Privatising electricity supply in Africa is key to unlocking the commercial power of the continent, according to leading Nigerian entrepreneur Kola Aluko who last week addressed US business leaders.

Aluko is well-known in the Nigerian oil and gas sector, after having founded his own company, Fossil Resources in 2001. He is currently the deputy chief executive officer at Atlantic Energy.

Last week he addressed the ‘US-Africa Business Summit’ held in the US city of Chicago.

And the entrepreneur’s comments regarding unbundling Africa’s power sector have come at a time when Nigeria has started privatising its state electricity supply company.

Nigeria produces just a few hours of electricity a day, forcing a heavy reliance on expensive diesel generators.

“In the past, 97% of Nigeria’s production was dominated by the international oil companies whose understandable focus on what was best for shareholders didn’t always reflect what was best for the country,” said Aluko.

“But the government is aware of the importance to change that and the introduction of tax benefits to independent operators is a major incentive to work for the wider benefit and generate a trickle down effect which then benefits the population,” added Aluko.

However, chronic power shortages are holding back not just Nigeria but other countries on the continent as well.

South Africa, Africa’s largest economy with an estimated population of 50 million, produces ten times the amount of electricity as Nigeria, according to Reuters.

But electricity blackouts in 2008, dubbed ‘load shedding’ by South African state power utility Eskom, has since placed Africa’s biggest economy on edge as the country has come to terms with its lack of power supply.

South Africa has since started construction new power plants, aimed at easing the country’s lack of power supply.

But delays and strikes have hit the projects, raising questions in South Africa about Eskom’s ability to deliver electricity as a state-owned entity.

Meanwhile, Aluko was speaking at the US-Africa Business Summit two weeks after the Made In Africa Foundation he co-founded with British designer, Ozwald Boateng, launched the ‘Africa50’ fund in association with the African Development Bank, at the NASDAQ in New York.

The fund has been established to raise $500 million for infrastructure projects across the African continent with the aim of taking 200 million Africans out of poverty through sustainable development.