Richard Nelson is the Coordinator of Power Africa, a U.S. government initiative to double access to electricity in sub-Saharan Africa by 2030. With over 200 partners, including private sector entities, African countries, donor nations, and multilateral institutions, Power Africa is a transformative public-private partnership. Nelson previously served as Mission Director for USAID/Uganda and as Deputy Coordinator for Power Africa in South Africa. He has also worked as a USAID legal officer in multiple locations, supporting the Agency’s development objectives. Before joining USAID, Nelson held positions at Dell Inc., Wachovia Securities, and McGuireWoods. He holds a JD (‘98) from Harvard Law School and a BA (‘95) from Brigham Young University. In this interview with the BusinessDay team led by John Osadolor, (Managing Editor), Tony Ailemen and Cynthia Egboboh, on his first visit to Nigeria, Nelson unveiled Power Africa’s plans to help boost power generation in the country, amongst others….Excerpts
Can you explain to us what the Power Africa programme is about and how it harnesses the collective resources of its partners to achieve its goals, especially in Sub-Saharan Africa?
As you have noted, I am the coordinator for Power Africa, which is the U.S. government’s initiative to double access to electricity in Sub-Saharan Africa by the year 2030. We have been working for 11 years across Sub-Saharan Africa to meet these goals. We do it as a partnership. One of the most important things to understand about Power Africa is that we are a collective. We are a partnership, and, in many ways, it is like an industry—an association with many different members all working towards the same objectives. That partnership consists of 12 U.S. government agencies at its core, one of which is USAID (United States Agency for International Development). USAID is the lead agency, and we have been designated to sort of coordinate with all the other 11, most of whom are working in Nigeria. There is quite a bit of activity across that partnership. The second layer of partners is our development partners, and we have multilateral and bilateral partners. We have the World Bank, the African Development Bank, Canada, the U.K., Denmark, Japan, Korea, Norway, et cetera. And we coordinate with them in the work that they are doing. Sometimes, we contribute to one of their funds, and at other times, we are just collaborating and sharing information, all in an effort to help them succeed. At the core of what we are all working towards, this partnership is to support the private sector in being successful. Power Africa itself has over 200 private sector partners, but we have supported well over 500—actually, many hundreds—of private sector companies all across sub-Saharan Africa to do this work. We also work very closely with African governments to help them develop their strategies and improve their policies and regulations so that the private sector can be successful and that there is thoughtful growth in the sector. That is the way we work across the board. We, as I said, are working very intentionally in Nigeria, also to try to advance the power sector here through that entire partnership.
I have been a new coordinator for about three months, but I am not new to Power Africa. I used to be a deputy coordinator for Power Africa from 2017 to early 2020, and so I got to know Power Africa, and I have been to many places on the continent. I have lived on the continent for the last eight years, but this is my first time in Nigeria. So, coming into this role as the coordinator, I told my team that the first country I need to visit to see what Power Africa is doing currently is Nigeria. So, it was a priority for me to get here and to understand what is happening in Nigeria’s power sector, how Power Africa is working with its partnership here, and really getting to know the government officials and the private sector to understand the potentials and also the challenges that exist in Nigeria. Power Africa is a full partnership, and we have, as the U.S. government and our Development Finance Corporation, I think in the last year, funded a $50 million support for a company doing off-grid work in Nigeria.
This USAID project is almost like a consulting company where you have some different engineers, financiers, business specialists, and power sector specialists who are ready to go and support the private sector, to help get deals done, and to help the government. Some of them sit with different agencies and governments to advise them on policies that are being developed, and their work encompasses the full breadth of the power sector. So they are working with them. For example, we recently had lunch with a bunch of companies working in the off-grid space, doing solar home systems, mini-grids, and mesh grids. We also had meetings with the Rural Electrification Agency, the Presidential Power Initiative, and others. They are also supporting them in enhancing the grid and improving how the grid works.
Read also: What state electricity markets mean for Nigeria’s power sector
What have been the achievements of Power Africa in Nigeria in the past few years?
We have done quite a bit, and Nigeria has been a priority country of ours right from the beginning. Power Africa has been around for about 11 years, and Nigeria was one of the priority countries right then. When I was working at Power Africa before, Nigeria was one of our focus countries. We have sort of divided up these groups of consultants by region, so we have a group that is focused on the western part of Africa as well as the eastern and southern parts, but we have a special group just for Nigeria, given its significance. Over that time, we have worked with over 200 private sector companies to help them develop their business models and get access to financing so that they can work more effectively in the off-grid space. As I said, we have worked closely with the Rural Electrification Agency and other agencies to develop and refine new policies that can help attract more investments.
We have worked with the NUPRC (Nigeria Upstream Petroleum Regulatory Commission) to help develop the gas flaring programme, which is hugely significant in terms of carbon reduction but also more efficient use of Nigeria’s resources. Rather than flaring it away, you can use it for productive uses, some of which will be for power. So we have been engaged with them working on that, and that has been a real high-profile development. Over the course of the last five or six years, and through USAID’s work, we estimate that we have had 5 million new connections, with maybe 20 million people benefiting from electricity. Roughly 3,500 megawatts of power and about $4.5 billion worth of investments have been leveraged through all of this work. So there has been a lot of positive work that we have been doing, and that says a lot about the attitude, the positive partnership that we have with the Government of Nigeria and with the private sector, and the vibrancy of the private sector.
You have been around the country and had interactions with government officials and stakeholders. What would you say, in your opinion, are the challenges in Nigeria’s energy sector, and in what ways is Power Africa helping to address them?
Like every country in Africa where we are working, there are challenges. There are very significant challenges in Nigeria, just like what we see in many other countries. But what is particularly pronounced here in Nigeria is the issue of payment for power. Nigeria has the ability to produce 12 gigawatts of power right now. They are only producing, on any given day, about 4 gigawatts. And that’s not because there is not enough demand. I mean, given the size of Nigeria, if you look at all the generators people are using, if you look at that demand, I mean, it is in the scores of gigawatts, but the issue is more of a financial breakdown. There’s no incentive to produce more power if they are not being paid for it. And so it starts from the very bottom: essentially, there are not enough people paying for power. Now, that sounds harsh, but that’s the reality. And so these distribution companies are not covering their costs, and so they cannot pay their suppliers. And so the suppliers will not send them power. They are only going to send them enough for what they will get paid for. So it is a full-chain effect. And then, if those producers of power, most of which are gas, are not going to buy gas, then the gas companies are not going to sell it. It is a major challenge all the way through. And there’s a power sector recovery programme that has been operating; the World Bank has been working with the government to try to fix some of these issues. We have worked very closely with the government to help meet many of the conditions for that. In fact, in one particular case, we were able to help the government meet those conditions and release over $700 million to sort of add some liquidity to that. But it still remains a challenge. So, we have been and will continue to work on this issue. This new programme that we will be starting up is going to have a particular focus on that: helping to try and improve DISCO’s ability to be able to collect revenue to cover their costs and then to be able to pay their suppliers, and so on.
I mean, honestly, in the three months that I have been working in this position, I have been to many conferences and have met partners all around the world. Everyone is watching Nigeria. Everyone is concerned. Everyone is hopeful. Everyone is waiting to see what is going to happen in Nigeria. They want to figure things out, but given this situation right now, where effectively 40% of the power that is produced, of those 4 gigawatts, is lost, there is no payment for it because it is either lost in the lines or people are not paying for it. I mean, if you are trying to run a business, if you have a shop on the side of the road and 40 percent of what you sell you do not get paid for, how can you run that business? You can’t. And so this is the responsibility of the government. It is the responsibility of the DISOCs. It is a responsibility for Nigerian citizens and Nigerian businesses. Everybody has to play a role in solving this problem. It is not just the governments’, it is not just the DISCOs’, it is not just the generation companies, and it is not just the citizens or the businesses. Everyone has got to play a role and recognise what the problem is. That is one of the things we are going to be focusing on. It is to see if we can bring greater awareness to this and try to bring parties together to see if we can start to solve this problem. Because I am telling you, if Nigeria can figure this out and can start to solve this problem, you are going to see tremendous investment coming into Nigeria. You are going to see companies, distribution companies, and generation companies all interested in coming into Nigeria. So, it would benefit everyone, and the more people who are paying a fair rate, the lower the rates can be. And so everyone benefits when this happens.
The thing that I have not mentioned in all of this is the whole off-grid space, the solar home systems, and the mini-grids. That is still going to be a priority as well. Millions and millions of Nigerians are never going to be within reach of the grid within a generation. So they need to be able to have access to power in a distributed power sense, from solar. Generally, solar is the easiest thing, but wind is also a possibility—small hydro in some cases. We are working with the African Development Bank on their Desert to Power initiative, which is looking to add 12 gigawatts (10 gigawatts) of power across the Sahel area, and Nigeria is part of that. And so there are several different initiatives that we are working on to try and address some of those problems as well. And there is a lot of enthusiasm for that as well in terms of the private sector, which is trying to figure that out. There is a lot of progress being made, so we will be focusing on that also. It is a very complex problem with lots of different aspects, and it is a big problem given the size of Nigeria. But it is also one that gives us a lot of hope and optimism that if we can figure this out together, Nigeria is going to just explode with more opportunity.
Can you speak to Power Africa’s specific work across countries and cities in sub-Saharan Africa?
It is a challenge across the board, and when we talk about off-grid support, we generally think about rural areas. I have been to many places in Africa where you are driving down the road, there is a power line running across, and you see all these shops on the side of the road, and none of them are connected to it. So, we are working on adding connections. We have projects with the African Development Bank and the World Bank to increase connections, and we have done that in several different urban areas around the continent. We have, through our Millennium Challenge Corporation, as one of our partners and our support to them, done significant work in Liberia, Ghana, Malawi, and other places where they have actually built out the grid in these urban areas so that it expands more and gets more people connected. In Uganda, where I just left, we had a special programme with the Ministry of Electricity to sort of increase and densify the connections within the range of the grid. I went to a person’s house in this area just outside of Kampala and helped flip the switch on in their house so that they could have a connection for the first time. That was right after I got to Uganda. I’ve been in Uganda for the last four years as the USAID Mission Director. One of the last things I did was go back to that same person’s house. This was five years later, and they were still paying for power—not a lot—about the equivalent of $5 every month, but they were using that power for security lights in their compound and in their home and helping their neighbours charge their phones. They were charging money for it, and they were making a little bit of money. That is an example of what we did there. One of the biggest things that we do is try to improve the enabling environment. We try to help the utilities work better, to be more efficient, and to have more expertise.
We help them develop strategic plans for how they are going to roll out and increase those connections. In fact, even here in Nigeria, we have helped to distribute and install smart metres so that customers can feel assured that they are being charged the right amount. As a customer, I have a smart metre at my house in the U.S., and I can see exactly how much I use any day, as can the power company. I can see the rate, and when they tell me what the bill is, I am still like, That’s a lot of money, but, oh, yeah, I used it, and I will pay it. That is the kind of thing we do. It helps with transparency. It helps with managing the grid. Nigeria is not yet integrated into the West African power pool. It is such a big grid, but it’s kind of unstable, and it will throw off the rest of the grid for the rest of West Africa. So, we are working with the authorities here to help get that stabilisation so that we can also incorporate more renewable energies into the system. So these things that will benefit Abuja will benefit Lagos, and they will benefit all of these other places, and we have a major focus on the power pools over the next several years as Power Africa.
What do you see as the most outstanding achievements of Power Africa in Nigeria, and what would be the major focus in the coming years?
I would say in the next few years we are going to be focusing on the distribution side of things, improving the performance of the DISCOs so that, like we talked about earlier, there is an environment of fair provision of electricity, consistent provision of electricity, and fair payment for those services by businesses and by consumers, so that the whole chain of electricity can be better functioning, more efficient, and more financially viable. That will be a major focus area of ours.
We are also going to be focused on a lot of innovations coming on board in Nigeria. I met with a lot of companies recently that are working on new innovations. I met with a company a couple of months ago that has developed wind-powered generation in a shipping container, and it’s interesting, and I went to see it. Apparently, it takes in wind, magnifies the wind speed in a turbine, and produces electricity quite efficiently. So there are lots of different innovations out there. We want to be able to harness those and use them here. We also want to see if we can get more U.S. companies engaged here. Now, if we accomplish the first goal that I mentioned, that will help U.S. companies be more comfortable coming. We hope to be able to do that. There are already some U.S. companies, like GE, here that are well established, but we want other U.S. companies to come in as well. In terms of what we are proud of so far, I mean, the biggest thing is probably the number of people that have gained access to electricity. And I mentioned that before—15 to 20 million people, we estimate. That is very, very significant, but not enough, and we want to build on that. I am particularly proud of projects where we have a lot of partners that have been engaged—the Azura Power Project, which is a big project.
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