Independent Power Projects in Sub-Saharan Africa: Lessons from Five Key Countries

Abstract

The track record of Sub-Saharan Africa’s power sector is dismal. Two out of three households in Sub-Saharan Africa, close to 600 million people, have no electricity connection. The need for large investments in power generation capacity is obvious, especially in the face of robust economic growth on the continent, which has been the key driver of electricity demand over the last decade. The five case study countries, namely Kenya, Nigeria, South Africa, Tanzania, and Uganda were selected because they present the largest and most diversified experience with independent power projects (IPPs) over the longest time period. The primary objective of this study is to evaluate the experience of IPPs in Sub-Saharan Africa and explore how they may be improved. Lessons from past experiences and a review of best practices from the region and from around the world can greatly help countries attract more and better IPPs. As African countries strive to anchor investments from traditional and nontraditional financiers over the long term, a better understanding of the emerging trends in the financial landscape will help them make informed choices and effectively leverage investments and financial assistance. The report is organized in two parts: part one presents power generation in Sub-Saharan Africa and part two presents five country case studies.