Last week the U.S. House of Representatives passed the Electrify Africa Act of 2014, confirming the existence of a broad, bi-partisan consensus in favor of supporting U.S. direct investment in Africa’s energy sector.  The bill, which now heads to the Senate, seeks to establish a “comprehensive United States Government policy to encourage the efforts of countries in sub-Saharan Africa to develop an appropriate mix of power solutions.”  The Electrify Africa Act echoes many of the themes of President Obama’s Power Africa initiative, which the Administration announced last year and which Commerce Secretary Penny Pritzker will discuss next week on her Energy Business Development Mission to Ghana and Nigeria.  The bill passed by a vote of 297-117 and was sponsored by the chairmen and ranking members of the Foreign Affairs Committee and its Africa Subcommittee.

In addition to requiring the Administration to develop and report to Congress on its progress in developing a “comprehensive, integrated, multiyear policy, partnership, and funding strategy” the Electrify Africa Act includes a number of provisions that will help facilitate U.S. private sector participation in the development of Africa’s power sector, including:

  • USAID loans and grantsThe bill calls on USAID to identify and prioritize loan guarantees to African financial institutions that would facilitate the involvement of those institutions in power projects in sub-Saharan Africa and prioritize grants to develop African states’ capacities to build and distribute electricity.
  • Expanded OPIC support.  The bill would amend the Foreign Assistance Act of 1961 to require that the Overseas Private Investment Corporation (“OPIC”) “take prompt measures to increase the loan, guarantee, and insurance programs, and financial commitments, of the Corporation to sub-Saharan Africa.”
  • International policy support.  The bill directs the President to use the influence of the United States within appropriate international bodies to “commit to significantly increase efforts to promote investment in well-designed power sector and electrification projects in sub-Saharan Africa . . . in partnership with the private sector.”

There is no doubt that developing Africa’s power sector will yield substantial benefits for the people of sub-Saharan Africa, 68 percent of whom did not have access to electricity as of 2010.  Access to electricity creates economic opportunities, improves food security, and can even help address problems in vaccine delivery.  But the bill also underscores the opportunities available to U.S. companies to invest in Africa’s power sector.  U.S. investors are likely to find a receptive audience in the U.S. government, which may be able to assist with financing, loan guarantees, political risk insurance, and policy support.  Of course, investing in Africa presents certain unique risks, many of which can be mitigated through careful planning and sound legal advice.