The theme of Africa Oil & Power, Catalysts for Change, encompasses the major changes that African governments and firms are undergoing in 2017, and the significant developments in the oil, gas, power and finance industries in response to the oil and gas price down-cycle. We asked the leading voices in the African oil, gas and power business to give us their views on the drivers for change and the challenges to established practices in the energy industry.
Chair, Africa Practice
There are a lot of factors that impact Africa’s direction and the speed of its evolution, but politics, both internal and external, will play a great role. For example, just before the US presidential election I was at a conference with a number of representatives from all over Africa and the conversation turned to how the US election was going to impact Africa. Many Africans had an interesting perspective in that, broadly speaking, Africa’s interests might be better served by a Donald Trump win. That was not necessarily my perspective, but it was an interesting one. They believed that a strong, commercially-focused US administration is good for Africa’s commercial development. They get the impression that the Trump administration will be business friendly and may encourage a strong, outward pursuit of opportunities. I believe there will be a strong focus in the US on encouraging US and international business.
The change in Washington, DC may have some positive impact on developments in Africa, and certainly there will be strong support for US companies that are doing business in Africa. I think there could be a new look at the relationship between Africa and the US, broadly speaking.
Other things that are happening which could have an impact on Africa’s development are just the normal variables, including the continual evolution of Africa’s population internally. Africans have as much access now as citizens in other countries to information about the way commerce should work, the way industries work and the way governments work. That filters down to a greater expectation from the population, and particularly among the voters in that population, that governments will respond in a way that reflects the common good.
The surprising results in the elections in The Gambia are a prime example of this expectation, and there are some upcoming elections that are quite important and indicative of the evolving political mood.
The need is just massive when you talk about Africa’s energy spectrum: there is a need for energy at the domestic level; there is a need for appropriately priced energy at the industrial level; and all of that is underlined by the fact that energy is a critical enabler for any economy — it is not only needed for industry, but for agriculture and food sufficiency and clean water — and African countries are no exception.
Africa is experiencing rapid population growth, as well as a rapid modernization of soft and hard infrastructure. In Africa, we are talking about a population that is very young and is aspiring to be in the middle class or better. So you have to be able to deliver an appropriate infrastructure to accommodate the needs of that growing middle class. This has to be accompanied by an appropriate energy system, which will include electricity and also energy in the form of fuel utilized for the conveyance of goods and movement of people. The growth and development of Africa is completely tied to how well, how robustly and how quickly the energy system can be brought to market.
Southern Africa, specifically, faces a challenging energy deficit. There isn’t a single country in Southern Africa that can claim energy sufficiency. That lack of supply is often augmented by either purchasing energy from neighboring producers .The importance and sufficiency of an organization such as the SADC Power Pool can therefore not be over emphasized.
The inquiries we have been getting from foreign direct investors are about power supply. Once they have made a decision to invest in a country, the next question is about infrastructure. Is there sufficient power infrastructure to sustain their chosen sector and at what price is that power accessed? Power is really the lynchpin of all the other needs, it is the basis for achieving realistic economic development in Africa.
The catalyst for change, in my opinion, will be addressing this demand for energy and filling the infrastructure gap. We are seeing a lot of regulatory and policy intervention by various African governments to make it easier for people who have the expertise and the knowledge to bring in the energy supply, be it in alternative energy or other sources of power generation.