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Africa's power problems threaten to derail ICT growth

o Rebecca Wanjiku
21.08.2009 kl 14:28 |

Environmental destruction, receding water in hydroelectric dams, power outages and lack of affordable renewable energy alternatives are threatening to derail Africa's technological progress.


Environmental destruction, receding water in hydroelectric dams, power outages and lack of affordable renewable energy alternatives are threatening to derail Africa's technological progress.

The question of electric power has dominated discussions on how technology can be used to spur economic growth on the continent. South Africa, Namibia, Angola, Zambia, Kenya, Uganda, Tanzania, Nigeria, Ghana and countries within the Sahara desert suffer from chronic power shortages that outstrip domestic and industrial demand.

While Nigeria has had a chronic power problem, South Africa's power shortage or "load shedding" last year raised serious concerns as data centers, business processing outsourcing facilities and other technology installations suffered from hours of downtime.

This year, Kenya, Uganda and Tanzania have had to introduce power rationing, with industrial areas losing power intermittently for a day or a few hours at a time and residential areas losing power for up to three days in a week. In Kenya, it is estimated that the power outages will have negative effects on economic growth and that lower bandwidth prices will not benefit the small companies based in residential areas.

"The situation in Kenya is very ironical, I have a friend who shifted his offices from Nairobi city center to one of the residential areas; offering technical services locally and abroad, now he is experiencing blackouts for three days in a week," said Tony Ng'eno, managing director of WinAfrique, a renewable energy company operating in Kenya, Uganda, Tanzania and Angola.

"Lack of regular or sufficient power delivery has a negative impact on the ICT sector; it increases costs for both providers and users alike by (requiring) additional sources of power like generators, which increases both capex and operational costs," said Dobek Pater, telecom analyst at Africa Analysis.

The power outages are taking place at a time when the region is convincing international companies to set up data centers and business process outsourcing centers in the region, which is said to have cheaper overhead costs than most Western countries.

"For data centres and BPO centres this (problem) is particularly acute as these installations require a lot of electricity for the cooling systems and to run the servers themselves. Generators can be used but only for smaller data centers, this means that the development of large data centers is unlikely to take place," added Dobek, in an e-mail interview.

Erratic power is also a drag on small companies that have low budgets, said Wilfred Mworia, software developer and consultant.

The Kenyan government is likely to be heaviest hit. The country has an ongoing data center project and a campaign to drive more young people into ICT businesses now that the SEACOM cable is operational and the East Africa Marine System is expected to go live next month.

But with entrepreneurs experiencing unproductive hours and some resorting to working at night, the benefits of cheaper bandwidth are severely hampered, said Peter Njenga, a Web and graphics designer operating from one of the residential areas in Nairobi.

Given the high power demand and the capital intensity of the ICT sector, Ghana is probably one of the best examples of how a country has been affected by serious power outages, which hit in 2006.

"When I moved to Ghana from the United States in 2006, the government was forced to ration power and most homes lost about 12 hours of power every week due to a light rainy season that led to an extremely low water level at the Akosomboa Dam, Ghana's main source of electricity," said Yaw Owusu, managing director of Gateway Innovations, an IT and outsourcing services provider.

Although power blackouts are experienced in Ghana, Owusu says the government has embarked on an ambitious project to build more power stations in partnership with the private sector and to export power to the West Africa region by 2012.

According to WinAfrique's Ng'eno, the alternative for countries like Kenya is to invest in renewable energy, remove duty and VAT for solar panels and batteries and partner with communities in using renewable energy.

"It is very expensive for companies to invest in wind and solar energy; the panels and batteries attract 16 percent VAT and 25 percent duty, which is prohibitive," added Ng'eno.

Given the power needs by large IT outlets, Africa Analysis' Pater feels that solar power would not be sufficient and can only help small companies. However, Pater notes that solar power can be used to augment other power supply sources or to act as an emergency back-up.

This tricky situation has left power companies with the option of providing subsidies for the installation of alternative power sources. For instance in South Africa, large corporations like mines generate their own power, which they can sell to the state power grid.

Whether the hot weather or the destruction of water catchment areas is to blame for the power problems, the economic downturn has worsened the situation because companies are not spending as much in renewable energy.

"Right now, companies like Safaricom and Orange have invested in solar and wind powered base stations in remote areas; incidentally, some of the areas have enough wind and sun that can power regions but the cost is intensive," Ng'eno concluded.

Keywords: Telecommunication  Networking  
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