Thanks to recent discoveries of vast natural gas deposits, African has the potential to create a flourishing energy sector that will enrich the continent for generations to come, according to N.J. Ayuk, Chairman of the African Energy Chamber.
The opportunity this presents for future prosperity isn’t guaranteed, however. Africa’s resources have traditionally been exported to wealthier nations, enriching other lands while providing few benefits to economies on the continent. But if African entrepreneurs make the right decisions, they has the potential to harness the remaining natural gas deposits to create jobs, build reliable energy grids, and fundamentally transform life for millions of Africans, Ayuk said.
How it Happens
As an example on how energy entrepreneurs can jump-start African economies, Ayuk pointed to the recent deal inked by the African company AlphaDen to build a hydrocarbon processing plant in Nigeria.
“I think energy is always going to be a big issue. If you look at the AlphaDen deal, it’s 60 million US dollars. It tells you that a lot of stuff that has to be done with natural gas has not really taken place in the continent,” he said. “And being able to really empower African entrepreneurs, small-scale producers, to be able to drive small scale biogas projects … That first, this is not just gas testing for Europe or Asia. This is gas that’s going to be used in Nigeria to industrialize Nigeria.”
By using a loan from the African Export-Import Bank (Afreximbank), AlphaDen relied completely on homegrown resources. The move wasn’t just financially sound, it was also a challenge to other businesses to follow their lead, Ayuk said.
“What is even beautiful is that African entrepreneurs are engaging in doing this, and driving it,” he said. “In the past, we would have to wait for somebody to come from the United States or from Europe to do such a project here. But now you have Africans who have gained experience from either their work with the international energy companies, their work with other kind of institutions, being able to say, ‘We are not just going to be consumers, we are going be producers.’”
Using Natural Gas to Build a Better Africa
Natural gas is a mix of fossil fuels that can be burned to create electricity. It’s a relatively clean-burning source of energy, which makes it a perfect stepping stone to help Africa prepare for an eventual transition to renewable sources of energy, Ayuk said.
“I think we have to use our natural resources in better prudent way. I think we have to come into it with the first state consideration, knowing that these are finite resources. They’re not coming back,” he said. “And once you have it in your mind that these are finite resources and that they’re not coming back, then you have to start knowing that we’ve got to be better stewards of what we use.”
African entrepreneurs not only need to re-think their relationship to fossil fuels, they must also re-evaluate the deals that have hindered economic development in the past.
“We have to walk away from issues that we have been victims of, that has created the resource scars. And these resource scars has really not been helpful to Africa,” Ayuk said. “So, we need to reverse the resource cost. And that, when we’re using those natural resources, we have to say, ‘How do we build the value chain within Africa and create value addition and really drive it?’”
Using Gas to Create Growth
Africa is home to some of the largest energy deserts in the world. Some 600 million Africans live without access to electricity. Homegrown natural gas companies have a duty to help solve that problem by creating jobs and building infrastructure, Ayuk said.
“For example, right now, if you look at a country like Namibia with vast oil and gas discoveries, it shouldn’t only be about Namibia producing natural gas and producing oil, and sending it abroad to other things,” he said. “They have to say, ‘How do we create more gas power projects and gas power projects with pipelines and other things, that we can power Namibia? And turn Namibia to become an industrial hub to supply goods, services, other things, across Africa.’”
If countries like Namibia build reliable electrical grids, they can begin to work in neighboring states to provide more opportunities that will, in turn, bolster growth at home, Ayuk said.
“With African solutions, we have to also start looking at how you really start generating power coming out of maybe biogas and all of that. And I think that is possible within Africa in itself. And when it comes to really driving energy, we need to increase the supply chain and infrastructure across Africa,” he said. “Once we do that, it’ll be easy for us to start deploying energy across state lines, cross-border, intra-country. And so, that would be helpful.”
From there, the possibilities are limitless. Once Africans have reliable access to power and steady employment opportunities within the energy sector, worlds of potential will open, Ayuk added.
“There’s going to be a lot of larger gas projects that are going to come from African entrepreneurs, and that’s going to really drive the continent,” he said.