US investors are moving to boost electricity generation in Africa, where a lack of reliable power continues to stall economic growth, as well as invest in oil and gas
On a two-week energy trade mission to Ghana, Nigeria, Tanzania, and Mozambique, officials from Chevron, General Electric, Symbion Power, Energy International, and Caterpillar met with government officials, chambers of commerce, and private sector leaders on the vast potential for American firms to invest in African energy. In Nigeria, Deputy Assistant Secretary of State, William Fitzgerald, says US firms are among those preparing June bids for the privatisation of power plants and power distribution networks. With regular supplies of less than 4,000 MW in a country where estimated demand tops 10,000 MW, Fitzgerald says President Goodluck Jonathan is moving to improve generation in partnership with private sector investors.
“The Nigerian government realises that to promote – certainly to diversify the economy – to bring the manufacturers back on line they need to boost power,” said Fitzgerald before adding that many US firms are interested in oil and natural gas offshore Ghana, especially if Ghana and Côte d'Ivoire resolve differences over the location of their maritime border.
“It's an exciting time to be in the energy sector in Ghana,” said Fitzgerald. “And I think what you are seeing is very much of a commitment on the part of the Ghanaian government to embrace private sector companies to come in and do the work. You are going to see employment levels increasing and reaching record heights. You will also see education improving, health sector clinics improving.”
In Tanzania, Symbion Power is operating an off-grid, renewable energy programme that has helped create 1,000 jobs for sugar cane and bamboo growers as part of the US$206mn energy component of Tanzania's nearly $700mn US Millennium Challenge Corporation compact.
Fitzgerald said officials in Nigeria and Ghana are looking at the possible transfer of that technology to solve their own off-grid power needs. But for all the interest US investors have about Africa, he said there must continue to be progress on lowering trade barriers to create a positive business climate.
“The American companies that are going to invest in Africa need to make a reasonable rate of return,” he said. “They are not doing it for development.”
US foreign direct investment in Africa has grown from about $14bn in 2006 to nearly $25bn in 2010. Total US trade with Africa last year was about $83bn. That is behind the European Union's $150bn and China's $90 billion in total trade.
“Foreign leaders often say to me, “Where are the American businesses? How come they’re not here competing for this construction contract or that mining deal? What are they waiting for?” Secretary of State Hillary Clinton asked business leaders gathered at the State Department. “This administration is doing everything we can to help American companies, large and small, compete and succeed. But ultimately, we know it is up to you. We can't help you if you are not hungry enough to get out there and compete for the business that is going to be available.”
