Watts into wealth: Why power is the hidden driver of equity in emerging markets

8 Jun 2025

Finance may be flowing and talent abundant in emerging markets like South Africa – but the real bottleneck to enterprise growth isn’t capital. It’s kilowatts.

In much of sub-Saharan Africa, access to finance has long been seen as a key bottleneck – but this is changing. Microloans, fintech platforms and even early-stage capital are increasingly available, at least in theory. The more urgent question is: once the money lands, what powers the growth?

I’ve previously argued that unlocking Africa’s potential requires bold capital and a willingness to embrace risk.

Read more: The capital problem Africa won’t talk about that America solved a long time ago

But there’s another side to the equation that we don’t talk about nearly enough: power. Literal, electrical power.

We’ve built frameworks to support entrepreneurs, subsidise credit and encourage local ownership. But if a welder in rural Free State can’t run his tools, or a small-scale farmer in the Eastern Cape can’t refrigerate her produce, or a township café in Gauteng can’t stay open past sunset – then there is reduced production.

And that means a lower rate of profit, which in turn limits equity value creation.

Based on decades of experience in the fields of finance and energy, I have come to recognise a simple truth, which can be expressed as a formula:

Power – measured in Watts – is the silent foundation of wealth creation.

The real equation: power → production velocity → equity

All economic value comes from transformation. Think of a tree, which can be transformed into furniture; grain which can become bread; or a digital code which can be made into a trading platform. Every transformation – mechanical, chemical, digital, agricultural – requires energy (measured in kilowatt hours).

But it’s not just the quantity of energy that matters. It’s how fast that energy can be applied. That’s what physicists call power: the rate at which energy is delivered. Economic output has an important time base (humans want stuff transformed quickly). It doesn’t help to change something over many lifetimes when I need it now. Time matters in economics.

In plain language: Economic performance depends not just on energy, but on the speed and reliability with which it’s delivered – i.e. power.

I’ve focused on electrical power, but the same logic applies to other energy carriers such as gas.

In business, a bakery with a 5kW oven can produce 10 times more than one with a domestic plug-in – assuming the power supply can support it. A data centre with patchy electricity can’t compete globally. Business performance is revenue over time – and power governs the time dimension.

Equity is the long-term accumulation of business performance. And power primarily determines how fast that accumulation can happen.

When we ask why some businesses thrive and others stall, or why some regions build ownership value and others remain fragile, we need to go beyond finance, skills or governance. We need to ask something more basic: How much energy is actually reaching that enterprise – and at what rate?

The overlooked constraint in emerging markets

In many parts of the world – especially across sub-Saharan Africa – we’re asking good but incomplete questions: “How do we fund more entrepreneurs?”; “How do we upskill the population?”; or “How do we attract investment?”

To make them complete, we can’t ignore the power factor: Can the businesses we’re trying to build even operate at full capacity?

Thousands of small enterprises in South Africa and across the continent run at a fraction of their potential. A welding shop with just 2kW from a solar panel can’t use industrial equipment. A food processor can’t scale without refrigeration. A tech startup with unreliable internet and daily power cuts can’t build customer trust.

These aren’t just minor hurdles. They are structural constraints — and they are governed by physics, not policy.

We need a shift in mindset. It’s not enough to talk about “electrification as access”. We must talk about “electrification as enablement”. The issue isn’t whether there’s a bulb in the room – it’s whether there’s enough current to run the tools of production at the required rate.

This is where the concept of “power-enabled throughput” becomes useful – measuring how much economic value is generated per Watt of power capacity. The ratio varies across sectors: heavy industry has lower returns per Watt, while digital services are more efficient. But in every case, the Watt is the rate-limiting input.

So when we ask why equity formation is lagging in the Global South, we should begin with a more grounded question: How many Watts are available to be turned into wealth?

What policymakers, investors and funders must rethink

If power is the silent driver of equity, then development strategy, investment priorities and economic policy must be retooled, mindful that energy infrastructure isn’t just social overhead – it’s capital formation infrastructure.

This means changing how we evaluate impact. Electrification efforts shouldn’t be judged solely on the number of homes connected or kilowatt-hours delivered or even the price of those kilowatt-hours. They should be measured by how much productive power they enable – the kind that runs machinery, powers tools, supports digital uptime and drives scalable enterprise.

Investors need to underwrite power as part of the business model. In many cases, investing in a business should include co-investing in its power system – solar kits, battery storage or even mini-grids. These are not support systems. They’re prerequisites.

For funders and development institutions, especially those working in blended or catalytic finance, this opens a new opportunity. Backing distributed energy is no longer just about sustainable development goals — it’s about unlocking investability. One dollar of reliable energy infrastructure may unlock multiples of that in long-term enterprise value.

But this will not happen unless we treat electrification as asset-building, not just service delivery.

The real unlock

We often talk about electricity as a basic right – and it is. But it’s also a multiplier of time, a lever for production velocity and a foundation for ownership.

In underpowered economies, business potential stalls not for lack of ambition but for lack of Watts. Enterprises idle. Ideas fade. Ownership never accumulates. Equity – in the financial sense – cannot form without throughput.

The real unlock for emerging markets may not lie in the next grant, incubator, or fund – but in the infrastructure that lets value flow at speed. The faster we deliver energy into productive hands, the faster those hands can build lasting value.

It’s time we stop treating power as overhead and tariff minimisation as the target. It’s equity infrastructure. And it’s long overdue for our full attention. DM

Dudley Baylis is a director of Bridge Capital, an independent M&A advisory, corporate finance, renewable energy and property advisory house.

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Business Maverick

The overlooked constraint in emerging markets

What policymakers, investors and funders must rethink

The real unlock