What is energy? It takes so many forms. From days gone by it was characterized by one resource primarily. Coal. The thing is that coal existed beside other forms of energy production as well. The waterwheel and the windmill where standard forms of “off-grid” energy generation. These forms of energy generation served a specific purpose for industrial use and domestic use. Why is it such a mental hurdle for society at large to get over the one size fits all approach to energy? Coal is being phased out. This is not a bad thing. Ramping up the off-grid solution though is pitched as new and innovative. Localized energy generation can be productive. It needs to be for the efforts/capital taken to install it. A transition to efficiency is uniform across all energy production. Electrical generation is necessary in the modern world so much more than in the past. Gas is a resource that was wasted for 100 years. It has an efficiency that exceeds coal. Solar has the capability, the wind has the ability, water has efficiency. Together these sources of energy will continue to transform the world as we know it. The one thing that power has not added to the mix in the past is data. The data collection available now from the gather, generation, transmission, usage, and waste is so massive that it makes one think where the actual efficiency needs to be. Energy technology is only just beginning. North America is not a leader. Europe is not a leader. Asia is not a leader. Only in Africa do we see the evolution of data and technology altering each other as the value perceptions change. Energy powers, transportation, personal and public. The data here has not even begun a discussion in the public discourse. Circling back around to the need for energy, it solves a specific purpose based on localized data. Herein lie a fascinating thought discourse and investment thesis for energy in Africa.
A population growth like none ever seen before is underway in Africa. At the same time investment risk is still seen as higher in Africa than in other markets. Why is that? In many cases, risk perception vs risk reality has a spread. The population growth is creating an endless supply of opportunity for investment growth yet perceived above-ground risks in Africa remain high. This infographic video illustrates the magnitude of the change (http://tinyurl.com/y4ktahwy). Organizations such as the African Development Bank are working to drive that perception down closer to reality. I have a belief that one event, in particular, has shaped an entire generation’s perception of Africa. This event happened on July 13, 1985. (http://tinyurl.com/y5l84prn) Live Aid. Beyond all the good it did it burned into the minds of Europe and North American youth an image of Africa. Beyond the short term good that it did now, editors at national papers are these people and it affects the reporting accordingly. The cyclone Idai in Mozambique and Zimbabwe created a tragedy that creates clickbait to sell the news. What about the headway that countries such as Rwanda, Ethiopia, and Uganda are making in their industrialization. Did Africa’s first electric train make headlines? No. Is the fintech revolution happening on the continent being extolled as a future for those in North America? No, we are subjected to the Apple Card as revolutionary while M-Pesa at 10 years old is still upheld as revolutionary cellphone technology.
Risk in Africa is how you are guided to see it. Energy in all its forms is in massive demand across Africa. Fin-tech partnered with utilities would have an impact that would far overshadow “Blockchain” revolutions. With 2 utilities in the black across the continent changes and evolution are required. The DFI’s are supporting these innovations. PE/VC has the opportunity to capture these tidbits of genius and reduce the above actual ground risk. Therein lies the opportunity for #EnergyAfrica investments. From the exploration, production, storage, and consumption of energy the market in Africa is not as it is in North America. Exponentially riskier it is not. Different yes. Above the ground, attention needs to be paid. African use of energy is evolving. The industrialization and growth of a new middle class are not to be overlooked. #EnergyAfrica will not.