Note: this is the second installment of ECP’s interview with IIA. The first component can be read here.
Energy, Capital & Power spoke with Seynabou Guisse, head of Finance at Invest in Africa about current trends in the MSGBC region including local content, company programs and future trends we can expect to see moving forward.
How has IIA’s business partnership evolved and progressed in since 2015?
Indeed, the business linkage program or business partnership program as we call it here in Senegal is a major undertaking for Invest in Africa- costing about $3.5 million. The African Development Bank recently provided a $1 million donation to support it, with other corporate sponsors joining with IIA to finance the remainder. The program selects 120 SMEs and trains them to meet the minimum requirements of oil companies like BP and Woodside to bid on their contracts and achieve access to major financing. It was started in Ghana in 2014 but now runs in Senegal as well, which is where the Africa Development Bank’s generous donation was targeted. Financing like this makes a tremendous difference for IIA as a charity in providing its program free of charge to local SMEs who desperately need it, and the business linkage program is a prime example of both how effective and how costly these initiatives can be, so we are looking for other banks and investors to donate and support it.
In what ways do you see Senegal’s policy and strategy shifting for the energy transition?
Although Senegal is no leader in renewables, it has rapidly rewritten its power supplies in just the past few years and is making great strides forward in the space. The Emerging Senegal Program launched by President Macky Sall immediately on his rise to power saw to this, with specific programs implemented to promote solar, wind, and hydropower. We have a national agency- L’ Agence nationale de l’énergie renouvelable- which oversees these projects and have pioneered transnational cooperation with the Organization for the Development of the Senegal River (OMVS) and the Organization for the Development of the Guinea River. These multilateral bodies not only govern integral water resources for Senegal and its nations, but also design and administer infrastructure projects including hydropower generation. For the rest, gas is the fuel source of the future as we transition away from oil. Here in Senegal, the 125MW coal power plant at Bargny is being converted for gas, and the rest of the industry is following, in both upstream and downstream sectors.
How does IIA contribute to the nationalization of Africa’s energy industry and stronger local content laws?
Firstly, nationalization and local content must be treated separately. Here in Senegal, we’ve been working towards nationalization of industry since our independence, NOC’s like Senelec and SONES founded at this time. It was as the country grew and developed that its industry became the international IOCs’ playground. Still, Senelec maintains its monopoly over distribution, so the downstream energy sector and distribution is more nationalized, but international investment and technologies are important for upstream oil and gas since these fields are so resource-intensive.
As for local content, since discovering oil and gas in Senegal, we’ve worked hard to see Senegalese companies incorporated into these hydrocarbons’ value chains. International support is still essential, but works should be grounded in the local economy. Under the Senegalese mixed regime, a significant fraction- though under 50%- of capital for companies in the sector must come from within the country. Under the exclusive regime, a majority of capital must be Senegalese. In either case, IIA intervenes by connecting the big players like BP and Woodside or their contractors such as Haliburton and Schlumberger with local SMEs to integrate into their value chains- a legal requirement following the revisions to local content laws as of February 2019.
Lastly, what can be expect to see from Invest in Africa over the next decade as it expands and consolidates its work across the region?
Invest in Africa is a powerful connector that is here and here to stay, fighting the good fight for SMEs. Since setting up shop here in Senegal, we’ve raised $4 million in financing for SMEs but we hope to reach $1 billion by 2027, adding new and larger partners to our network, supporting the country’s nascent energy industry as it grows. The discovery of hydrocarbons is still a recent thing for the country and MSGBC region, so Invest in Africa will be there throughout the entire journey, supporting as Senegal and its neighbors develop and reap the benefits for economies and for communities.