Energy Consumption Per Capita — Part 2

Geopolitics Explained

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The Geopolitical Economist

11 min readJun 13, 2024

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Deep Dive Into India’s Energy Profile, And Lessons Somalia Could Learn

Contents

Introduction
Developing Example: India
How India Became The Powerhouse It Is Today
Lessons For Somalia
Concluding Remarks

Bitesize Edition

Last week introduced the concept of energy consumption per capita, through the scope of Somalia, our chosen example of an underdeveloped country. This week, we’ll continue exploring the concept through the world’s most populous country: India.
Somalia found itself in an unfortunate position where its population was increasing at a faster rate than GNI per capita. As a result, the quality of life in Somalia isn’t increasing. Will India, with its growing population, have a GNI per capita growth higher than its population growth, indicating an improvement in quality of life?
If India’s quality of life is improving, what energy sources is it relying on to do this? Through analysing their energy profile, and strategies used outside the energy sector, can Somalia learn any lessons from the Indians? Find out more below.

Introduction

Last week, I covered Somalia as an example of an underdeveloped country. You can find the link to that below, along with an explanation of the history of energy and why energy consumption per capita is a proxy for quality of life:

https://geopoliticsreport.substack.com/p/energy-consumption-per-capita-part

Developing Example: India

In 2021 data, India had 99.57% of its population with access to electricity. This has risen dramatically over the last few decades, with just over half the population having access to electricity in 1993.

71.1% of the population in 2021 had access to clean cooking fuels, rising from 11.2% in 1990.

Energy use per person also continues to rise dramatically, at 7143kWh per person in 2022. This compared to Somalia’s energy use per person of 217kWh in 2021 means those individuals in Somalia use 3% of the energy a person in India does.

One kilowatt-hour is enough to power a 100-watt lightbulb for 10 hours. So, the average person in Somalia could power a 100-watt lightbulb for 2170 hours, or just over 90 days. A person in India could do the same for 71430 hours, or 2976.25 days. I hope this highlights the stark difference in energy use in these two countries.

Per capita electricity generation is 1377kWh per person in India, compared to 22kWh in Somalia. Another interesting aspect is India’s per capita electricity generation continues to rise, whereas Somalia’s is decreasing. What can be done to turn this trend around for Somalia?

Electricity generation in India for 2023 was 1967.9 TWh. The last available data in Somalia in 2022 put electricity generation at 0.38TWh. This is a stark difference in electricity generation capabilities.

As we’re exploring energy consumption per capita, let’s look at population and gross national income in India.

India’s population currently sits at 1.41 billion people (2021), officially overtaking China last year as the most populated country on the planet. In 1990, India’s population was 870.45 million.

Gross national income per capita sits at $6970 per annum (2022). In 1990, it was $1799.

Population Increase = 61.98%

GNI Per Capita Increase = 287.44%

As we can see, although India has experienced high population growth, its GNI per capita has increased at a faster rate. As a result, the quality of life in India has risen. This has given India more options for pursuing economic growth. As we discussed last week, energy = life, and energy is a key component of any economic growth.

The GNI per capita of India in 1990 would place them just above the classification of an underdeveloped or low-income country, which is equivalent to a GNI per capita of $1045 or less. India finds itself now as a medium-income country, classified as a GNI per capita between $1045 and $12695.

So could Somalia look at India’s progress, especially over the last three decades, and take some lessons to apply to its own country? This calls for a deeper look into the strategies India used to become the fifth-biggest economy in the world today. The exciting thing is India has much more free air to run into to realise further economic growth. Let’s dive into it.

How India Became The Powerhouse It Is Today

The spark that made this change was the 1991 economic crisis. India found itself in a balance of payments deficit, meaning it was importing more than it exported. Their foreign exchange reserves in 1991 dried up, and India could barely pay for three weeks of imports. India secured an emergency loan of $2.2B from the IMF, with 67 tons of gold used as collateral. This gold was secretly transported by air to the Bank of England (47 tons) and the Union Bank of Switzerland (20 tons). Interestingly, it was only two weeks ago, on May 31st, 2024, when India moved back 100 metric tonnes of its gold that was stored in UK vaults. It was the largest such move of gold made by India since these 1991 transportations.

India also devalued the rupee by 9% on the 1st of July 1991, and a further 11% on the 3rd of July 1991.

Photo by Ishant Mishra on Unsplash

After the economic crisis, the government commenced a policy of economic liberalisation. The country was made more attractive to private businesses and foreign investment, with much of the red tape and regulation being scrapped. They also reduced import tariffs and cut back on spending.

This occurred at an opportune time, with globalisation in full swing in the 1990s. It also provided millions of jobs for the Indian population.

Back in 1995, ICT made up 5.53% of India’s exports and was worth $2.13B. Today, 30.11% of India’s exports are ICT, equal to $192B. Other booming sectors include telecommunications, software, pharmaceuticals, and biotechnology.

So, to summarize, how did India do it? India played the long game. It looked for a gap and it provided a good or service that people needed for cheaper than the competition. It didn’t overregulate its important sectors, specifically the ICT services sector, and as a result, it flourished from foreign investment and domestic economic activity from the jobs created.

India also experienced rapid urbanisation during this period which had been the trend since independence in 1947. Urbanisation was fuelled by industrialisation, commercialisation, increased employment opportunities, better education, and the growth of the private sector after 1990.

Photo by Atharva Tulsi on Unsplash

Urbanisation, globalisation, and economic liberalisation policies improved living conditions for millions in India, with urban populations benefitting much more than rural equivalents. It is predicted that by 2030, over 40% of India’s population will live in cities. Some cite this as a negative of India’s period of economic liberalisation, with the rise in inequality between urban and rural dwellers, and the rich and poor.

One thing is clear, the economic strategies of the 1990s have put India in an extraordinary economic growth trend and have improved the quality of life for many in its population. Looking at this, can Somalia learn any lessons?

Lessons For Somalia

What gaps could Somalia look for as India did, or what global situations can it take advantage of? Back in 1994, an article in the Washington Post was published, titled “A daring few are bullish on Somalia”. They were embroiled in a civil war at the time, saw the UN withdraw a year later, and are still in a period of civil war. This bullish age for Somalia didn’t come at the time of the article, so let’s explore their situation now to see if now could be Somalia’s time.

The current iteration of the civil war is against terrorist groups Al-Shabab, and Islamic State, but the Somali government is backed by the United States. There also exists Somaliland that wants independence from Somalia.

Back in February, the United States announced it would build 5 new military bases for the Somali army to counter extremist groups. The African Union was enacting a peacekeeping mission in Somalia (ATMIS) before this but scaled back its presence. The US filled the gap. Terrorism is one of the biggest issues Somalia faces domestically, but the United States clearly sees some advantages to getting involved here. The first reason that pops into my mind is geography.

Photo by Kyle Glenn on Unsplash

Somalia is located on the Horn of Africa, at the exit of the Red Sea and bordering along the Gulf of Aden. Currently, the Houthi Rebels are disrupting trade through this route and are looking to supply weapons to Al Shabab in Somalia, likely another move to undermine US interests in the region. The Houthis are equipped with missiles and drones and would greatly bolster the power of Al-Shabab, who usually utilize smaller arms and custom-made weaponry.

Somalia, if built up from a stable, peaceful base, has the potential to become an important hub for regional trade in Africa, and further afield. Of course, this is easier said than done and the issue of terrorism has to diminish for this to occur. The Global Terrorism Index in 2023 had Somalia 7th placed out of 163 countries, a drop of 4 places from the year prior, but still incredibly high on the index. The country has been in the top 10 countries on the terrorism index every year since 2011.

If we can foresee a potential world where Somalia eradicates its problem of terrorism, what changes could it make to improve the quality of life for its population?

Outside becoming a trade hub, they could also undergo urbanisation. In 2050, Somalia is predicted to have a population of over 36 million people. With an urbanisation rate of 7.2% per annum, Somali citizens are already making the transition to urban life. This could be sped up further through an increased labour force being drawn to Somalia’s cities, such as Mogadishu. This would be necessary if Somalia was to undergo a period of future industrialisation. If jobs can be provided for citizens of Somalia in a population where 75% of the total population is under 35, it could be a supporting wind for economic growth for decades to come.

The country has also been part of the IMF’s Heavily Indebted Poor Countries Initiative (HIPC). They completed this program in December 2023, reducing external debt from $5.2B in 2018 to less than $600 million today. A key driver of this has been increasing domestic revenue, which is still low but is trending in the right direction. Much of this is coming from grants which will eventually decline, and so Somalia needs to find alternatives.

The key to all of this is energy. How can Somalia take advantage of its geography and environment to secure greater amounts of energy to fuel this improvement in the quality of life of Somalians?

This is going to come from fossil fuels, due to the ease of access and cost-effectiveness. Wind and solar facilities are expensive and have to be built in the country, usually by private companies, as discussed last week. Even if private companies can be attracted to invest, these renewable facilities will be small-scale and few and far between.

How do I know Somalia, or any underdeveloped country, will use fossil fuels if it is to advance its economy? Because India did the same thing back in the 1990s and still is to this day.

Of course, Somalia has internal problems, such as the terrorist group Al Shabab and its conflicts with Somaliland and Ethiopia, that will likely limit its chances of escaping the grasp of being a low-income country. This is limited even further if an independent Somaliland takes with it many of the opportunities Somalia possesses as a trade hub for Africa. Somalia would also lose the city of Hargeisa. If the nation wants to advance, these issues will need to be addressed without any adverse effects worsening the situation. This won’t occur anytime soon, but US security involvement is promising.

Concluding Remarks

If a nation is to advance from underdeveloped or developing status alone, it will likely use fossil fuels to do it, as India still does. This demonstrates that developed nations or private enterprises will have to provide aid to developing and underdeveloped nations if they want to clean up our global energy sector.

Somalia’s problems are deep, and its current economic growth isn’t improving its quality of life. For those nations like Somalia, the easiest, cheapest, and fastest way energy can be accessed and established for utilization is fossil fuels. It will remain that way until cleaner energy sources become the easiest, cheapest, and fastest.

Next week, we’ll look at the energy profile of the United States and compare it to that of India. Just as Somalia could look at India’s progression over the last three decades and take some lessons, how could India do the same when looking at the United States, if at all?

Does the United States’ position in the world come down to more than energy, with geography and overarching geopolitical theories, such as Power Transition Theory and Hegemonic Stability Theory playing a key role? Find out more next week.

Also, if you have any other reasons to be bullish or bearish on Somalia, let me know below!

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Energy Consumption Per Capita — Part 2

Written by Geopolitics Explained