It's Strategy and Full Implementation that Will Drive African Growth

While Africa holds some of the world's most valuable natural resources - including oil, gas, coal, uranium and critical minerals -, simply possessing these resources is not enough to drive sustainable economic growth. What’s required is the development and full implementation of innovative strategies that maximize value addition, foster industrialization and ensure inclusive growth across African economies.

Historically, Africa’s resources have primarily been exploited for export markets, with limited benefits flowing back into local markets. Take the energy sector, for example: despite holding 125.3 billion barrels of crude oil, 620 trillion cubic feet of gas and nearly 16.4 billion short tons of coal, Africa has the world’s lowest energy access rates. Over 600 million people lack access to reliable electricity while 900 million are without clean cooking solutions. Addressing this paradox demands a shift in strategy.

Prioritizing Local Markets Over Exports

In this regard, being strategic means cutting energy exports and prioritize local markets. Imagine the majority of oil produced in Nigeria, Libya, Angola, Gabon and North African countries is leveraged to meet regional demand first before directed to export markets. With some of the world’s largest oil producers, including the U.S., Russia and Saudi Arabia doing it; why aren’t African producers following suit? Strengthening local energy supply chains would not only improve access but also lower costs, fostering economic growth across the continent.

Advancing Local Value Addition

Being strategic also means investing in the local processing of oil and gas to produce affordable petroleum products. This approach would allow African countries to sell fuel at competitive prices compared to relying on international suppliers. For instance, the Dangote Refinery in Nigeria presents a significant opportunity for other West African producers to meet their refining needs. Similarly, countries in Southern Africa could take advantage of existing facilities in South Africa while also waiting to untap Angola’s growing capacity. Imagine the potential of the Equatorial Guinea’s Gas Mega Hub if all regional gas producers prioritize the program’s potential.

Fast Rollout of Energy Infrastructure

Being strategic means faster rollout of infrastructure – such as LNG ports - required to facilitate regional trading. We have countries like South Africa witnessing a shortfall in gas supply while countries such as the Equatorial Guinea and Algeria have excess gas to supply both international and regional markets. If Germany could develop over four LNG ports within a single year to receive LNG from the US, Norway and North Africa - following the Russian Ukraine war - why are African countries taking more time to develop such infrastructure to ensure regional trading.

Leveraging Innovative Financing

Being strategic means advancing the development and use of innovative local financial tools to advance oil and gas projects amidst the energy transition disrupting the flow of investments in the industry. The African Energy Bank and institutions like Afreximbank and the Africa Finance Corporation are steps in the right direction. However, greater regional cooperation - similar to the European Union’s initiatives and institutions like the European Investment Bank, the European Bank for Reconstruction and Development - could unlock more funding from public and private financiers for oil and gas projects. I want to see the African Union doing more to enhance access to local capital for African energy projects.

Empowered National Oil Companies

Being strategic means African National Oil Companies (NOCs) investing in their capacity to independently lead exploration and production activities. By combining decades of experience from partnerships with global firms with new investments in local talent and technology, NOCs can drive resource development more efficiently. This independence would reduce delays in exploration and monetization, ensuring quicker returns on investments. It is not healthy for African NOCs to wait for external parties to make discoveries, only to secure a small stake in the monetization of the discoveries. If Saudi Arabia’s Aramco can do it, why can’t African NOCs do the same?

Maximizing the Potential of Critical Minerals

As the global energy transition accelerates and the demand for critical minerals skyrockets, Africa, with a 30% share of global reserves, must prioritize local beneficiation and manufacturing. For instance, the Democratic Republic of Congo - home to some of the world’s largest cobalt and copper reserves - could lead in producing components for electric vehicles and energy storage systems. This shift would not only generate revenue but also enable local industries to flourish, addressing issues like low energy access rates and employment.

Seizing Opportunities Amid Shifting Demand

The demand for critical minerals evolves rapidly with technological advancements. Five years ago, lithium was not in the spotlight, but today it is central to the energy transition. African producers must act swiftly to exploit their resources, ensuring they capitalize on surges in demand before new technologies shift the market focus. Just imagine a new technology for green hydrogen production is developed, what would happen to South Africa’s vast PMs resources?

The same way western, Asian and Middle Eastern governments have strategically exploited their resources, established infrastructure and maximized local benefits, Africa can do the same to boost energy access, create local employment, shape GDP growth, gain financial independence and curb reliance on foreign aid.

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