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The next chapter in Africa’s oil and gas story

  • SOURCE: | qwesa2big
  • offshore-rigThis week in London, a high-profile group of African ministers, business leaders and NGOs will gather to discuss Africa’s extractives sector and its long-term prospects. The aim of the event is to examine “new approaches to enduring challenges”, but the one fundamental challenge above all else will be how to ensure Africa’s resource potential remains a socioeconomic boon rather than a curse.

    The conference could not be better timed. The oil price has fallen sharply over the last twelve months, with many of the major players scrapping key projects and governments slashing budgets. A period of painful adjustment is currently taking place across major oil producing countries in Africa, including once rising stars Angola and Ghana.

    Looking beyond the headlines, however, one positive story which will be discussed is the profound shift taking place in the extractives sector driven by technological, demographic and democratic changes. Companies are now starting to take a progressive stance on issues that affect the communities they operate in. More often than not, this change is being driven by the newer players in the market, although some major companies have been going in this direction for a long time.

    Many companies have spoken about the need for a licence to communicate; the credibility to speak on issues that affect communities they operate in. In truth, it has always been needed but seldom applied. Sharing a platform with NGOs and activists to speak about human rights or transparency would have been unthinkable for many companies twenty years ago, but today it is commonplace. Two decades ago a small spill or local community dispute could usually be contained without much threat to a company’s licence to operate.

    Today, there appears to be agreement that a licence to communicate is being driven by the need for companies to radically rethink their approach about how they do business. My own company’s research, ‘How Africa Tweets’, was the first study of its kind to look at how social media was changing across the continent, and it showed that societies – particularly young urban populations – were becoming increasingly connected across borders. Without doubt, social media has created powerful new alliances and given civil society a much greater platform. Companies are now scrutinised more than ever before, meaning issues such as transparency or human rights can no longer afford to be ignored.

    A seasoned executive from a large extractives company said recently that obtaining a licence to operate now was much more difficult because governments and regulators (the permission givers) also required permission themselves (directly or indirectly) from a much larger group of people whom they are held accountable by. What is needed, argued the executive, is for a company to build a narrative that is credible not only with governments and regulators, but people within the communities themselves.

    You don’t have to go far to find examples of companies and countries starting to do things the right way. In Mozambique, the Country Mining Vision (CMV) process, designed by the United Nations Economic Commission for Africa and other donors, is currently being piloted. It articulates a vision for how oil and gas fits into the country’s economic development strategy, and has built public understanding through trusted institutions such as the church and media.

    After a rocky start in Ghana a decade ago, a number of companies and the government have managed to work together to try and promote transparency, avoid corruption, protect human rights, and facilitate local content objectives in the supply chain. I witnessed some of the progress for myself when travelling through Ghana’s western region back in 2013.

    But it’s more than just building wells, schools and hospitals. In East Africa, Tullow Oil recently entered into a two-year partnership with the David Astor Journalism Awards Trust (DAJAT) to promote, strengthen and support independent journalism in Africa. Nigerian company Seplat’s chairman, ABC Orjiako, said in an interview last year that he hopes his company can serve as an example to others across the continent. He claims that his local workforce and expertise has led to a massive reduction in theft from oil pipelines in the Delta region. So what advice would I give to those attending this week’s Chatham House conference? First and foremost, ensure that communications is a core part of your decision-making process. Obtaining a licence has become much more complex, and this change has been driven partly by the communications revolution. A citizen in the remotest part of the world with a smartphone can now do a better job at holding a multinational to account than any NGO. This has fundamentally changed the way companies and governments operate and communicate.

    At a practical level, this means identifying and communicating early with all relevant stakeholders, building partnerships at a local level, and being open and transparent about your business plans. Secondly, it means ensuring your communication is locally driven and that you’re using the right channels to engage with your audiences, including social media and mobile technology. Internet access and smartphone ownership has flourished over the last few years, meaning companies now have little excuse for not engaging.

    The successful development of natural resources involves significant governance, political and macro-economic challenges. In such unpredictable times, one thing that looks certain is that companies now realise that they must up their game or risk getting left behind. This can only be good news for Africa’s next chap.



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