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Powering Africa: Meeting the Financing and Reform Challenges

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Anton Eberhard, Maria Shkaratan
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Sub-Saharan Africa faces chronic power problems, including insufficient generation capacity, low connectivity, poor reliability, and high costs, all of which constrain development. The authors of this journal article note the investment requirements to meet Africa's power needs and set out strategies to address the funding gap. According to the authors, six areas require focus: (1) current underpricing must be corrected and subsidies more effectively targeted, (2) new electrification strategies need to be nimbler and smarter, )3) inefficiencies within the current delivery mechanisms, dominated by state-owned utilities, need to be substantially reduced through governance reforms, (4) sector reforms must be deepened to allow for greater private sector participation within a clear regulatory environment, contributing private equity and debt finance as well as management and technical capacity, (5) new private generation capacity must be encouraged and facilitated through the careful management of hybrid power markets and (6) regional integration must be aggressively pursued to reduce overall costs and realize other economic and political benefits.