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Local content for oil and gas value-chains a challenge in Africa

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The oil and gas sectors are expected to bring several opportunities to Africa in the next few years and there is a drive to ensure that Africans benefit. Image credit: Geoexpro

01 September 2020 – The African Energy Chamber (www.EnergyChamber.org) held its first meeting with its Local Content Committee yesterday, placing local content development at the core of its activities.

With several established markets like Nigeria or Angola and frontier energy markets such as Senegal or Uganda, the oil sector supports several of Africa’s economies. As a result, African local content has become a key priority for government, regulators and industry stakeholders.

Issues around the perceptions and understanding of local content dynamics were major topics of discussion. Key points put forward included the need for African governments and companies to develop better implementation of local content policies and come up with new approaches putting entrepreneurship and capacity building as priorities. From financing African starts ups, SMEs and companies to promoting an enabling business environment, it was agreed that African governments and regulators need to rise up to the task and provide for better conditions and environments for African entrepreneurs to thrive.

Established African energy markets such as Congo Brazzaville, Equatorial Guinea or Gabon are still missing a pool of strong local companies across the value-chain, and especially upstream. Despite producing oil and gas for decades, these countries have not been able to nurture entrepreneurs in oil and gas, especially because of a lack of domestic financing.

The regionalisation of the African content was identified as a key trend for the short and medium-term. With the roll out of the African Continental Free Trade Area (AfCTFA) and upcoming first oil and gas in many African markets, the potential to have local content move away from a pure international-local perspective is real.

This is especially an opportunity for local companies within established markets, be it Nigerian companies regionalising the oil and gas content or South African and Kenyan companies regionalising content within the renewable energy space. African companies have the means and opportunities to create regional ventures and partnerships taking the African content development to a new level, and must be seizing them.

Finally, inclusion in the workforce is set to become a major focus for the Chamber and its Committee, especially when it comes to promoting youth and women inclusion in the extractive industries. A sustainable African energy industry will only be as strong as it is inclusive, and better mechanisms and policies need to be put in place to ensure African women and youth can build successful careers in the sector.

In that regard, upcoming producers such as Senegal, Mozambique or Uganda have a unique opportunity to truly innovate as they develop their own approach to capacity building and local content development.

As the Covid-19 pandemic further increases the need for localising value chains in Africa, local content development is set to become even more important for all industry stakeholders. Its success will ultimately depend on the nurturing of capable and patient African entrepreneurs able to raise capital and engage regionally with the right partners to build successful ventures. In such a journey, cooperation with international companies, but especially amongst African entities, will be crucial.

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