Sun still shines on African investment – Stanlib

The sun is shining on long-term African investment – quite literally.

Interest in solar power and renewable energy sources is helping to drive continued international investment in the continent, according to an assessment by STANLIB, South Africa’s largest unit trust company and top asset manager.

STANLIB’s London office alerts European and Middle East investors to African trends as part of the marketing effort in support of the Standard South Africa Equity Fund. As the only UCITS-approved Africa equity fund, it can be marketed across all EU jurisdictions.

In the latest report to investors STANLIB’s Africa-watchers draw attention to continuing support for Africa-based energy projects.

London-based Dylan Evans, Director: Global Investment Marketing, notes: “One of Africa's greatest needs is power and fortunately it has the resources to produce it – not just oil, gas and coal, but water, wind and sun.

“NASAhas identifiedpart of Niger as the sunniest place on earth! Solar power is therefore taken seriously. Senegal's president has ordered a study into the feasibility of the country becoming totally reliant on this form of energy. Well-informed investors from outside the continent are also interested in African ‘renewables’ and are prepared to commit substantial sums.

“This is a strong pro-Africa signal at a time when risk aversion is the norm in numerous investment markets.”

The STANLIB report points out:

• India’s Editia Perla, a specialist in petrochemicals and renewable energy, is to invest up to US$500 million in a project in Egypt to produce the silicon cells needed to generate energy from the sun.
  
• Egypt is to build a 200MW Red Sea wind farm, using a US$388 million loan from a German commercial bank and the European Investment Bank.
  
• In January, Libya starts construction of a US$5 billion energy hub. ‘Smart Energy City’ is a joint-venture between a Libyan state fund and Bahrain’s Gulf Finance House, which will contribute US$3.8 billion.
  
• Tunisia is to build two wind farms in Bizerte Province to generate 400000MW. The project is financed by a US$250 million loan from the Spanish government.
  
• In Nigeria, China’s Shenzhen Energy Group is planning to build a 3000MW power plant in a JV with Nigeria’s First Bank at an estimated cost of US$2.4 billion.
  
• Brazil is to finance the US$555 million construction of Ghana’s Jule River and Puralugu hydro power plants. When completed in 2013, the plants will supply 3 500MW. Ghana’s government is also investing US$400 million to develop thermal power generation and China’s Exim Bank is to finance the US$600 million development of the Bui hydro project.
  
• In Zambia, China’s Sino Hydro is to spend US$400 million to expand the Kariba North Bank power station – a development to help mines on the Copperbelt achieve full potential. Exim Bank will provide 85% of the funds.

Huge pent-up demand underpins investor interest in African power generation.

Dylan Evan adds: “Africa sorely needs every watt of electricity it can generate. Per capita consumption of electricity across the continent is just 560 kilowatt hours, compared to well over 8 000 kilowatt hours in developed countries.

“If Southand North Africa arestripped out, per capita consumption in the vast majority of African countries is well below 200 kilowatt hours. So there is tremendous demand, but there is no reason why Africa could not become energy self-sufficient.

“If Africa cannot achieve this solely by eco-friendly means, it has 16% of the world's uranium, 10% of the world's oil and 7% of the world's coal reserves as a last resort.”