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Powering the Zambian Economy

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For Zambia's manufacturing sector, power outages can mean make or break. Bartlett PhD Researcher Imad Ahmed is working to help the government find a better way to deal with electricity crises.

Powering the Zambian Economy

Kariba North dam, Zambia.

Credit: Zambezi River Authority

70% of surviving manufacturers used diesel generators to varying degrees when there were power outages.

Source: International Growth Centre research

Much of Zambia’s electricity comes from two hydropower dams: the Kafue Gorge and Kariba North dams. Low rainfall in 2014 and 2015 reduced water levels to such an extent that, at the height of the power outages, companies across the country were without power for up to eight hours a day. When the worst of the outages were over, manufacturers’ share of energy from the grid had dropped from 4.6% to 4.1% – the difference an indication of how many had been forced out of business.

“Demand in Zambia is now matching its supply at normal times, so when there’s a period of low rainfall, there’s simply not enough power to go round,” says Imad Ahmed, a PhD Researcher at The Bartlett School of Construction and Project Management (CPM), and Project Manager of a grant from the International Growth Centre, which is funding the research into the electricity crisis in Zambia.

Of 146 surviving manufacturers that Ahmed’s team interviewed, they found that 70% used diesel generators to varying degrees when there were power outages. The costs of this reliance are comparatively high. The Zambian government knows this and, as a palliative measure, has waived import duties on backup generators – the assumption being that removing the tariffs will reduce the cost of self-generation and encourage companies to adopt it. Exactly how this and long-term energy policy affects the manufacturing sector is what interests Ahmed.

“Almost every firm that has access to a generator uses them. Large, export-facing manufacturers not within the basic metals sub-sectors use them most, and it’s not difficult to see why: self-generation is associated with reduced loss of clients. To the extent that firms use self-generation, we can infer that their marginal cost of an outage is north of USD$0.25 per kWh.”

Beyond economics

Ahmed is no stranger to infrastructure projects in Africa. Prior to joining CPM, he led negotiations on the commercial terms for the award-winning Kigali Bulk Water Supply Project in Rwanda, the first public-private partnership (PPP) for water treatment plants in Sub-saharan Africa, as well as for several power projects; the Rwanda Development Board had hired him from African private equity, and he spent four years as the government’s PPP Transaction Adviser, as well as later as Special Policy Advisor to the Treasury Secretary. “My background in government and energy has helped me have in-depth conversations with Zambian government officials and developers,” he says.

Municipalities and manufacturers should be allowed to recycle their waste into energy and sell back to the grid so long as their emissions fall within acceptable parameters and the costs are competitive.

Imad Ahmed

But even in Rwanda, a highly-modernised, technocratic state, he was often puzzled why people didn’t listen to the economic and financial advice that he was providing. He credits his PhD supervisor, CPM Director, D’Maris Coffman, with providing the answer: politics. “I started my PhD because I wanted to zoom out from the work I was doing in Africa. It took my work with D’Maris to realise how much the political economy informs decision-making [on infrastructure], not just economics.”

Ahmed has previously said that he has found his metier in infrastructure “because its spill-over effects on society seem to be substantial” and that one motivation for his PhD at CPM is to better understand those spill-over effects. With the research in Zambia he hopes that the team can better inform how the government manages its energy mix and stop seeing self-generation, which generates high carbon emissions, as a stop-gap.

“Zambia is overly dependent on hydropower and there is not enough evidence in the meteorological data to support building more dams. Apparently, it is safe to increase solar generation for up to 15% of the grid’s capacity. Solar plants can also be used to recharge hydropower dams’ reservoirs. Beyond that, Zambia is going to have to look at other reliable sources of energy,” says Ahmed.

“Not all of this needs to come from the state utility. Municipalities and manufacturers should be allowed to recycle their waste into energy and sell back to the grid so long as their emissions fall within acceptable parameters and the costs are competitive.”

The School of Construction and Project Management is an international centre of excellence in the teaching and research of project management and economics. It is part of The Bartlett, UCL's Faculty of the Built Environment. Find out more: https://ucl.ac.uk/bartlett/construction

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