May Is A Busy Month For African Energy Investors

Written by D.A. Barber

If you’re an international energy investor eying Africa, you could have a busy month of nation hopping in May.

Senegal, Ethiopia, Mozambique, South Africa, Ghana and Nigeria are all hosting major conferences targeting energy and infrastructure investment.

“Everybody wants to be in Africa,” said Simon Gosling, Director of EnergyNet Ltd. in an AFKInsider interview. “There’s a ton of people wanting to do a ton of things but it’s all about finding the credible stakeholders within the country and the credible businesses outside the country.”

U.K.-based EnergyNet organizes global investment meetings, including the Annual “Powering Africa: Mozambique” conference this month. Gosling’s role is to develop EnergyNet’s focus on government and private investment in Africa’s power and industrial infrastructure sectors.

“One of the things that we talk about is integrated planning,” according to Gosling.

In fact, one of the underlying themes of all the upcoming economic conferences is how Africa’s economies can accelerate integrated planning and cross-border cooperation.

On May 6 and May 7 in Dakar, Senegal, conference organizer Solarplaza will present the Competitive Solar Solutions: West Africa conference. More than 20 government and energy officials from Senegal, Burkina Faso, Mali, Mauritania and Niger will be present, along with representatives from World Bank, Netherlands Development Finance Company, German government-owned development bank KfW, the French Development Agency, and the African Development Bank.

Focusing on solar power in West Africa, the sessions include government policies and initiatives in the West Africa Region; the role of the government in stimulating solar energy adoption; optimizing and de-risking solar investments; and incentives and international standards driving solar project development.

Next up is the Ethiopia Infrastructure Power and New Energy Investment Summit,
scheduled in Addis Abeba May 7 and May 8 as a match-making platform for companies interested in business development in the power and energy sector. Organizers are expecting around 200 senior representatives from the Ethiopian government, international financial institutions and the private sector.

The Ethiopian summit’s topics will include Ethiopia’s five-year Growth and Transformation Plan; infrastructure development; renewable energy power potential; and inter-regional trade.

Meanwhile, the 24th annual 24th World Economic Forum on Africa is also scheduled to take place May 7 to May 9 in Abuja, Nigeria, that includes a live webcast.

This event will bring together regional and global leaders to discuss innovative structural reforms and investments that can sustain the continent’s growth while creating jobs and prosperity for all its citizens.

Among the forum speakers scheduled are Li Keqiang, premier of the People’s Republic of China; Yonov Frederick Agah, deputy director general of the World Trade Organization; Shari Berenbach, president and CEO of the U.S. African Development Foundation; Donald Kaberuka, president of the African Development Bank; and Gordon Brown, former U.K. prime minister and chairman of the World Economic Forum Global Strategic Infrastructure Initiative.

Also present will be the prime ministers of Côte d’Ivoire and Mali, as well as the presidents of Togo, Nigeria, Rwanda, Kenya, Ghana and Senegal.

The 3rd Annual Powering Africa: Mozambique conference is scheduled to take place May 8 and May 9 in Maputo. According to conference organizer EnergyNet, Mozambique is emerging as one of the fastest-growing economies in Africa with economic growth expected to average around 8 percent over the next few years.

“If Mozambique is sitting on the world’s fourth-largest natural gas deposits, then how wealthy is Mozambique going to be in 20 years time?” asks EnergyNet’s Gosling. “It’s going to go from being one of the poorest countries on the planet to possibly being one of the countries that has as much spending power as U.A.E. — that’s a crazy idea. And the fact is that we can see that coming and the potential is there if they get it right.”

Among the topics to be discussed in Mozambique are investment opportunities in Mozambique’s power sector; the role of government in funding and activating power projects; new-generation projects and funding options; and development of grid connections and transmission.

On May 13 and May 14, more than 5,000 power and water professionals will gather for the 14th Annual African Utility Week and Clean Power Africa Conference and Expo in Cape Town. It is the largest utility gathering of its kind on the continent drawing participants from 30 African countries and 70 worldwide.

According to Nicolette Pombo-van Zyl, African Utility Week program director, the conference will discuss topics ranging from the energy-water-food nexus, energy efficiency, rural electrification and smart metering. Those in attendance will hear about cherry-picked case studies and successful projects around the continent and look at how utilities can incorporate renewable energy into their power mix.

May’s energy investment events wrap up with the U.S. Trade Mission to Ghana and Nigeria from May 18 to May 23. Representatives from 20 American companies will accompany U.S. Secretary of Commerce Penny Pritzker on this energy business development trade mission to Ghana and Nigeria.

“We will endeavor to find partners for American companies, work to navigate regulatory hurdles and support the development that will help Africa thrive,” Pritzker said in a Commerce Department news release.

Africa Investor Perceptions

More than two thirds of Africa’s population is without electricity, including roughly 85 percent of those living in rural areas. According to the International Energy Agency, sub-Saharan Africa needs more than $300 billion in investments to fix this electricity access problem by 2030. Private investment will play a critical role.

But that shouldn’t be a problem since investment interest in Africa at an all-time high. In fact, Africa attracted a record $42 billion in foreign direct investment in 2013, according to the World Economic Forum on Africa. “Africa’s remarkable growth trajectory is projected to remain above 5 percent in 2014 with West Africa the fastest growing sub-region, representing the continent’s largest business opportunity.”

The African Development Bank puts foreign direct investment in Africa for 2013 closer to $50 billion, according to bank president Donald Kaberuka. In the past five years, the African Development Bank said it delivered more than $5.4 billion in infrastructure investment in Africa through public-private partnerships.

Over the next seven years the European Commission says it will spend more than $2.7 billion supporting energy in Africa. In April alone, the European Commission announced grants of $132 million for 16 projects to provide access to electricity to more than 2 million people in rural Madagascar, Burkina Faso, Senegal, Cameroon, Liberia, Tanzania, Sierra Leone, Eritrea and Rwanda.

Also in April, the Carlyle Group announced it had raised $698 million for its new sub-Saharan Africa Fund, exceeding its initial target by 40 percent. The Carlyle Sub-Saharan Africa Fund is one of the first global asset managers to launch such a fund. Its strategy is to invest in national companies looking to expand across regions that include Angola, Botswana, Ghana, Côte d’Ivoire, Mauritius, Mozambique, Namibia, and Zambia.

But the misconceptions in this new interest from international investors is a challenge as well as a blessing.

“There is a gold rush going on and people think that it’s easy money and quick wins, but it’s not,” EnergyNet’s Gosling told AFKInsider.

This perception of Africa was reflected at April’s Milken Institute Global Conference
in Los Angeles where Rwandan President Paul Kagame urged global investors to rethink misconceptions about Africa.

“Africa is not short of bad stories that travel faster than good stories, but people need to understand, know Africa the way it is and make informed decision about their investments,” Kagame said during a panel discussion.

Similar misconceptions have taken root locally in Africa.

“There is a risk across Africa that the talk of vast (amounts) of money being invested — tens of billions of dollars being invested in East African gas projects alone,” says EnergyNet’s Gosling. “That there is a possibility that it can destabilize countries because people just hear these numbers and then people think, ‘Why was the money not reaching me?’ But actually they are not going to see the benefits for 10 years.”

If investors continue to flock to Africa’s energy sector, many will have electricity for the first time.