Wealth in our land - Africa's new frontiers

 The recent discovery of more than 30 trillion cubic feet of gas in Mozambique’s Basin by both Italian Eni, and US-based Anadarko, and the crude oil finds in Uganda,  and Kenya by Tullow oil and her partners, which came after the rave of Jubilee Fields discoveries in Ghana, once again proved that Africa has more reserves of hydrocarbon than have been reported – a clear  indication that Africa is under-explored.

 Africa the cradle of human civilization is in no small measure blessed with abundant natural resources. From diamond to natural gas, there is no known high dollar earning commodity that is not embedded in Africa’s soil. Not only are these mineral resources available in Africa, the African producing nations are counted among the top producers in the world.  A cursory look at the table below explains the position of Africa in the production of high –dollar yielding mineral resources

 According to the 2008 BP Statistical Energy Survey, Africa is enriched with 117.481 billion barrels of oil at the end of 2007 which accounts for about 9.55 of the world’s reserves.  With the new discoveries in Ghana, Uganda, Kenya  and the latest trends in Africa’s new frontiers , it is estimated that by 2015, Africa’s world reserve of oil will be about 15% or more.  The same BP survey positioned Africa’s natural gas reserves to be 14.58 trillion cubic meters, which accounts for 8.22% of the world total. The latest massive discovery of natural gas in Mozambique, and Namibia, once again, proves that Africa has been poorly reported in terms of actual reserves.

 At the current world’s market price of $106 per barrel of oil, and $1662  per ounce of Gold to mention but a few,  resource-rich nations in Africa should be economically buoyant and the region’s general economic growth should have been expected to grow at a tiger –stride instead of  it’s lack luster snail pace . Only few economies in the region such as those of South Africa, Nigeria and Egypt have shown some considerable upward locomotion in the past 3 years.

 It becomes obvious that much have been left undone in the development of Africa’s economy through the revenues of its abundant mineral resources. Poor management of the resources and lack of adequate visionary and pragmatic leadership to steer the economic boat accordingly has been identified as some of the core problems facing the continent’s socio- economic development. Poor policies initiated by some African governments and jaundiced contracts have caused most of the economic stagnancy or back-pedaling experienced in the region’s economy. Some of the wrongly crafted policies  either threatened foreign direct investments in the region or aided capital flight .

 While taking some steps to ameliorate the aforementioned discrepancies, some nations have started initiating policies such as the South Africa’s Black Economic Empowerment (BEE0, and local content policies.

 Local Content

Local Content in its simple terms is the “value added” in local oil and gas industries which consists of the creating of opportunities and the encouraging of indigenous oil companies to actively participate in the exploration, production, manufacturing, procurement and allied services sectors of the oil business.  Local content, when implemented is a win-win situation that can promote partnerships among national oil companies, local companies, and international organizations. It could also promote good business environment, through corporate social responsibility. The eradication of abject poverty, rather called “Dutch Disease” in resource-rich nations and the  redistribution of income  to create more wealth in the local communities are the drivers of local content

Black Economic Empowerment (BEE)

According to SouthAfrica.info, South Africa’s policy of black economic empowerment (BEE) is not simply a moral initiative to redress the wrongs of the past. It is a pragmatic growth strategy that aims to realize the country’s full economic potential while helping to bring the black majority into the economic mainstream. . The Department of Trades and Industry of South Africa ,sub-Saharan Africa biggest economy, “No economy can grow by excluding any part of its people, and an economy that is not growing cannot integrate all of its citizens in a meaningful way.” BEE is aimed at expanding the economic platform of South Africa and ensuring the creation of more employment opportunities especially for the blacks who were deprived for many years through the inhuman apartheid system.   

The Journey So far

Despite numerous criticisms and shortfalls, BEE and Local Content are becoming huge economic success in Africa. Take for instance in South Africa blacks ownership of mining industry and wine producing companies have increased tremendously. Before the end of apartheid, wine production, major control of mining industry and financial institutions used to be mere exclusivity of white entrepreneurs. Now these business domains have huge number of black players who do not only have adequate share of the market, are also competing very well.

 Many Africa countries and local companies have proved themselves very competent and partnerships with foreign companies have produced good results. Angola is a country which through Sonagol, the national oil company has achieved a lot through skill development for its citizens from their local content policy called Angolanization. Nigeria, the highest oil producer in the region has implemented a very successful Nigerian content policy and the monitoring has shown that local companies have continued to increase their ante.

According to Engr. Ernest Nwapa , the Executive Secretary of the Nigerian Content Development and Monitoring Board, NCDMB, the effects of the implementation of the local content mandate of the Federal government was already being felt in other sectors of the economy. Nwapa went further to say at the ceremony in which he was recognized as Nigeria’s oil man of the year in Abuja, that “Local content is a positive concept, and even people who don’t agree with it initially would begin to see it is indeed valuable…”

Above all, the success of BEE and Local Content can be easily be seen through the emergence of a new community of millionaires and middle class in some of the African nations involved. However, the only caveat still holding these processes to earn a full “A” is that much development have not been realized in rural areas depicting convulsing wealth distribution and technology development is still more of an imported asset. These economic overhauling processes require the support of all and sundry and also time to achieve the fully intended goals.