Don’t Catch Up, Leap Forward
In the final part of her interview, Managing Director of Lagos Deep Offshore Logistics Base (LADOL) Amy Jadesimi talks about how Nigeria could leapfrog traditional gas distribution systems, and how local SMEs need support to contribute to climate change mitigation.
What solutions do you see for better gas distribution systems and connections between suppliers and off-takers in Nigeria?
We must consider the impact of our political situation and the disruption of supplies from the Niger Delta because of the militants. We need a political solution for these problems. We know our government is working on that, though it is not a straightforward problem to solve.
However, from a market perceptive, I think we should think broader than we have been thinking. Nigeria is now rolling out an old school traditional gas distribution network, and I think we should not do that. I think we should leapfrog. There are new solutions that empower individuals, SMEs and larger companies to develop micro, mini and macro solutions at the regional level, sometimes at street level. Such immediate solutions maybe less efficient or more expensive today than a fully developed old style pipe system – but if we embrace immediate solutions, we generate jobs, create wealth to invest in new solutions and technologies. We can create new markets and embrace new solutions today or wait two decades for the rollout of a pipe network that will be obsolete before it is completed. Bringing the Nigerian private sector into a much more deregulated but value driven environment will generate billions of dollars.
Multimodal distribution has already been adopted by the transport sector. We should do the same for oil and gas. Vessels, inland waterways, mini LNG plants, and mini storage facilities can be deployed by the private sector across the country. We should also look at renewable solutions (particularly solar) where it makes sense, especially in the north. Each state will need their own solutions, and we need to look at how these solutions can be implemented in the short, medium and long term. For example, in the short term you would look at what can be done to power a textile factory in Kaduna to provide economic benefits for the community immediately. In the medium term, you would look at how we can make it cheaper to power the factory. For the long term, we look at how we can reach the rural area surrounding the factory to provide power to the local population. If we look at this way as opposed to a western development model, we will be able to industrialize Nigeria immediately, instead of chasing huge projects with massive CAPEX commitments that tie up government funds for decades, take years to plan and even longer to execute. All these delays have already unnecessarily put off the industrialization of Nigeria.
How has the Copenhagen Accord impacted developing nations’ ability to rapidly improve their power and industrial capacity?
In Nigeria we are signing up to adhere to these carbon limits and so on, but we are not able to do that unless the international community lives up to its commitments. Sustainable industrialization in high growth low income countries requires a shift in investment to these countries. It also requires the international community to engage with our local private sector. We can’t afford these solutions on our own and the West can’t decide the pace and manner of our development. We need to invest in the solutions we want to prioritise and not just the ones they want to sell.
This theme was discussed at the World Bank annual meeting, and senior level executives at the bank agreed that they need to evolve from dealing with international corporations and foreign governments to dealing with real local private sector companies, and in particular with small- and medium-sized enterprises. Even LADOL, which was a $500 million investment, would only be medium sized by World Bank Standards and would so far have flown under their radar. The World Bank’s own report states that 80 percent of the 600 million new jobs that the world needs in the next 15 years will be created by SMEs. So, these are the companies that need sustainable, climate friendly solutions and support today.
What I increasingly hear from international funding organizations is that they are willing to change their thinking, and they are willing to finance projects that they previously considered un-financeable – i.e. to redefine bankability. They are willing to reach out to these smaller companies, but work urgently needs to be done on all sides to unlock this funding immediately, because where the climate is considered our mitigation strategies are already behind schedule.
Locally more could be done by our government, for example changing the regulatory environment to support the real private sector more and create a level playing field, so companies are assessed transparently on the value they add. Our banks need to change dramatically and focus on making money by lending to the real private sector as opposed to lending and trading with government.