Why oil and gas may make Africa the next big thing

Africa is one continent whose immense oil and gas reserves are expected to see it emerge as the new global hub.

Regulatory changes in the oil and gas sector together with a fast-growing energy demand from expanding local consumer markets prospect a significance economic growth and a related independence in the African energy-exporting countries, through affiliation with the Organization of Petroleum Exporting Countries body.

Oil and gas, have over the years been a primary driver of economic growth in Africa.

Oil exports can account for more than 90 per cent of revenues in the OPEC countries.

In a report published in July 2021 by Statista, the overall production of oil in Africa in 2020, including crude oil, shale oil, oil sands, and NGLs, reached 327.3 million metric tons.

Moreover, the African output of oil per day amounted to 8.4 million barrels in 2019, variation minimally compared to the previous year.

Nigeria was the leading oil producer in Africa as of 2020.

Oil production amounted to 86.9 million metric tons in the country.

Angola and Algeria followed with 64.5 million and 57.6 million metric tons, respectively.

Africa is a continent of many countries.

Think of the U.S. having 50 states and each state has its own money, economy, and goods and services – This is how much of Africa is.

Integration would establish a single market for goods and service.

It would bring 55 countries under one “economic umbrella.”

However, there is some hope as the continent is so collaborative today; the nations in Africa have unique histories and many things in common.

This includes religion, language, culture, and philosophy as well.

Influence is a very broad word but in many areas, Nigeria stands to be the most influential country in Africa.

Not only will collaboration enable pooling of resources and sharing of risks during the early stages of an idea, but it will ensure that the knowledge, networks and synergies that African countries have built over the past 20 years are appropriately leveraged.

This way, great ideas can flourish and tomorrow’s solutions can emerge.

Given the complexity of local oil and gas markets, finding the right local partners is crucial.

Partnerships may range from those focused on geographical and technical expertise to those that provide access to networks, channels and local decision-makers.

Local partners with on-the-ground experience can help entrants understand local business etiquette and culture.

These ‘softer’ elements are crucial to success.

Partnering with experienced businesses can help a market entrant navigate the local regulatory environment, overcome distribution challenges and avoid costly mistakes.

Taking on tech related collaborations and adopting digital technology could be the resilience these technologies offer to downturns and adverse consequences in Africa.

Players benefit from a coherent framework that helps achieve near-term business objectives, measures digital progression through stages of evolution, and offers a pathway to transforming the core of operations, real assets and the business model.

The complexity of the search for the right partner should not be underestimated.

Due diligence is necessary when evaluating potential partnerships, particularly in the context of mitigating the risk of unwittingly becoming complicit in corruption.

There are some encouraging indications from other markets around the world, where collaborative contracting has been around for a little longer, that it works; however, the delivery of infrastructure has its own challenges.

Infrastructure projects are long term, highly complex and costly, and often come with poor productivity, cost overruns and delays in Africa.

The return on investment is seen to be high-risk and long-term and infrastructure is therefore not an attractive proposition for many foreign investors.

South Africa’s Jinshan University professor of international relations Shelton said in an interview that one of the factors driving Africa’s economic growth is the demand for commodities from China.

China has promoted the demand for oil, natural gas and other raw materials.

The economic development of export-oriented countries has had a direct or indirect positive effect.

Africa is now undergoing profound changes with the help of China.

They are on the eve of economic take-off.

From 2005 to 2015, the average growth rate of African GDP was 5.7%, higher than the same period in the world.

Therefore Africa should keep at hand in developing with the foreign investments.

Collaboration will improve the chances of success and reduce the possibility of failure through competition, inefficiency, poor quality and low investment, collaboration and team work gets more skill together and capacity building.

Technology is the grease in these wheels because once you are using the right technology, or appropriate you are certain to save both time and money.

The list is endless but looking carefully, some of the vehicle manufacturers are efficient because of collaboration, while lots of tech companies work best with a great team.

It is this tremendous potential that we believe must be harnessed and nurtured, to incubate revolutionary African ideas and scale these globally to disrupt.

By promoting a collaborative ecosystem and investing in local partnerships amongst corporations, governments and risk capital providers, the hope is to support the African oil sector in the quest to blend the oil and gas natural blessing to achieve sustainable goals.

You can also read What evolving digital technologies mean to banking sector in Africa

Previous articleFICTION: When vengeance backfires
Next articleRUSTIC ROMANCE: Three Mad Dogs!
Daniel Tusiimukye is a columnist with The Scholar Media Africa, is an award winning author, and a Ugandan based publisher. He is the founder at The Iconic Publications and currently pursuing a Bachelor of Science in Mechanical Engineering at Makerere University, Kampala. His contact: d.tusiimukye@scholarmedia.africa



Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.