SPEECH BY PROF.

MARK MWANDOSYA, MINISTER OF STATE, PR ESIDENT’S OFFICE (SPECIAL DUTIES) AT THE LAUNCH OF THE B OOK “POWER SECTOR REFORM IN AFRICA” AT THE 10TH ANNUA L CONFERENCE OF THE AFRICAN FORUM FOR UTILITIY REGULA TORS(AFUR), ARUSHA, TANZANIA ,16 APRIL, 2013

Mr Haruna Masebu, Chairman of AFUR Honourable Judge(Rtd) Buxton Chipeta, SUMATRA Board Chairman Mr. Simon Sayore, EWURA Board Chairman Distinguished Guests, Ladies and Gentlemen, I am delighted to officiate at the lauch of the book “Power Sector Refor m and Regulation in Africa”. I am also aware that most of you present are attending the 10th Annual Conference and Annual General Meeting of the African Forum for Utility Regulators (AFUR) and for this reason all ow me to begin with reflections on Africa’s infrastructure sector in gener al. AFUR as I understand brings together regulators of various public utilitie s from across our continent. As I am sure you are all aware, public utilitie s such as energy, water, sanitation, telecommunications and transport ar e central to the future of Africa and its development. In fact it is the servi ces that these utilities provide that the poor in our countries continue to li st as being critical to improving their quality of life. This should be of no s urprise to any of us. But the story of infrastructure in Africa is a chequered one. Infrastructure stocks that were available at the time most countries gained their indep

endence from colonialism in the 1950s and 60s arguably supported reas onable economic growth. This however only lasted until the oil shocks of the 1970s which triggered a period of prolonged economic decline lastin g until the 1990s. Unfortunately for us, the period of economic decline al so coincided with what some have termed a “fast, steady and continuou s growth in household demand for infrastructure” which was a conseque nce of high population growth and an increase in the rate of urbanisation . As a result, by the time our economies were beginning to grow again, t here was a large and growing gap between the demand and supply for i nfrastructure services. This gap was further amplified by other features o f the economic geography of Africa such as low overall rates of populatio n density, a large number of landlocked countries and our varying coloni al histories that at times have created false barriers such as the “anglo-s axon / Francophone” divide. Africa’s infrastructure gap presents a daunting challenge. According to e stimates contained in the Africa Infrastructure Country Diagnostic (AICD) report of 2010, Africa needs to undertake the following in order to make meaningful in-roads into closing the gap:

 Develop an additional 7,000MW a year of new power generation capacity  Enable regional power trade by building 22,000MW of crossborder transmission power line capacity  Complete the intraregional fiber-optic back-bone network  Interconnect capitals, ports, border crossings, and secondary cities with good quality road network  Provide all-season road access to Africa’s high-value agricultural

land  More than double Africa’s irrigated area  Meet the MDGs for water and sanitation  Provide cell phone voice coverage and public access broadband to 100% of the population Not surprisingly, the cost of such an ambitious programme is significant. In 2010 this was estimated at United States Dollars 93 Billion per annum including operations and maintenance costs, with the amount attributabl e to capital expenditure being in the region of United States Dollars 60 Bi llion. This is a staggering 15% of the continent’s GDP! And I imagine tha t over the last few years since this figure was derived, it has grown. The magnitude of the challenge that we face means that we can no long er continue to do “business as usual”. It is with this realisation that many countries began, from around the 1990s, to reform and restructure their infrastructure industries. This has led to private sector participation in the se industries and the emergence of independent regulation. At this point may I hasten to add that while some proponents had in the earlier years of the reform agenda advocated that private sector participation would b e a panacea for our challenges, it is increasingly clear that efficient state -owned entities with a strong commercial bias remain an important ingre dient. Although I am advised that the analysis of possible achievements of refo rms remain modest, preliminary indications from the 2006 report by Esta che Antonio of the World Bank and the Free University of Brusells, were that in general across infrastructure industries:  Regulation and competition yields a more positive impact on performance than ownership

 In most sectors private sector participation and independent regulation have been associated with increases in investment, access rates and quality.

This leads me to conclude that, bearing in mind the massive infrastructur e gap that we face, regulators are crucial in our desire to alleviate povert y on the continent, and that an organisation such as AFUR can play a no ble and meaningful role in Africa’s development. Distinguished Guests, Ladies and Gentlemen, allow me now to turn to th e specific matter of electricity. The book we are launching here today is after all about the power sector! This sector is perhaps one that presents the greatest infrastructure chall enge for Africa. While we have witnessed meaningful progress in the pro vision of telecommunications services, including access to the internet, a nd the provision of safe and clean drinking water, which now reaches 61 % of Africa’s population, access to electricity has remained a paltry 25% or so for several years now. Furthermore, all of our countries have expe rienced blackouts and load –shedding which for many continues to be a monthly if not daily occurrence. To make matters worse, for many of our people, even when power is available its quality leaves much to be desir ed with brownouts, resulting from voltage dips and low voltages common place as respective power systems reach their daily peaks. Yet evidence that shows that electricity is among the three infrastructure sectors that have the most positive contribution to economic growth, the other two being telecommunications and transport. In addition, it is the el ectricity sector that takes the lion’s share of the estimated cost of closing the infrastructure gap that I referred to earlier, a massive $41Billion per

annum which is twice the requirement for water and sanitation, the secto r with the second highest annual spending requirement. The need to get the electricity sector right in Africa can therefore not be over-stated. The proponents of the power sector reform and restructuring agenda of t he 1990s had advocated for commercialisation of state owned utilities, u nbundling, privatisation, liberalisation to allow private sector participants i n the form of Independent Power Producers (IPPs), wholesale and retail electricity markets, and the establishment of independent regulators. Ma ny of us embarked upon this road through commercialisation, allowing th e entry of IPPs and the establishment of independent regulators. But few countries if any have ever carried out all the steps that had originally be en advocated. Worse still, for many of our people the electricity experien ce is little different from that of twenty years ago and may in some cases become worse! As if this were not enough we have ended up with Emer gency Power Producers (EPPs), with debilitating effects to our economie s. Given what is at stake, there is no doubt in my mind that we need to gain insights and better understand power sector reform and regulation withi n our unique African context. It is for this reason that I support the Peer L earning Network initiative of the University of Cape Town, Graduate Sch ool of Business the outcome of which is the book that we are launching t onight.In particular I commend the efforts of the authors of the book,Jose ph Kapika and Antony Eberherd. In fact, I first learnt of the University of Cape Town’s initiative way back in May 2010 when regulators and resea chers came to my office and bombarded me with all manner of question s in relation to the power sector and how we regulate it here in Tanzania. Little did I know that a book would come out of that exchange! I am also aware that this book also depicts some parts of our reform experience t

hat have been difficult if not painful. Such stories however must be told i n order that we have a sound footing from which to prevent past pitfalls f rom recurring. Ladies and Gentlemen, perhaps the African infrastructure story that I ha ve painted is one of hopelessness. But let us all remember that in this w ork, failure is not an option. Rather, let us be encouraged that finally and in our time, a continent that many thought could only breed stories of wa r and disease is, as the Economist magazine of 3rd December 2011 put it “rising”! Based on the World Bank estimates, of the 20 countries in the world with the highest projected compounded annual growth rate, from 2 013 to 2015, eleven are in sub Saharan Africa. To underscore the same point, and according to the International Monetary Fund projections, bas ed on percentage Annual Average Gross Domestic Product (GDP) growt h, of the 10 fastest growing economies in the world, from 2011 to 2015, seven will be from sub Saharan Africa. It is with deep humility I note that Tanzania is in both lists. As I conclude, I would like us all to be mindful of the fact that this book al so represents an important point of departure. Far too many of our storie s are written by non-African scholars. While this in itself is not necessaril y a bad thing, it does raise the possibility of not being able to discern so me nuances in the manner that those born and bred on the continent wo uld. Further, there is a greater likelihood of passion, urgency and applica bility when we are intimately involved in our own policy formulation. As Chinua Achebe once wrote: “Nobody can teach me who I am. You can describe parts of me, but wh o I am – and what I need – is something I have to find out myself.” And I have great admiration for the character Isaac Okonkwo in Chinua

Achebe’s “Things Fall Apart” who had mystic regard for the written word . Ladies and gentlemen it is now my honour and privilege to officially laun ch the book on: “Power Sector Reform and Regulation in Africa: Lessons from Ken ya, Tanzania, Uganda, Zambia, Namibia and Ghana.” Obrigado, Shukran, Merci, Ngiyabonga, Zikomo, i ni che, Murakoze Asante Sana!

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