The Nordic countries Denmark, Finland, Norway and Sweden hosted the Nordic Energy Days conference from September 13 through 14 at The Innovation Hub in Pretoria. The countries have over the last 10 years collaborated amongst themselves to develop an innovative energy mix focused on effective system integration, grid stability and sustainable energy solutions.
The Nordic countries outlined their experience and the function of their energy mix, with Finland’s Deputy Minister of Economic Affairs and Employment Petri Peltonen stating:
“We have very advanced electricity and energy systems and our grids have been connected for decades. The Nord Pool has now been in operation since the 1990s and it is the world’s largest exchange for electricity …. We are trying to increase the share and production of renewable energy from various sources, Finland being focused on bio-based sources and our colleagues in hydro, wind and others …. The South African government objectives are also ambitious regarding renewable energy in particular and I think our mission is really to first of all open up our experiences, lessons learned, the positive and at the same time also connect the best of our resources, companies, agencies, research organisations with our South African counterparts during the Nordic Energy Days.”
Ambassador of Sweden to South Africa Cecilia Julin added:
“The Nordic cooperation is really strong and I think that’s what we want to share with South Africa as well … because we get inspired by SADC to show possibilities to work in the Southern African Power Pool. We can share experiences from Nord Pool and how we can work together.”
Day one of the conference was focused on opportunities for the Southern African Power Pool (SAPP) teaming up with the Nordic countries. Norwegian Deputy Minister Ingvil Smines Tybring-Gjedde stated that embracing the diversification of energy sources will minimise the effects of global warming, whilst significantly enhancing the share of energy between countries within the SADC region as it has done for the Nordic countries.
The Nordic countries have shown a particular interest in working with the region by assisting in the facilitation of cross-border cooperation. The countries also indicated a desired involvement in ensuring energy security in Europe by developing a prolonged relationship with the African continent.
Special energy adviser to the South African presidency Silas Zimu said on this point:
“Let us learn from what the Nordic countries have done …. Public companies need to put measures into place.”
The second day of the conference highlighted the technical side of the energy sector focused on clean technology and grid technology. In a session on clean technology, DNV GL Africa’s business manager Robert O’Keefe talked on the decarbonisation of the energy system within the next 30 years due to increased efficiency in energy generation leading to a significant decrease in the overall demand of energy. He went on to state that the global use of fossil fuels to generate energy would decrease from 81% to 50% by 2050, which can be troubling for Southern Africa as a region profoundly endowed with coal as a source for power generation.
To effectively support the integration of clean energy into the SAPP it is vital for the region to develop a stable grid. Stig Uffe-Pederson, Deputy Director General of the Danish Energy Agency, highlighted the importance of these technologies, mentioning:
“This is also a story about making a green transition. This is about investing and setting long-term political projections and a stable framework that allows this transition. In that way, you are actually able to sustain economic growth while you reduce your energy emissions and while you also reduce your energy consumption.”
- African law students are changing the way we access data by leading efforts to disseminate Africa’s mining legal frameworks through the African Mining Legislation Atlas (AMLA) project
Naomi Kakundu is from the small town of Ndola in the copperbelt province of Zambia. In 2014, she was a second-year law student at the University of Cape Town Faculty of Law, considering whether to take an elective course in mineral law.
In Scotland, from Conakry, Guinea, Abdoul Karim Kabele-Camara was working on his PhD at the University of Dundee, specializing in mining infrastructure development and regulation in Sub-Saharan Africa.
In Mozambique, Deisy Ribeiro had begun her first year as a law student and became interested in mineral law after hearing about her country’s natural resource discoveries and the lack of local professionals to meet the needs of companies investing in Mozambique.
Naomi, Abdoul and Deisy joined 11 other students in 2014 to become part of Africa’s next generation of leaders in the mining sector, through their role as founding members of the Legal Research Team of the African Mining Legislation Atlas (AMLA) Project.
The AMLA Project gathers, organizes, and disseminates laws and builds capacity across the African continent via three main channels:
An online platform, providing a free, easily accessible one-stop resource for Africa’s mining legal framework;
Production of a guiding template, an annotated document outlining legislative solutions to assist in the preparation or revision of African mining laws; and Capacity building through training (on-ground and remotely) of African law students in the use of the platform and overall mining law issues.
Initiated by the World Bank Group in 2013, the AMLA Project is a multi-stakeholder program that works in close partnership with the African Legal Support Facility, the African Union Commission, several African universities and other global private and public institutions.
Currently, the project has trained 44 African law students—20 women and 24 men—from 17 countries. Students represent all four regions of the African continent and speak French, Portuguese, Arabic and English.
Starting with an intensive 10-day training, pre-selected students attend sessions on a diverse range of topics impacting the mining sector, from fiscal regimes, licensing and local content to community development, environmental protection and health and safety. Students are introduced to the AMLA platform that is populated with the primary mining codes, regulations and related legislation of all African countries.
The best students from each year’s training are invited to join the Legal Research Team responsible for populating and updating the AMLA platform. Each student on the Legal Research Team is assigned to analyze a minimum of two countries’ mining legislation against a common taxonomy of topics, to encourage comparative analysis, and gives each member the mission to also gather related legislation.
Members of the Legal Research Team rely on each other to answer questions of legislative interpretation and formatting, engaging with one another weekly and often daily via the World Bank Group’s Communication for Development (C4D) online platform. A group of experts in the field are also present on the C4D platform, to guide the students in their research assignments when needed.
Today, Naomi, Deisy and Abdoul are all applying the knowledge they gained through AMLA training as legal professionals in the mining sector. Naomi serves as a reviewer of the Legal Research Team’s research results and is preparing to begin postgraduate studies in Tax Law with a focus on mining tax. Abdoul serves as a reviewer and Project Coordinator for the AMLA Project at the African Legal Support Facility. Deisy graduated with distinction from her legal studies, has published and lectured on criminalizing the illegal sale of precious stones, and now works as a junior legal researcher at a Mozambican law firm, focused on legal services in oil, gas, mining, energy and infrastructure projects.
“The work of the AMLA legal team not only provides the world with an incredible resource but it also prepares the next generation of African leaders to develop mining frameworks that foster sustainable development in our countries,” said Abdoul Karim Kabele-Camara, member of the AMLA Legal Research Team and AMLA Project Coordinator at the African Legal Support Facility.
The AMLA Project continues to train law students in the use of the platform and mining law in general, and is preparing for its third annual training with 33 African law students in December 2016.
Much has been said and written about the fortunes of doing business on the African continent or simply, in countries outside one’s own familiar comforts.
There is something to be gleaned from those who have gone before us and have gathered various insights into what it takes to make operating in Africa a success.
For a global tourism marketing organisation like South African Tourism, we are of the opinion that all these views and learnings are valid. Doing business on the continent is not smooth sailing and it is definitely not for those who aren’t in it for the long haul.
To quote Mark Steinhobel, Chairman of the VWV Group: “If you take the time to understand Africa, if you respect her many cultures and diverse needs, and if you cast off your own preconceptions, you will discover that she is the wonder and beauty of the rainbow , with a real pot of gold at its end.”
Opting to extend our business focus to the rest of the continent was a strategically informed decision backed up by years of sound research and tracking of trends. Global interest in Africa has heightened and our continent’s status as a feasible and profitable investment hub has flourished. Economies are thriving and the perception of Africa as a whole is changing from one of despair to hope. This, unsurprisingly, coincided with a burgeoning middle class and with that, a noticeable increase in outbound travel to South Africa. This prompted us to start marketing South Africa more aggressively and also, to increase our investment by having physical presence in most major cities and use those as hubs to better service the continent.
The time was now right to invest in our vision to grow the tourism potential of Africa.
What was also becoming clear was the importance of inter-regional and inter-continental partnerships, as a critical success factor. There is still the misconception that a blanket approach to dealing with countries on the continent works.
The reality is, this is a dynamic continent, home to 54 countries, countless nationalities and even more languages, cultural and religious nuances that one needs to know about, understand and more importantly, respect. There is a different way of conducting business and engaging with people – and it differs with each individual country. We have had to learn these nuances and respectfully navigate our way into all engagements with an innate appreciation of the environment we were in and relationships we were building. The insights have helped inform our strategies and our campaigns, the tonality of our messaging and our response to issues. More especially however, they have helped us to win the trust, the hearts and the minds of the people whose countries we visit, invest in and we support all year round. We now know that the African business culture is very much driven by relationships.
The result of our efforts, though not impermeable and definitely not the result of a singular effort, is far reaching. We are noticing how the global community is still interested in tourism products and destinations from our beloved continent. The positive impact of tourism in Africa is widely felt: there is economic growth and job creation; and wider investment in African infrastructure and skills. This is backed up by EY’s attractiveness survey Africa 2015 which states that capital investment into the continent surged to US$128b, up 136%. And FDI created 188,400 new African jobs, a 68% increase. Spurred by a handful of megadeals, the average investment increased to US$174.5m per project, from US$67.8m in 2013. Africa’s share of global capital investment and job creation hit an all-time high in 2014. Only Asia-Pacific attracted more FDI funds than Africa last year.
All these contribute towards building a positive global image of an Africa that is capable, inviting, welcoming, friendly, stable, and thriving. Regional Africa in particular, has already proven itself as fundamental to the long term growth and sustainability of South Africa’s tourism industry.
Collectively as the African continent, we need to see to it that economies grow, that local talent is developed and that jobs are created on our continent.
Doing business in Africa is about knowing that ultimately, we are visitors in someone’s home and the onus is on us who choose to invest to listen and in so doing learn more about our gracious hosts: what they value, what they dislike and how we can help them fulfil their unspoken dreams and articulated desires.
As earlier alluded, we want to form lifetime partnerships, it’s the relationships and friendships which we form that will stand us in good stead long after the bells and whistles from opening an office have died down.
If organisations can understand this, master the basics, the potential for doing business in Africa will forever remain a highly attainable and lucrative goal. And what’s more, it will unearth people who are passionate, knowledgeable, excited and committed to making business on the continent a success. Is it challenging? Definitely. Is it rewarding? If done correctly, it certainly is.
“I believe tourism is a crucial driver of the second economy – it is one of the pillars that can help address poverty”. Evelyn Mahlaba, Regional Director: Africa at South African Tourism
The writer is the Regional Director: Africa at South African Tourism
Overall activity in the oil & gas industry across the African continent has slowed in the wake of the declining oil price in late 2014.
“While the oil price has caused activity to drop, it has also served as a wake-up call to many African governments, which are working hard to pass favourable oil & gas legislation in order to attract investment into the sector,” says Chris Bredenhann, PwC Africa Oil & Gas Advisory Leader. Countries such as Kenya, South Africa and Tanzania have been taking a serious look at legislation currently in place with a view to making it more investor-friendly.
PwC’s ‘Africa oil & gas review, 2015’ analyses what has happened in the last 12 months in the oil & gas industry within the major and emerging African markets. As oil prices declined in 2014, the industry response has been far-reaching with significant reduction in headcount and other cost cutting measures. Capital budgets have also been cut, and frontier exploration activity has decreased. “While response to such a drastic decline is necessary, we have seen the most successful organisations are taking time to re-set, re-strategise and plan for the upturn in prices, which will inevitably come. Africa should be no exception as many of the frontier exploration plays lie on the continent,” adds Bredenhann.
As at the end of 2014, Africa has proven natural gas reserves of just under 500 trillion cubic feet (Tcf) with 90% of the continent’s annual natural gas production still coming from Nigeria, Libya, Algeria and Egypt.
The main challenges identified by organisations in the oil & gas industry have remained largely unchanged with the top three issues of uncertain regulatory framework, corruption and poor physical infrastructure also identified as the biggest challenges in 2014. Uncertain regulatory frameworks remain a concern across the industry, with more than 80% of Tanzanian respondents regarding regulatory uncertainty as the top challenge facing the business. Other countries where respondents cited concern about regulatory uncertainty include Nigeria, Kenya and Angola.
The inadequacy of basic infrastructure ranked much higher in the current review than in 2013. Areas in which infrastructure remains limited are likely to see the development of existing discoveries stalled unless there is a domestic need for the resource.
Organisations identified the price of oil and natural gas as the most significant factor that would affect their companies’ businesses over the next three years. “This is not surprising given the current uncertainty around the market,” says Brendenhann. “Fortunately industry players are looking beyond current prices when planning for the longer term.” The results of the report show that a high 90% of respondents expect the oil price to increase gradually over the next three years.
People skills and skills retention is rated the second most likely factor to impact business over the next three years. Community/social activism, instability and unstoppable political events, ranked fourth, are a noteworthy concern in the oil & gas industry. Organisations from South Africa, Mozambique, Nigeria and Kenya, in particular, expected community/social activism/instability and unstoppable political events to have a significant impact on their business.
Asset management and optimisation also remains a top strategic focus area for oil & gas companies over the next three years.
Financing and investing
After a rush of bidding rounds in 2014, 2015 and 2016 appear to be comparatively quiet with only a handful of bidding rounds expected. This is partly due to the flurry of bidding rounds in the previous couple of years and a consolidation of these agreements together with the lower oil price and lower interest to invest.
While it seems that the temporary meltdown is receding, African governments have shifted into gear to promulgate and ratify oil & gas regulations that are intended to encourage the monetisation of assets, while doing away with policy uncertainties.
Although merger and acquisition (M&A) activity was low in 2014/15, around one-fifth of respondents have been targeted, and a third of respondents has targeted or intends targeting companies for acquisition. This suggests that an increase in M&A activity can be expected in the near future.
Forty-one percent of E&P companies said that they would be investing in the development of drilling or exploration programmes, which is significantly lower than in 2014 when 70% reported this as a key strategic focus.
Combatting fraud and corruption
Over 98% of organisations indicated that they have an anti-fraud and anti-corruption programme in place – of these, more than 60% believe that the programme is very effective at preventing and/or detecting fraud. Only 8% of respondents indicated that they did not have a compliance programme.
Over 43% of respondents indicated that fraud and corruption would have a severe effect on their businesses. Government officials continue to be implicated in a number of fraudulent activities across the continent.
Recent research conducted by PwC shows that bribery and procurement fraud remain some of the top types of economic crimes in the broader energy, mining and utilities sectors. Despite pervasive fraud, some governments around the continent have made significant efforts to increase transparency in the industry.
Under the current economic climate, oil & gas companies are looking to increasing production potential through improving efficiencies and operational excellence. In addition, they are also looking towards exploration and finding new resources as an alternative for sustainability. A vast majority of respondents (71%) reported that they will be looking at formal cost reduction measures in the next three years. In as much as businesses are considering other measures to ensure their sustainability over and above monetising natural resources, they are also expecting the commodity price to increase in the future. And despite development in renewable and alternative sources of energy across Africa, respondents do not expect demand for these to have a significant impact on oil & gas businesses over the next three years.
The presence of an uncertain regulatory framework is one of the biggest issues in developing the oil & gas business in Africa. South Africa’s uncertain regulatory framework for the oil & gas industry is mainly due to unclear and overlapping mandates between the Government and state-owned companies. Furthermore, the enforcement of the Minerals and Petroleum Resources Development Act (MPRDA) has raised a number of compliance challenges in the industry, primarily resulting from new requirements directly introduced by the Act.