Where Stability has a Precedent, It Can Prevail

AOP talks to Ann Norman, General Manager for Sub-Saharan Africa of Pioneer Energy, about the obstacles Africa faces in attracting investment to key sectors, like power, and what it takes to invest in less stable environments. 

In your experience, what are the biggest obstacles as Africa attempts to attract FID to power and infrastructure projects?

Bureaucracy in government and bureaucracy in business — those are the biggest obstacles. A lot of people would say corruption, but I think corruption is an offshoot of that big, monstrous complicated bureaucracy.

Every investor looks at Africa and says, ‘Wow this is just a goldmine.’ But when you go there and you start to work within the system, or the lack of a system, you become so exasperated. It is a rare company that will stick around.

And we are seeing this trend in even more developed countries like Nigeria.  Nigerian National Petroleum Corp., for example, it’s a huge operation which can be a nightmare to maneuver through. My perception is that often it’s decision by committee, and it seems there is little accountability behind decision-making in middle management and field production level. It impedes progress.  To put this in the context of power projects, in order to get power you must get the gas. To get the gas you have to work with the oil producers, especially the marginal field producers, and therefore you must work with NNPC.

To be fair to NNPC and Nigeria, however, it’s not just them, this is a problem we face in many countries in Sub Saharan Africa, and as I said earlier, it’s not unique to government operations, but also often in private sector companies as well. It’s a problem we collectively created and now we need to collectively solve.

To me, this is the biggest impediment. Get rid of the bureaucracy and red tape, and get rid of government involvement as much as possible to let competition and a free market work their magic. Allow private companies take over and do what they do best — which is make things work, both operationally and fiscally.

Achieving universal power access is one of Africa’s greatest challenges. In your opinion, what steps need to be taken on a regional level in order to boost generation access for the population?

Again, it boils down to bureaucracy. We have the Southern African Development Community, the East African community, ECoWAS, etc., and these regional organizations have done a pretty good job on paper of interacting well with one another, but that is not really happening in reality.

In reality, the bureaucracies aren’t talking. They aren’t going past the borders to figure out solutions to problems, though I think this is beginning to change. For example, the presidents of Equatorial Guinea and Ghana recently signed a deal to provide LNG from Equatorial Guinea to Ghana to power their electricity, and I credit that to the progressive leaders of those two countries. They are very progressive, they move fast and they don’t allow bureaucracy to overburden progress.

When you can get outside your border and increase problem-solving capability within your region and with your neighbors, I think things begin to fall in place because you are communicating.

Domestic stability is inherently dependent on job production, energy security, etc. How do you encourage investors to go to countries that lack stability and bring with them the variables most tied to creating domestic stability — investment, jobs, power, etc.? How do you encourage investors to enter these less stable environments, such as South Sudan?

One mistake that we all make as investors is lumping everyone in the same category, and trying to solve problems in Ghana like you would in South Sudan and vice versa. They are not the same, and they require unique solutions. Africa is not one country, we need to stop talking as if it is.

In a conflict zone, and in a post-conflict state, until there is real political stability, which is dependent on the economy, you have to engage with the government. In the case of South Sudan, if I want to come in as an investor, the very first thing I would do is go straight to the president and the security teams to determine if my investment can be protected. The government’s job is to stay out of the business and allow it to thrive by providing protection. If that is in place, and the investor knows they can depend on their operations to be secure, then some investors will be willing to invest. And then you build from there, the longer new investments are secure, the more appetite will grow, and you will see more investment flow into these countries.

However, that situation is not for every investor. It takes a pretty hardy risk-taker to do that. You see that in people like Prince Eze of Oranto Petroleum — those are the kind of investment he loves, and he knows they are risky.  But he wins on them because he knows how to work with the security forces and the government in place to make that situation work.

And when one person can do that, the rest will follow. If stability happens once, it begins to build on itself.

What do you see as the future investment for Africa?

I firmly believe the last place to find big investments with large profit margins is on the continent of Africa. It is the final frontier for people who are willing to go, work hard and work smart. It’s not for the faint of heart, nor for the “armchair quarterback” (if you will allow me to make an American football reference), who sits at a desk in New York, Paris or London, and tries to call the shots from there.  You have to show up. Go. Pick up a shovel and start moving that rich African earth yourself.  What will remain are winners who establish, and are establishing now, a legacy that will live on and on.  And that is what Africa is — a legacy.