It’s time for Africa!
It’s time for Africa!
Africa’s best opportunities will be created by its innumerable challenges. As African economies continue expanding, the continent’s problems multiply. And problems need solutions. The major concern is that a large part of Africa’s people will be left behind as development takes off.
By Leon Louw founder of WhyAfrica and editor of the WhyAfrica magazine
Caution is therefore needed to ensure that communities are empowered, and that the environment is protected. There are glaring backlogs in road, rail and port infrastructure, and electricity and water provision is scant. To make things worse, politics and corruption continue to muddy the water. Economies are reeling, and the impact of Covid-19 and the crisis in Ukraine will be felt for a long time. Yet, there is hope.
The energy transition will require natural resources and so-called “green metals” that are abundant in Africa. Countries like Zimbabwe, the Democratic Republic of the Congo (DRC), Namibia, Zambia, Angola, Tanzania, Morocco, and Ghana (to name only a few), are rich in critical minerals like lithium, cobalt, copper, tin, tungsten, Rare Earth Elements (REEs) and nickel which will all be required in increasingly large amounts to satisfy the needs of a greener world economy.
To grow these African economies will require sufficient power generation, and therefore the energy sector will be critical for development in Africa. In the search for solutions the African energy sector is booming and currently presents great opportunities for new entrepreneurs and innovative technology.
However, the war between Russia and Ukraine has presented African countries with huge challenges (many African nations are reliant on food imports from Russia and Ukraine) but also resulted in most countries backing their own agricultural abilities, while significant investments by international companies and the African Development Bank (AfDB) have unlocked the huge agricultural potential in Africa.
The dearth of fertiliser (also a result of the conflict in Ukraine) has prompted African countries to find solutions within their own borders and several new projects mining potassium and phosphorous have sprung up around the continent or are being developed. Africa has huge swaths of fertile land laying fallow, and this presents further opportunities for the entire agriculture value chain.
Africa’s great potential (It’s time for Africa!)
African optimists predict a future where Africa plays a central role in the global economy looking for new growth areas, especially after the African Continental Free Trade Area (AfCFTA) kicked into gear recently.
According to the World Bank, AfCFTA could bring 30 million people out of extreme poverty and raise the incomes of 68 million others who currently live on less than USD5.50 per day.
“With the implementation of AfCFTA, trade facilitation measures that cut red tape and simplify customs procedures would drive USD292-billion of the USD450-billion in potential income gains. Implementing the agreement would help usher in the deep reforms necessary to enhance long-term growth in African countries,” the World Bank states.
Africa plays a key role in China’s Belt and Road Initiative, while countries like Russia, Turkey, the UK, France, the US, Japan, and Israel are strengthening their ties with several African countries.
While primary sectors like mining and agriculture will remain the backbone of Africa’s future growth; services, communication, and technology will create opportunities for young people (which are increasing exponentially) that their parents would never have dreamt of. Nevertheless, tourism and hospitality could be the magic wand Africa needs when the international travel industry finds its feet again after the devastation of the global pandemic.
It is extremely difficult to pick the top five countries in Africa which might provide the greatest opportunities in 2023. When I look at Africa I see opportunities everywhere, especially where there are backlogs and service delivery issues. However, there are a few countries that stand out, but there are also two or three regions which are very important and that we cannot ignore. These regions/countries are currently embroiled in disputes and/or security issues which makes investing there more than just risky.
Renewed optimism in Zambia and Tanzania (It’s time for Africa!)
First on my top five list is Zambia and Tanzania. These countries have always been on the cusp of entering elevated levels of development, but both were, unfortunately, the victims of controversial presidents and policies. The late Tanzanian president John Magufuli’s uncompromising stance made him popular with his own people, but not so much with foreign investors. In the end, it cost the people of Tanzania dearly as investors either pulled out of the country or refused to invest.
Magufuli passed away in March 2021. The appointment of Samia Suluhu Hassan as his replacement was praised by the international community and investors alike. Although she is still dealing with factional battles within her own party, her appointment has opened the floodgates as projects which were put on ice during Magufuli’s rule, are revived.
Ditto in Zambia, where the Zambian Kwatcha became the world’s best performing currency for one day in August 2021 after Hakainde Hichilema snatched the election away from his opponent Edgar Lungu. It was Hichilema’s (an ardent businessman) fifth attempt at the presidency, and when he was inaugurated, the business world rejoiced. Progress in Zambia, a country with a growing young population, was stifled by Lungu’s apparent kleptocratic rule. Zambia is replete with opportunities, and with Hichilema, or HH as he is better known, in full control, Zambia looks like the place to be in 2023, despite its debt problems and structural constraints.
Unique opportunities in Namibia (It’s time for Africa!)
Namibia has been a hive of activity over the last two years. The discovery of oil and gas both onshore and offshore, the development of large renewable energy projects (including hydrogen) and the development of several new mines in the country, makes it probably the country with the most potential in southern Africa.
In 2022, Namibia witnessed its first two major oil and gas discoveries made by global majors TotalEnergies and Shell in the Venus and Graff-1 wells, respectively. Potentially holding billions of barrels worth of reserves, these discoveries have not only made clear the sizable hydrocarbon resources available in the country’s offshore basins but have laid the foundation for widespread sectoral growth as new players flock to the promising market.
Shell has announced another potential discovery in the Jonker-1 well which may complement previous finds.
Following TotalEnergies and Shell’s discoveries, several other exploration campaigns have kicked off, with frontier explorers hoping to mirror the success of Venus and Graff-1.
Canadian oil and gas explorer, ReconAfrica, is conducting upstream activities in the deep Kavango Sedimentary Basin in the north-eastern part of the country while independent French explorer, Maurel & Prom, is set to join the Namibian upstream drive with a potential five-well drilling campaign, kicking off with the spudding of the Aurora wildcat this year.
Canadian oil and gas company, Sintana Energy, has approved the extension to its Petroleum Exploration License (PEL) 87 in the Orange Basin which is expected to contain similar characteristics to that of the Shell and TotalEnergies discoveries.
Energy major Chevron acquired an interest in PEL 90 in the Orange Basin in October 2022 while ExxonMobil is increasing its exploration acreage in the country with an agreement for Blocks 1710 and 1810, as well as farm-in agreements for Blocks 1711 and 1811A.
Meanwhile, notwithstanding opportunities across the hydrocarbons space, the country’s pursuit of becoming a global green hydrogen hub on the back of large-scale projects opens critical prospects for businesses and service providers across the green energy landscape.
Projects such as the Hyphen Hydrogen-led USD9.4-billion green hydrogen project as well as the various green hydrogen pilot projects launched by the Ministry of Mines and Energy lay the foundation for new opportunities across the market.
Namibia is unique. The country is small compared to other African countries. It doesn’t have a large, growing population, its economy is minute compared to a country like Nigeria, for example. Moreover, the largest part of Namibia is desert. And that’s why it is interesting.
The Namib’s unique ecology is protected by the most stringent and best conservation and environmental laws and regulations not only in Africa, but in the world. But the country is also blessed with great uranium and diamond deposits and a few spectacular gold deposits.
In addition, it is a hotspot for renewable energy projects. Namibia’s conundrum lies in how to encourage development, while at the same time protecting its incredibly diverse and pristine natural environment that continues drawing large numbers of tourists. Namibia has become a haven for geologists, miners, water specialists, energy developers etc. However, its stability, regulatory and political certainty, and its world-class infrastructure, could be its own worst enemy if caution is thrown to the wind.
Will South Africa and Egypt bounce back? (It’s time for Africa!)
The last two countries on my list are South Africa and Egypt – the giants of North and Southern Africa. Both have been through the political maelstrom and are not out of the woods yet. Moreover, Covid-19 has had a devastating impact on their health systems and economies. To make things worse South Africa has been grappling with a devastating energy crisis for many years which continues to constrain business and new developments. The effect of this malaise on its economy has been substantial.
South Africa’s crumbling infrastructure is another red flag, especially the collapse of its rail network. But both South Africa and Egypt are resilient and will bounce back faster than what most experts predict. Both countries host large deposits of minerals and boast world class financial systems.
Despite worrying political and economic trends, especially in South Africa, South Africa and Egypt still attract a large chunk of foreign investors and continue to reward believers. However, the risks of investing in South Africa are piling up, and the government of President Cyril Ramaphosa has a lot of hard work to do to ease political tension ahead of what could be the country’s most hotly contested election ever.
Giants in the background (It’s time for Africa!)
There are the slumbering giants of course, especially in West Africa. Nigeria and Ghana can never be ignored, and the rest of the West African region is making gradual progress, as is the Democratic Republic of the Congo (DRC) in Central Africa. Under President Paul Kagame, Rwanda has established itself as a giant in the East African region and is now strategically expanding its influence into other regions (DRC and Mozambique). The country will remain a powerhouse in Africa.
Three of the most important countries in Africa to monitor in 2023 are Ethiopia, Mozambique, and Angola. These countries ostensibly hold the key to projects that could unlock unlimited opportunities for Africa and those interested in doing business in Africa. Hopefully, their governments find a way to do so in 2023.
It’s time for Africa!
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It’s time for Africa!