Walden University ScholarWorks Walden Dissertations and Doctoral Studies Walden Dissertations and Doctoral Studies Collection 2019 Success Factors for Power Project Development Businesses in Sub-Saharan Africa Kodjo Galevissi Afidegnon Walden University Follow this and additional works at: https://scholarworks.edu/dissertations Part of the African Languages and Societies Commons, African Studies Commons, Finance and Financial Management Commons, and the Oil, Gas, and Energy Commons This Dissertation is brought to you for free and open access by the Walden Dissertations and Doctoral Studies Collection at ScholarWorks. It has been accepted for inclusion in Walden Dissertations and Doctoral Studies by an authorized administrator of ScholarWorks. For more information, please contact ScholarWorks@waldenu. Walden University College of Management and Technology This is to certify that the doctoral study by Kodjo Afidegnon has been found to be complete and satisfactory in all respects, and that any and all revisions required by the review committee have been made.
Review Committee Dr. Alexandre Lazo, Committee Chairperson, Doctor of Business Administration Faculty Dr. Richard Johnson, Committee Member, Doctor of Business Administration Faculty Dr. Timothy Malone, University Reviewer, Doctor of Business Administration Faculty Chief Academic Officer Eric Riedel, Ph.
Walden University 2019 Abstract Success Factors for Power Project Development Businesses in Sub-Saharan Africa by Kodjo Afidegnon MS, University of Toledo, 2006 MS, University of Lomé, 2001 BS, University of Lomé, 1999 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University April 2019 Abstract Despite the financing gap in the sub-Saharan Africa power sector, private investors struggle to capitalize on the opportunity because of the high failure rate of power project development companies. Using the conceptual framework of the behavioral finance theory, this multiple case study was conducted to explore the strategies used by executives of 4 companies in sub-Saharan Africa who successfully developed power projects within the last 5 years. Data were collected from semistructured interviews and a review of government and institutions’ websites. Yin’s 5-phased cycle for analyzing case studies provided the guidelines for data analysis.
Three themes emerged from data analysis: market knowledge, stakeholder alignment, and commercial viability. Findings revealed strategies that current and aspiring power project development company executives may use as a guide to mitigate business failure risks. Implications of these findings for positive social change include the potential to increase the power generation capacity in sub-Saharan Africa and provide electricity to many of the 620 million Africans who currently lack access. Implications also include poverty alleviation and economic growth through creation of successful power project development companies.
Success Factors for Power Project Development Businesses in Sub-Saharan Africa by Kodjo Afidegnon MS, University of Toledo, 2006 MS, University of Lomé, 2001 BS, University of Lomé, 1999 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University April 2019 Dedication I dedicate this study to my late mother, Sossi Kondo, and my late wife, Yawa Mawusi, who were inspirational in my life and provided the support and endurance to achieve my educational dreams. I also dedicate it to my father, Kouami Valentin Afidegnon, who taught me the importance of education very early in my upbringing. Special mention to my wonderful partner, Edna Selasse, and my children, Nathanael and David Afidegnon, who provided extraordinary support throughout this doctoral journey and encouraged me to press on and stay focused. Acknowledgments I want to thank my Lord and Savior Jesus Christ who has always been there for me in every situation in my life and who upheld me to become who I am today.
Loving God, You provided me with ALL I needed to complete my study. How amazing You are! My special gratitude to Dr. Alexandre Lazo, my mentor and dissertation chair, who encouraged and supported me throughout this journey. I could not have made it this far without your outstanding mentoring.
I would also like to thank my second committee member, Dr. Richard Johnson, for your valuable and timely feedback. Thanks to Dr. Timothy Malone for your extensive feedback and encouragement.
My gratitude also goes to my friends, Folly Hemazro-Somado and Gilles Mevo, for their support and encouragement. I would like to recognize my lifetime friends, Pr. Machidude Pio, Scot Smith, Yves N’DA, Edem Darrah, Komi Darrah, Patrick Wallace, and Martin Adonsou, for believing in me and being beside me for this journey. For friends, faculty, and family members who are not listed here, they know who they are.
Table of Contents List of Tables. iv Section 1: Foundation of the Study.1 Background of the Problem .2 Nature of the Study .6 Definition of Terms.7 Assumptions, Limitations, and Delimitations. 9 Significance of the Study .9 Contribution to Business Practice. 10 Implications for Social Change.
10 A Review of the Professional and Academic Literature .11 Literature Review Search Strategies. 12 Behavioral Finance Theory. 14 i Reforms and Energy Development. 16 Uniform Code and Standardization.
19 Energy, the Engine of Economic Growth. 23 Attracting Energy Sector Investments. 25 Renewable and Sustainable Energy. 29 Instilling Management Competencies.
31 Social Change Implications of Sub-Saharan Africa Energy Development. 34 Deeper Business and Performance Analysis Warranted .42 Section 2: The Project .44 Role of the Researcher .46 Research Method and Design. 48 Population and Sampling .52 Data Collection Instruments .53 Data Collection Technique .55 Data Organization Technique .57 ii Data Analysis .60 Reliability and Validity. 62 Transition and Summary .65 Section 3: Application to Professional Practice and Implications for Change .66 Presentation of the Findings.66 Theme 1: Market Knowledge.
67 Theme 2: Stakeholder Alignment. 71 Theme 3: Commercial Viability. 75 Applications to Professional Practice .79 Implications for Social Change .81 Recommendations for Action .82 Recommendations for Further Research.85 Summary and Study Conclusions .88 Appendix: Interview Protocol .121 iii List of Tables Table 1. Frequency of Emergent Themes: Market Knowledge.
Frequency of Emergent Themes: Stakeholder Alignment. Frequency of Emergent Themes: Commercial Viability. 79 iv 1 Section 1: Foundation of the Study Background of the Problem There is a yearly investment need of at least 21 billion U. Securing such an investment is a challenge due to limited national public finances and insufficient capabilities among multilateral agencies and development financial institutions.
As a result, there is a significant financing gap in the sub-Saharan Africa power sector. That situation offers the private sector an investment opportunity of 10 billion USD each year in the region (Chirambo, 2016; Szabó, Moner-Girona, Kougias, Bailis, & Bódis, 2016). The International Renewable Energy Agency estimated the total theoretical renewable energy potential of Africa at around 1.6 billion Gigawatt hours (IRENA, 2015). The shortage of current power generation capacity, the increasing demand, the investment gap, and the enormous renewable energy resources constitutes a significant opportunity for global power companies (Eberhard, Gratwick, Morella, & Antmann, 2016).
Before the private equity funds, pension funds, global power companies, banks, and multilateral lenders decide to invest, a company needs to move power projects from the concept phase to investment opportunities. Businesses called development companies, play that role by identifying power generation opportunities, gauging the fundamental market characteristics, engaging with governments and electric utility companies, conducting feasibility studies through dedicated consultancy firms, and completing all required activities to transform power generation ideas into bankable investment opportunities (World Bank, 2016). Project developers work with financiers, 2 technology suppliers, engineering firms, legal counsel, and others to identify appropriate sites for energy projects, secure access to transmission infrastructure, interconnect facilities, and comply with government information reporting requirements (Enevoldsen & Sovacool, 2016; Rohankar, Jain, Nangia, & Dwivedi, 2016). Power project development is viewed as an entrepreneurial activity subject to risks and requiring an ongoing investment of time, financial resources, and political resources to promote projects.
In sub-Saharan Africa, there is a high failure rate of power project development companies, resulting in a significant loss of money (Eberhard et al. The intent of this study was to address critical success factors of power project development companies in sub-Saharan Africa. Problem Statement Private investors are not capitalizing on the opportunity of more than 20 USD billion per year in the electricity generation sector in sub-Saharan Africa (Ouedraogo, 2017). Less than 20% of power generation projects reach completion, and 35% of completed projects face arbitration, financial distress, or change of contracts within the first 5 years (Eberhard et al.
The general business problem was a high failure rate for power project development businesses in sub-Saharan Africa. The specific business problem was some executives of power project development companies lack strategies to conduct successful businesses ventures in sub-Saharan Africa. Purpose Statement The purpose of this qualitative multiple case study was to explore the strategies that executives of power project development companies in sub-Saharan Africa use to 3 operate successful businesses in sub-Saharan Africa. The sample population included four executives who had successfully developed independent power generation projects in sub-Saharan Africa in the past 5 years.
I collected data through open-ended interview questions. This study may contribute to social change by enabling more successful power generation businesses in sub-Saharan Africa, and thereby provide electricity to many of the 620 million Africans who currently lack access. Nature of the Study I used a qualitative case study design to answer the research question. Qualitative methods are instrumental in exploring contemporary, real-life situations, understanding a phenomenon, answering questions, and capturing descriptions of human experiences (Houghton, Murphy, Shaw, & Casey, 2015; Runfola, Perna, Baraldi, & Gregori, 2017).
The focus of this study was to explore strategies executives of power project development companies can use to conduct successful business ventures in sub-Saharan Africa. Therefore, the qualitative method was suitable. The quantitative method did not suit the needs of this study because this method involves collecting numerical data, testing hypotheses, and finding potential relationships between two or more variables (Watson, 2015); testing a hypothesis was not the goal of this study. The mixed-methods approach combines the quantitative and qualitative approaches in a single study and is used to compensate for the limitations of quantitative and qualitative methods (Almalki, 2016).
The mixed-methods approach did not suit the requirements of this study because it did not require quantitative research. 4 The goal of a qualitative case study is to make sense of a social phenomenon in its natural setting through classification and analysis of data related to that phenomenon and exploration of a bounded system over time through detailed, in-depth data collection involving multiple data sources in a rich, real-life framework (Gaya & Smith, 2016; Houghton, Casey, Shaw, & Murphy, 2013). A multiple case study was the most suitable design to explore strategies that supported successful power project development ventures in sub-Saharan Africa. Schmidt (2016) asserted that the phenomenological research designs are used to achieve a deeper understanding of a given phenomenon by describing structures of gained experiences; therefore, a phenomenological design was not appropriate for the study.
The grounded theory design is used to generate new theories, going beyond descriptions of individual lived experiences (Urquhart & Fernández, 2016). The objective of the current study was not to develop a new theory; therefore, the grounded theory design was not suitable. The ethnographic design provides a framework for a cultural study of specific groups in which researcher can collect interview data in a traditional setting over a sustained period (Cahyadi & Prananto, 2015; Lewis, 2015). The ethnographic design was not suitable for this study, which focused on the strategies, executives of power projects development companies use, rather than on the culture of a certain group.
Research Question The overarching research question for this study was the following: What strategies do executives of power project development companies use to conduct successful business ventures in sub-Saharan Africa? 5 Interview Questions 1. What are the most significant challenges faced when developing power projects in sub-Saharan Africa? 2. What critical steps did you follow during the process of developing a power project in sub-Saharan Africa? 3. What are the critical success factors when developing power projects in sub- Saharan Africa? 4.