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Free zones could attract investors to Africa’s MSGBC region

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Mauritania is attracting an increasing number of investors and intrepid travellers. Image credit: Daniel Born from Unsplash

Free zones could attract investors to Africa’s MSGBC region  

Special Economic Zones (SEZ) or free zones between the governments of Mauritania, Senegal, The Gambia, Guinea-Bissau and Guinea-Conakry (MSGBC) and private sector operators could attract foreign investment, promote economic growth and facilitate technology transfer.

With projects like the Sangomar oil project in Senegal and the Greater Tortue Ahmeyim development on the Senegal-Mauritania maritime border coming online this year, it has become critical for MSGBC countries to establish effective governance policies to maximise the benefits of new energy supplies introduced to the market.

Special Economic Zones (SEZ) or free zones could be established between MSGBC governments and private sector operators to attract foreign investment, promote economic growth, and facilitate technology transfer to maximise the benefits of first oil and gas.

In West Africa, there are currently 29 free zones across 11 countries, including one in Senegal and two in The Gambia, established with the aim of advancing investment.

Options to incentivise investors (Free zones could attract investors to Africa’s MSGBC region)

According to Moustapha Bechir, General Manager of Hydrocarbons at Mauritania’s Ministry of Petroleum, Energy and Mines, the country is currently looking at developing SEZs.

“A feasibility team is currently studying the potential of a SEZ in Mauritania. We should start building the hub around 2025,” says Bechir.

Earlier during an interview with Energy Capital & Power (ECP), Bechir said that the Ministry is looking at different options to incentivise investors. “Establishing a free zone could be a good way to unlock capital and create local employment.”

Creating a free trade market for the energy sector (Free zones could attract investors to Africa’s MSGBC region)
Recent geopolitics and associated trade sanctions imposed by the U.S. and Europe against Russia have highlighted an opportunity for MSGBC energy producing countries to develop their own energy free trade agreement and finally bridge the energy gap in the region.

MSGBC countries could derive insights from other free trade agreements such as the US-Mexico-Canada Agreement (USMCA) and consider the establishment of a specialised regional free trade zone focused on the energy sector.

By eliminating tariffs on crude oil, the USMCA plays a critical role in supporting and growing North American energy integration, interdependence, and energy security. Like the interconnected energy markets in North America, the markets within the MSGBC region exhibit close ties. In this context, the establishment of a regional energy market holds the potential to enhance operational efficiency.

Visa Process Harmonisation (Free zones could attract investors to Africa’s MSGBC region)

In October 2022, regional experts adopted the ECOVISA throughout the Economic Community of West African States to simplify visa processes and the movement of people.

Equally, harmonising visa procedures in the MSGBC region could promote the mobility of qualified professionals and investors within the region.

The liberalisation of Schengen visas in Europe has shown enormous transformational potential in commerce, investment, and tourism. Adopting a similar strategy to simplify procedures and introducing similar visa regulations could boost cross-border collaboration and talent attraction and contribute to the growth of the energy and mining sectors in the MSGBC basin.

Common sovereign fund for green projects (Free zones could attract investors to Africa’s MSGBC region)

African sovereign wealth funds (SWF) (there are 28 in total) collectively managed an impressive sum of USD300-billion in 2020.

There has been an upswing in investor interest regarding impact investing, which presents a promising avenue to mobilise private capital and create positive social and environmental outcomes.

During the ECP interview, Bechir expanded on this topic, stating that Mauritania wants to shift from grey to blue and then green energy by 2030, and the country is counting on regional cooperation to do so.

Mauritania established a SWF in 2006 namely The National Fund for Hydrocarbon Reserves. MSGBC countries could join forces and create their own regional SWF, which would help maximise revenue from first gas and stimulate finance for the energy transition.

Under the auspices of Mauritanian President Mohamed Ould Ghazouani, the 2023 edition of the MSGBC Oil, Gas & Power conference (https://apo-opa.info/42RFZiI) – scheduled for November 21-22 in Nouakchott – will convene a ministerial panel to explore regional cooperation and governance following first oil and gas production.

Ministers from across the MSGBC region will delve into concerted strategies aimed at fostering the broadening of industrial opportunities as well as the creation of effective policies designed to avert the perils associated with the ‘resource curse’ phenomenon.

Source: Energy Capital & Power

Energy Capital & Power (www.EnergyCapitalPower.com) will host the MSGBC Oil, Gas & Power conference and exhibition (https://apo-opa.info/42S7skb) where African and global energy policymakers, and energy firms and investors will explore how the implementation of special economic zones, trade markets, visa harmonization and green project funds can help the MSGBC region maximize its energy resources for long-term growth. 

Free zones could attract investors to Africa’s MSGBC region

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Free zones could attract investors to Africa’s MSGBC region  

 

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