Investment in Energy: Boosting FDI to Africa

Energy investment in Africa is now facilitated by the African Energy Chamber (AEC) established in 2018. In this sense, the Investment Committee of the ACS met this Thursday, February 25 in Johannesburg to set in motion a project of massive investments in African energy.

The ACS has also reiterated its concern about making its development an ecologically virtuous development. On the other hand, it underlines the small share of Africa in climate change and the need to fight first against energy insecurity.

Energy investment to supply 1.34 billion consumers in 2050

Investment in energy, especially in large infrastructure, is difficult in this time of pandemic, the ACS acknowledges. Nevertheless, she reminds us that energy projects in Africa remain very interesting investments for foreign investors.

Especially since, according to the World Economic Forum, Africa’s urban population is expected to triple by 2050, to 1.34 billion people. This market will need more and more foreign capital. This is to develop the industries and jobs needed to meet this exponential demand.

Facilitate the entry of foreign investors into the African market

The decline in energy demand due to Covid-19 and the growing popularity of renewable energy are challenging an African model based on hydrocarbons. Competition from other sectors seeking investment such as agriculture or technology also increases its vulnerability.

For Folarin Lajumoke, Vice President Africa of ION Geophysical and member of the ACS Investment Committee:

“In order to push investors to Africa, the tax conditions should be reviewed taking into account the return on investment.”

Mr. Lajumoke also called on governments at the meeting to reduce taxation on hydrocarbon exploitation and exploration. He also called for an easing of bureaucracy in public administrations. This, before Nosizwe Nokwe-Macamo, president of Raise Africa Investments adds that “the traditional way of investing is changing.”

The committee also calls for efforts to attract investors away from the geographic areas they have favored to date. The energy transition would be an opportunity to restructure the energy sector towards a localization of productive infrastructures.

Internationalize national oil companies

The committee encourages African national oil companies (NOCs) to seek projects abroad. Mr. Lajumoke noted that they have little presence outside their national borders. However, NOCs like Qatar Petroleum, which have been able to internationalize and master their product cycle, are better at raising capital.

The ACS is therefore committed to facilitating the implementation of transnational projects through its network of partners and members. It aims to become a forum for building partnerships between the world’s private sector and governments. The objective is to attract funding for African projects.

Energy development to meet the continent’s needs

The ACS also reaffirmed its interest in low-carbon energy projects. It recognizes that addressing climate change and harnessing local resources will be critical to sustainable energy growth.

She nevertheless reminded us of Africa’s lesser involvement in climate change. Indeed, African countries represent only 3% of greenhouse gas emissions, while they account for 14% of the world population. The mission of the ACS is therefore first and foremost to fight against energy poverty and improve the livelihoods of Africans.

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