Better Utilities: Cutting Losses and Upping Efficiency in Africa
In Sub-Saharan Africa, unreliable utility distribution systems are a major drag on regional growth – the cost of inefficiency in Africa's water and power sectors is valued at $4.5 billion annually. Along with financial costs, distribution losses also contribute to greater greenhouse gas emissions and increased water stress within the region.
IFC is addressing these issues through a new advisory services program for utility efficiency. Offered by the Sustainable Business Advisory team, the program will help utility companies in Africa optimize operations and reduce losses. Clients of the program will include the region's energy and water distribution companies.
On average, electricity utilities in Sub-Saharan Africa lose 23% of all energy consumed due to operational inefficiencies, at a cost, according to the Agence Française de Développement, of almost $3.3 billion per year. Compared to a 10% global average, the region can do better. Meanwhile, water losses average 30 percent on the continent, higher than the average 23 percent experienced in other developing countries.
Such inefficiencies undermine the future performance of utilities, dissuade investment, and harm the environment.
“More reliable utilities can better living standards for people and improve the climate for doing business, whilst helping the environment”, said Sara Clancy, IFC’s Manager for Sustainable Business Advisory. “The utility efficiency program is an example of how IFC Advisory Services and the region's companies can address people, planet and profit.”
The program will apply lessons learned from successful experiences with IFC utility loss reduction projects in Latin America and the Caribbean. Advisory services will be offered to help utilities identify sources of system losses, develop loss reduction plans, and to mobilize finance for investments in efficiency. The program will also assist with sharing best practices and knowledge on utility efficiency within the region.