Solar Energy and Economic Transformation in Africa

The proposed paper engages with a central source of tension within the global energy transition to low-carbon societies and economies. Can Africa harness the opportunity provided by the transition to develop productive capabilities in the design, manufacture, and export of renewable energy technologies? Or, in a continuation of historical inequities and injustices in global trade and development, will the transition see Africa provide the raw materials required for the manufacture of clean energy infrastructure, while remaining dependent upon the import of the high-value final products? The paper will explore this tension through a focus on solar energy, which has expanded rapidly across the continent over the last decade. To assess whether and to what extent this expansion is contributing to economic transformation on the continent, leading to a more diversified and autonomous economic structure, the paper adopts Hirschman’s linkages framework to review the existing literature on the topic. Hirschman proposed three major types of linkages from the commodities sector, which can be usefully transposed to energy: fiscal linkages from the commodities/energy sector in the form of corporate and others taxes accruing to the state; consumption linkages created by the demand for the output of other sectors stimulated by the expenditure of incomes earned in the commodities/energy sector, and; production linkages through producing inputs to be used in commodity/energy production. Notably, existing studies have focused heavily on the issue of production linkages, to the exclusion of a concern with fiscal and consumption linkages. Existing global value chain mapping studies, produced predominantly by the United Nations Economic Commission for Africa, suggest the potential to develop these linkages in Africa is significant. While there is some empirical evidence to support this optimism, existing studies raise two associated questions. First, much of the evidence in this direction is clustered around the lower value-added segments of the solar value chain, and in particular productive activity related to the manufacture and distribution of solar lanterns or solar home system components. The extent to which this is serving or can serve as a springboard for domestic firms and entrepreneurs to move into higher value-added activities within the chain is an open question. Second, to what extent material inputs are being procured domestically or regionally in Africa is largely undocumented by the existing literature. Reflecting on the existing state of knowledge concerning the impact of Africa’s expanding solar sector on sustained and transformative processes of economic development, perhaps the most striking observation is how relatively little we know beyond just a few countries. While the potential for the solar sector to contribute to economic transformation on the continent is well documented, the realisation of this potential remains relatively understudied, and is deserving of more attention from energy scholars and scholars of structural change and industrial policy in Africa. This is particularly urgent considering the dominance of foreign firms in the continent’s renewable energy sector, which in other sectors – such as mining – has historically functioned to undermine rather than support progress towards this goal.