Africa in the News: US Reinforces Power Africa, and Nigeria Has a New Central Bank Governor

Investment Framework Launched at U.S.-Africa Energy Ministerial

On June 3-4, 2014, U.S. Secretary of Energy Ernest Moniz led a delegation of high-level U.S. officials to Addis Ababa for the U.S.-Africa Energy Ministerial, cohosted by the government of Ethiopia. Based around the theme, “Catalyzing Sustainable Energy Growth in Africa,” the ministerial convened leaders from government, the private sector, academia and civil society to discuss the technologies, strategies and partnerships necessary for leveraging the continent’s extraordinary renewable and hydrocarbon energy resources. Attendees included Rajiv Shah, administrator of the U.S. Agency for International Development; Alex Rugamba, director of the African Development Bank; Fred Hochberg, chairman of the U.S. Export-Import Bank; and Elizabeth Littlefield, president of the Overseas Private Investment Corporation. Public figures representing ministries of Energy and Development from African countries also participated in the meeting.

Discussions at the ministerial highlighted the importance of energy infrastructure development as an enabler of economic development and the need for sustainable energy, given the risks in Africa from climate change. The forum also served as a platform to launch the new Power Africa Initiative, “Beyond the Grid: a framework for American investment in off-grid and small-scale energy projects. These projects will target primarily rural areas in the six Power Africa partners: Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania. An estimated 240 million people in rural and peri-urban communities in Africa lack access to electricity and have largely been excluded from government plans to extend electricity grids beyond densely populated urban centers. Through the Beyond the Grid approach, 27 private investors and donors have committed $1 billion to improving access to affordable energy in these areas, covering an expected 20 million underserved households and businesses. Proposed projects by investors include: $80 million in funding by Schneider Electric to finance off-grid energy small and medium enterprises and train 1,000 Africans in energy-related trades as well as Solar Sister’s commitment to develop a distributed network of female entrepreneurs who will run clean energy micro-businesses.

Nigerian Central Bank Governor Proposes Leadership Agenda

On Tuesday, Godwin Emefiele, former chief executive officer of Zenith Bank Plc, assumed the role of governor of the Nigerian Central Bank. He replaced Lamido Sanusi who was suspended by President Goodluck Jonathan in February for alleged financial mismanagement. Sanusi denies President Jonathan’s claims and argues that his firing was politically motivated.

In a press conference on Thursday, Emefiele outlined his agenda as governor, including a major focus on “development banking”—cutting unemployment and poverty rates—not just monetary stability. Specifically, he will aim to implement measures to identify and direct credit toward productive sectors of the economy. Emefiele also stated that he will work to achieve “very daunting twin goals: gradually reducing interest rates while upholding the stability of the naira. Slumping foreign currency reserves due to below-target oil outputs (the country’s main export) have made it increasingly difficult for the Nigerian Central Bank to maintain the currency peg over the past year. This challenge has led to mounting pressure to devalue naira—a move that Emefiele staunchly opposes.

Following his statements on Thursday, the naira dropped by 0.69 percent against the dollar to a one-month low of 163.85 as bond yields and treasury bills also fell. As noted by the Financial Times, the volatility in the foreign exchange market is based in part on investors’ concerns over the shift in the interest rate policy as well as perceptions of the eroding independence of the Nigerian Central Bank.