Africa: Still Rising?
The theme for AOP 2017 is “Catalysts for Change.” Rodney J. MacAlister, CEO of Monetizing Gas Africa, expands on the factors he believes will lead to change in the energy sector in the coming year.
My first thought is to what extent there remains consensus around the “Africa Rising” narrative. That is one of the preoccupying questions on investors’ minds. Was the upside potential exaggerated a few years ago? Is there a more balanced view taking its place? Is Africa situationally rising (in some places, not in others)? We are not seeing the dedication to good governance, after all, that was part of claiming Africa’s rise a few years ago.
There are plenty of reasons to doubt, but should we allow ourselves to become doubtful? Do we erase all of the gains that the optimism brought, or are there intelligent ways to lock in those gains? There are a variety of implications to that question.
One level down from that macro theme is the theme of Africa oil, gas and power: this theme holds that energy has a vital place in all other facets of development. If you listen to development institutions like the Gates Foundation, their message is that every life matters and they promote data-driven healthcare, education, agriculture — but what is the common denominator that all of those things require? Energy. Yet we know that two-thirds of the continent does not have access to electricity, so how are kids, especially girls, supposed to stay in school and not have multiple babies instead? How are you going to do everything that you need – power buildings, process and package foods, clean up cities, etc. – when it all requires energy? Our industry has a fundamental contribution to make towards all other factors of development.
So we need to remove barriers to investment. What would those include? The obvious constraints of government decision and cycle time, cumbersome processes and corruption lead the list. McKinsey did a report in 2010 on the Africa Rising theme, but they’ve recently come out with a modification of that report, and the interesting aspect of that report from our industry’s standpoint is that it identifies six different priorities which, if they are managed well, will all help Africa rise: mobilize more domestic resources, aggressively diversify economies, accelerate infrastructure development, deepen regional integration, create tomorrow’s talent and ensure healthy urbanization. What is evident is that these all depend on our sector performing well — we are integral to all six factors. If you look for meaning, significance and importance and a sector with high leverage, look no further than the African energy industry.
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 a sustained low oil price. 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.