The difficulties faced by African utilities to secure finance for infrastructure development : energy sector

Mkhonta, Ernest Sipho Godfrey (2015-04)

Thesis (MBA)--Stellenbosch University, 2015.


ENGLISH ABSTRACT: Expansion of electricity generation and transmission infrastructure in Sub-Saharan Africa is on a very slow path compared to the demand and is by far lower than the potential demand. The projects needed to bridge the gap demand high capital input from the project sponsors. Securing finance to bring the generation expansion and new transmission line project into operation is difficult for utilities from small economies. The study contained in this document intends to investigate the difficulties faced by utilities to secure funding as they make efforts to meet the demand for electricity in their own countries and contribute to the regional electricity supply. Often projects are delayed because utilities have not fulfilled the strict requirements of the financial institutions. The research is limited to the two utilities and a sample of the development finance institutions that traditionally support these two countries with facilities for development. Data was collected from senior officials of the utilities and institutions involves using questionnaire and interview questions and analysed using statistical tools and inductive methods. The difficulties were divided into four major themes were found through the study. These are economic issues, financial issues, capacity issues and governance issues. The utilities need to be assisted in order to deal with these difficulties. The industry needs reforms are to truly liberalise it and allow other players in particular the private sector to participate in power generation. The impact of this would be the relaxation of the entry barriers for independent power producers and a better framework for public private partnerships.

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