*Kyari: Continent will fix its energy problems before joining renewables bandwagon
*AFC launches $2bn intervention for African countries
Several prominent Africans, including former President Olusegun Obasanjo, Vice President Yemi Osinbajo, President Nana Akufo-Ado, Governor of Anambra state, and Prof. Chukwuma Soludo, yesterday converged on Abuja to discuss the continent’s infrastructure deficit.
Obasanjo contended that if the world must take Africa seriously, the initial financing for major projects must be mobilised from within the continent, stressing that the issue of corruption in projects financing must be eliminated completely.
Speaking at the African Finance Corporation (AFC) organised programme tagged: “The Infrastructure Solutions Summit 2022,” the former Nigerian leader called for continuity of projects even when leadership changes, noting that it remains the bane of development on the continent.
He called for commitment from African leaders in the bid to ramp up major infrastructure on the continent, explaining that for instance, AFC and Transcorp were almost killed because his successor thought he benefitted from both organisations.
“You can see why many projects fail. There has to be that drive. Do you have the drive to get the project off the ground and run with it literally? There has to be continuity. We nearly got AFC and Transcorp as you heard, killed by my successor (because he thought they belonged to Obasanjo and Soludo.), ” Obasanjo said.
He explained that after laying the groundwork for the rail system, if the succeeding administration had continued with it, by now Nigeria would have been sufficient in rail transport.
“If we had managed to get the railways going, the way we got AFC and Transcorp going, the situation wouldn’t be what it is today. There has to be continuity and that is very important.
“You need the driver at the top but also the people who make things happen. It’s a team. I can bulldoze, but if I bulldoze and the team doesn’t follow, the land that has been bulldozed will be overgrown with weed,” he argued.
Obasanjo insisted that Africa must provide initial financing like he did with AFC at the time it was formed, explaining that until then, the world will not take the continent seriously.
“We need to have that initial money and we did it with AFC, raising money in Africa. When I called a summit on HIV, I put in $10 million, Bush junior (then American president) put in $200 million. That initial money later raised over $45 billion,” he contended.
Speaking on the energy transition, the Group Managing Director, Nigerian National Petroleum Company (NNPC), Mele Kyari, stated that although Africa should be conscious of the energy transition, it must fix its peculiar needs before rushing to join the bandwagon.
“We miss the point if we don’t recognise that’s there’s abject energy poverty in Africa and you see that reflect everywhere. I am sure that as you were coming here, you saw fuel queues outside. It tells you the level of energy poverty in this country. We have a very thin supply chain, and a little disruption can cause any problem just like our own nation.
“Having said that, energy transition is not about stopping hydrocarbons or fossil fuels but we are going to get carbon-neutral and what that means is that we are going to have cleaner use of hydrocarbons so that ultimately the negative impact on the environment will be minimal,” he noted.
According to Kyari, Africa should not be rushed to join the rat race for renewables, stressing that the continent’s contribution to global emissions remains very low.
“In Africa, our contribution is probably 3 to 4 per cent maximum carbon emissions, but we are a very resource-dependent continent. In Nigeria we have over 203 TCF proven gas reserves and potentially about 600 TCF of gas but this can actually fuel and fire Africa.
“But there’s very little we can do rather than to first of all address the energy poverty challenge that we have, which means we have to transit gradually. The world has agreed that gas is a transition fuel of choice as we move towards carbon neutrality.
“We are very clear that NNPC is the largest NOC on the continent. We are going to become a fully CAMA company in a month or two, and what that means is that we have an opportunity to use this huge company to close the energy gap in Africa in all its sense.
“What Africa must focus on today is to seek financing for gas in the first instance and create wealth from the liquids. There’s a frontal approach by African countries that there must be energy justice.
“There must be a way we address Africa’s energy deficiency and ultimately arrive at net zero situation by 2060. We agree there’s an emission problem but we cannot move at the pace others are doing and our contribution is actually not the same,” he argued.
In his intervention, Akufo-Ado, insisted that there was a structural problem in getting capital for major projects on the continent, like the risk premium imposed on Africa.
“You don’t default on your debt but you pay a higher rate than countries that have, like Argentina,” he submitted.
According to him, unless Africa seizes the gauntlet, nobody will come and develop the continent. “Nobody is going to come and develop this continent but ourselves. Let us rise up to the challenge.
“We don’t have a choice. There have been models of development from outside the continent, more responsive to the desires and needs of others. We need our own models.
“Those who are holding the wealth of the world are not in Africa. This an area it is critical to change,” the Ghanaian president pointed out.
According to him, while Ghana and Ivory Coast produce two thirds of the world’s cocoa, they receive only 6-7 per cent in the value chain. “These statistics cannot continue,” he noted.
Also speaking, former Central Bank of Nigeria (CBN) Governor and Anambra Governor, Soludo, described Africa as the last frontier in terms of development, stressing that Africa cannot afford incremental, organic growth.
“We need to be running at 1000km per hour if others are running at 100km or 200km,” he maintained.
He added: “We require serious disruptive thinking and extraordinary execution and this is what AFC summarises. We need leadership, we need a team that’s capable, a vision and then execution, we need long-term financing, and then infrastructure,” he argued.
According to him, part of the problem in the public sector is the question of “what is in it for me or what is in it for him”.
“Many valuable projects have been killed for that reason. What was driving us was the public purpose, Soludo said, adding that influence from political forces remains the bane of public projects on the continent,” he noted.
Also speaking, Osinbajo stated that “In the next few years , we will need to see more innovation in finance, for example in the area of climate change.”
According to him, “We’re crying out for innovation on climate finance. There’s a huge gap. If we’re innovative enough we can do a lot.”
Founder of Heirs Holdings and Chairman, United Bank for Africa (UBA), Mr Tony Elumelu, in his comments, said there were huge opportunities in Africa, stressing that the continent needs massive investment in infrastructure.
“These issues that happen in our environment, affect global perception of our continent and private capital investment decisions.
“We want to see intra African trade grow but we need to see certain things first, for it to work. Is Africa wired in the twenty-first century in a way that we can trade amongst ourselves? The answer is no.
“The sentiment about our continent is not so positive. It is our responsibility as Africans to share our stories with the world and position our continent in a manner that will attract private global capital.
“We need to have industries out of Africa. For you to trade with a country, you must have what the country needs,” he stated.
Highlight of the occasion was the launch of a $2 billion facility by the AFC in response to economic challenges created by the global pandemic and the Russia-Ukraine conflict.
AFC said it was committing to funding up to 50 per cent of the new African Economic Resilience Facility and mobilising the remainder through the corporation’s network of international partners and investors.
The facility will be disbursed through loans from AFC to selected commercial banks, regional development banks and central banks in various African countries, providing them with much needed hard currency liquidity to finance trade and other economic activities in their jurisdictions.
Speaking on the rationale behind the launch, Head of Treasury and Financial Institutions, Banji Fehintola, said: “The COVID-19 pandemic set back Africa’s economic growth trajectory and widened the trade financing gap, while the Russia-Ukraine conflict has added a further set of challenges negatively impacting growth prospects across the continent.
“ We are determined to play a leading role in helping the continent’s recovery and resilience, not only though the work we do in bridging Africa’s infrastructure gap, but also through targeted interventions such as this $2 billion economic resilience facility.”
