Why Angry Voters Could Destroy Southern Africa’s Energy Trading Market

Jeannette Ilunga, Africa Works, LUSAKA | Friday 28 November, 2025 — The energy trading market in Southern Africa is under threat, not from technical failure or financial collapse, but from politics and perception. Public sentiment has turned hostile toward traders who are seen as profiting from crisis without owning assets or building infrastructure. Politicians respond to public anger, and when enough voters believe traders are extracting wealth rather than creating value, regulatory reversal becomes inevitable. The technical and commercial success of the trader model may not matter if the political foundation beneath it crumbles. This vulnerability was laid bare during a panel discussion at the ZimZam Energy Summit at the Radisson Blu Mosi-Oa-Taunya Hotel in Livingstone, where industry participants confronted the structural weaknesses and political dangers threatening the market they have built.

You Have Laptops, Not Turbines

An unidentified questioner from the floor delivered the most pointed challenge of the session. “People don’t like you,” the questioner said, addressing the traders directly. “They are saying that you reap where you didn’t sow. They say all you have are laptops, you have no assets and you are making more money than the generators. I think your greatest danger is actually that sentiment.”

The image is potent and politically lethal: traders sitting in air-conditioned offices with computers, earning margins on transactions involving infrastructure they neither built nor own. It does not matter whether the characterisation is fair. What matters is that it resonates. Voters see power shortages, high tariffs, and companies that appeared during the crisis now reporting profits.

Mr. Alpha Mwale, Managing Director at Lunsemfwa Hydro, acknowledged the danger without evasion. “Public sentiment can change policy,” Mr. Mwale said. “Public sentiment can actually reverse the same policies that are enabling trading.” He identified the root of the perception problem: traders participate only in the high-tariff industrial markets where margins exist. They are absent from the domestic low-tariff market where ordinary voters buy electricity. Traders serve mines and factories but not households, which makes them look like opportunists rather than essential market participants.

The political risk is not hypothetical. Governments facing voter anger over electricity costs will look for targets, and traders—visible, profitable, and lacking popular constituencies—make convenient ones.

Why Traders Cannot Reach Your House

The absence of traders from the domestic market is not a choice. It is a structural impossibility created by two failures. First, the tariff structure is not cost-reflective, which means pricing does not cover the actual cost of supplying power to residential customers. Traders cannot profitably serve a market where tariffs are set below cost for political reasons.

Second, the distribution network itself is not configured for trading. “The circuit configuration in the distribution network is not ready for trading,” Mr. Mwale said. “You cannot segregate this neighbour from the other neighbour.” The network was designed for a single utility supplying everyone uniformly, and retrofitting it for competitive retail supply would require investment that no one has funded.

This creates a vicious political cycle. Traders cannot serve households because the infrastructure prevents it. Households therefore see no benefit from open access and view traders as serving only wealthy industrial customers. That perception fuels political opposition to trading, which makes policymakers less likely to invest in the distribution network upgrades that would allow traders to serve residential customers.

When Constraints Become Incubators

Emmanuel Chilombo Kalenga, Chief Executive Officer at Enterprise Power Zambia, identified transmission capacity as a binding constraint that threatens to choke the market’s growth. “The solution is not only sitting with generation,” Mr. Kalenga said. “Transmission needs to receive the same attention.” The activity that trading has brought into the region has exposed the limitations of cross-border transmission infrastructure.

Sherrill Byrne, Head of Power and Infrastructure Finance at Standard Bank, offered a contrarian view: transmission constraints, while problematic long-term, might actually serve as an incubator for the new industry in the short term. By limiting how much power can flow across borders, these capacity limitations prevent excessive supply from flooding the market too quickly, which keeps prices viable for generators. “Transmission constraints can actually protect at least the IP side of things because it prevents too much supply getting onto the market too quickly,” Ms. Byrne said.

Ms. Byrne also flagged transfer and convertibility risk as critical. When revenue is in local currency but debt service is in hard currency, exchange rate depreciation can turn viable projects into distressed assets overnight. “We see transfer and convertibility as a critical risk from an African context,” she said. “What we see there is exchange rate depreciation. Suddenly they can’t afford the power and then you have payment issues.”

The Market with No Referee

Ms. Nsofwa Sikanyika, Chief Executive Officer at Kanona Power, identified a regulatory failure that feeds directly into public suspicion: the absence of an independent system marketer and operator. Without an ISMO, transactions remain opaque, and charges—particularly wheeling fees for moving power across the grid—vary in ways that market participants struggle to predict or verify. “The independency of the system operator needs to be addressed,” Mr. Sikanyika said. “Without that, those opaque corners will still be there.”

Mr. Mwale reinforced the point, describing two parallel markets operating under different transparency standards. The Southern African Power Pool (SAPP) runs a transparent market with clear pricing. Bilateral trades between utilities and traders operate with far less clarity. “We are running two parallel markets. You have the SAPP market and then you have bilaterals with the traders or off takers,” Mr. Mwale said. “There’s no clear transparency on how we are arriving at bilateral wheeling charges.”

He advocated for adopting the SAPP postage stamp method—a standardised, distance-independent wheeling charge—for bilateral transactions. The lack of such standardisation creates room for discretion that looks like favouritism or extraction. In an environment where public trust is already fragile, opacity is politically toxic.

Success Without Legitimacy

The dichotomy facing Southern Africa’s energy traders is that their operational success has made them politically vulnerable. They have delivered power when utilities could not. They have mobilised capital that governments lacked all while keeping industrial customers operating and cross-border trade flowing.

Public opinion is shaped by timing, and traders making money during a difficult period has coloured much of how they are seen. Their emphasis on industrial clients doesn’t help—understandable in market terms, but easily viewed as favouring the big end of town. The fog of unclear charges and incomplete regulation adds to the confusion, and without visible assets to point to, much of their work stays out of sight.

Trying to make the case for traders often means explaining a structure that feels distant from people’s daily lives, especially when the only thing the public wants to hear is that electricity will cost less. Few politicians are prepared to take that on, which makes the current trading framework fragile and, in many ways, simpler to dismantle than it was to establish.

On the surface, many of the sector’s challenges have clear technical solutions. Transmission can grow with new investment, distribution networks can be reinforced, tariffs can be made truly cost-reflective, and an independent system operator would bring much-needed transparency. However, even if all of that were achieved, one obstacle would remain unchanged: traders are unpopular with voters, and every politician knows it.

Whether the market survives depends less on its economic efficiency than on whether its defenders can shift public perception before policy reversal becomes irresistible. That is a harder problem than financing power plants, and right now it is not clear anyone has a solution.

Article provided by Financial Insights Zambia