1 May 2018
Senegal, a country known for fishing, groundnut and advanced education joins Mauritania as the latest African countries to discover significant amounts of oil and gas. According to industry estimates, both countries have found enough gas to power all of Africa for seven years.
The local response to the news was mixed. For some, it is a time for jubilation, as recent finds could inject an estimated $30bn into both Senegal and Mauritania’s economy. For others, it is a cause for concern. Why? Because it raises questions, to which answers are few and far between, such as:
– Can Senegal avoid the resource curse that has blighted countries like Angola, Iraq and Nigeria?
– How are these resources going to create much-needed jobs, especially for graduates who face unemployment rates of up to 30%?
– How can the Senegalese Government manage the high expectations of improvements in
healthcare, education and infrastructure overnight?
– Does the government have the institutions and transparent systems in place to ensure real accountability?
To address these issues, most would look solely to the government for both answers and a national framework that ensures Senegalese citizens benefit from its natural resources. However, the role of business cannot be underestimated as it serves everyone to create a structure that increases economic prospects and political stability for all. As a vehicle for job creation, business must proactively contribute to the framework's success.
To achieve this, what is needed is a well communicated and coordinated approach that brings together local communities, government and industry to agree the following:
- 1. Senegal’s current local capabilities,
- 2. The vision for the country’s future capabilities, and
- 3. A roadmap which maximises the opportunity for local businesses to grow sustainably
Doing this successfully requires constant coordination and communication. This function is usually best led by an independent third party and if done right creates the industry-led success that informs legislation.
However, this approach requires a level of transparency, trust and openness that doesn’t always come naturally, particularly at the start. The sooner we recognise the shared destination, objectives and challenges of all involved, the sooner we can get to work solving them together. Most valuable about this model is that a coordinated approach allows all parties to save time and money as they benefit from economies of scale and scope.
This coordinated approach is one Invest in Africa has been using to good effect over the past 5 years in East and West Africa as we believe this coordinated approach creates a win-win. Investors can surpass local content requirements while reducing procurement costs. Local suppliers can access the three core ingredients for sustainable growth: skills, tenders and finance through one initiative. Finally, government benefits from job creation and the growth of local industries.
Until we can make it easier for investors and local companies to play a more prominent part of Africa’s development story then the same old challenges and barriers to growth that we see today will exist long after even the natural resources are gone.
Invest in Africa (IIA) is a private sector led initiative working with leading businesses
(including Tullow Oil, Safaricom, Ecobank, Equity Bank, Shell & EY) to do three things:
- 1. Connect MNCs and larger business to credible local suppliers (SMEs)
- 2. Improve those local suppliers (SMEs) access to skills, tenders and finance to build long-term capacity
- 3. Improve the investment climate and quality of policy discussions
IIA’s vision is to create thriving African economies. By 2027 we aim to connect African SMEs with contracts worth $1bn and to create 100,000 jobs.