya
The president of the African Development Bank (AfDB), Mr Akinwumi Adesina, has tasked President Bola Tinubu to reduce the high cost of governance and ensure fiscal stability.
He made the disclosure during his speech at the Inauguration Lecture for the New President of Nigeria on May 27, 2023, in Abuja, noting that, “The starting point must be macroeconomic and fiscal stability. Unless the economy is revived and fiscal challenges addressed boldly, resources to develop will not be there.”
He noted that Nigeria currently faces huge fiscal deficits, estimated at 6 per cent of the Gross Domestic Product (GDP).
“This has been due to huge federal and state government expenditures, lower receipts due to dwindling revenues from crude oil export, vandalism of pipelines, and illegal bunkering of crude oil.
“According to Nigeria’s Debt Management Office, Nigeria now spends 96 per cent of its revenue servicing debt, with the debt-to-revenue ratio rising from 83.2 per cent in 2021 to 96.3 per cent by 2022.
“Some will argue that the debt to GDP ratio at 34 per cent is still low compared to other countries in Africa, which is correct, but no one pays their debt using GDP.
“Debt is paid using revenue, and Nigeria’s revenues have been declining,” he warned.
He lamented that Nigeria now earns revenue to service debt—not to grow, and advised the government to remove the inefficient fuel subsidies, a decision he adhered to on Monday.
In his words, “Nigeria’s fuel subsidies benefit the rich, not the poor, fuelling their and government’s endless fleets of cars at the expense of the poor. Estimates show that the poorest 40 per cent of the population consume just 3 per cent of petrol.
“Fuel subsidies are killing the Nigerian economy, costing Nigeria $10 billion alone in 2022. That means Nigeria is borrowing what it does not have to if it simply eliminates the subsidies and uses the resources well for its national development.”
He advised that rather support should be given to private sector refineries and modular refineries to allow for efficiency and competitiveness to drive down fuel pump prices.
“The newly commissioned Dangote Refinery by President Buhari—the largest single train petroleum refinery in the world, as well as its Petrochemical Complex—will revolutionize Nigeria’s economy,” he announced.
The former Nigerian minister of agriculture also said the country must urgently look at the cost of governance.
“The cost of governance in Nigeria is way too high and should be drastically reduced to free up more resources for development. Nigeria is spending very little on development.
“Nigeria is ranked among countries with the lowest human development index in the world, with a rank of 167 among 174 countries globally, according to the World Bank 2022 Public Expenditure Review report.
“To meet Nigeria’s massive infrastructure needs, according to the report, will require $3 trillion by 2050. According to the report, at the current rate, it would take Nigeria 300 years to provide its minimum level of infrastructure needed for development.
“All living Nigerians today, and many generations to come, will be long gone by then! We must change this. Nigeria must rely more on the private sector for infrastructure development to reduce fiscal burdens on the government,” he hammered.
He also tasked the Tinubu administration to raise tax revenue, as the tax-to-GDP ratio is still low.
“This must include improving tax collection, tax administration, moving from tax exemption to tax redemption, ensuring that multinational companies pay appropriate royalties and taxes and that leakages in tax collection are closed.”
However, he noted that simply raising taxes is not enough, “as many question the value of paying taxes, hence the high level of tax avoidance. Many citizens provide their own electricity, sink boreholes to get access to water, and repair roads in their towns and neighbourhoods.”
“These are essentially high implicit taxes. Nigerians, therefore, pay the highest ‘implicit tax rates’ in the world.
“Governments need to assure effective social contracts by delivering quality public services. It is not the amount collected, it is how it is spent and what is delivered. Nations that grow better run effective governments that assure social contracts with their citizens,” he added.
Nigeria’s Dollar Bonds Rise After Tinubu Inauguration
By Adedapo Adesanya
Nigeria’s dollar bonds rallied after President Bola Tinubu was officially conferred as the 16th president of Nigeria, a day that he announced plans to scrap the fuel subsidy programme, unify the exchange rate regime, as well as reduce high interest rates.
Bonds with a maturity date of 2047 jumped 3.3 per cent to 66.750 cents on the Dollar.
The debt instrument due in 2049 gained 2.9 per cent, and those maturing in 2051 advanced 3.5 per cent.
The gains came as markets in London and the US reopened following national holidays as well as a day after Mr Tinubu’s speech at his inauguration on Monday.
On fuel subsidy, Mr Tinubu said, “Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead re-channel the funds into better investment in public infrastructure, education, health care and jobs that will materially improve the lives of millions.
“We commend the decision of the outgoing administration in phasing out the petrol subsidy regime, which has increasingly favoured the rich more than the poor.”
He said that since there was no provision for subsidy in the budget from July 1, noting that the policy would be removed.
He also planned to bring Nigeria into a unilateral exchange rate regime to help staunch the continued FX crisis that has gripped investors and average Nigerians.
“The Central Bank must work towards a unified exchange rate. This will direct funds away from arbitrage into meaningful investment in the plant, equipment and jobs that power the real economy,” he said.
He also assured both local and foreign investors that his administration would move to reduce the high interest rate that has stymied faith in Nigeria being a destination for good investments.
“Interest rates need to be reduced to increase investment and consumer purchasing in ways that sustain the economy at a higher level,” Mr Tinubu said.
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