Enhance Security and Ease of Doing Business Determines Foreign Direct Investment in Africa
By Sunny Oputa
In the new transformation agenda in the global oil industry, the new mantra is efficiency. Efficiency which calls for reduction of cost in both capital and operations expenditure through elimination of waste or “muda” ( Japanese for elimination of waste) by inculcating value engineering - lean production, manufacturing, inventory, excellence in operations and supply management.
The same prime factor which national oil companies, domestic and international operators are using to remain afloat and maintain a realistic bottom-line for shareholders in this recovery period when the price of crude oil is not expected to exceed $60 per barrel in time soon is the same model of efficiency in mitigating risk that investors are using to critically assess countries and projects to put their money.
Efficient and effective security and ease of doing business in a country have become very paramount to investors.
Any country that want to attract significant number of foreign direct investment in this era need to work on proving to potential investors that they have enough measures to ensure security, peace and orderliness. Investors or potential investors do not want to put chunk of their money in securing their assets or worrying over plunders by marauders, theft, killing, mayhem, kidnapping, action of pirates, bunkering, operation disturbance or stoppage through attacks or any adverse facet of insecurity.
Investors would prefer a situation in which their scarce resources are used entirely for the operations or projects in focus.
While investors and operators are still worried about the risk of corruption, political instability and issues of foreign exchange, it seems no longer to be on the apex of their major concern. Their main focus is now on security and ease or speed of doing business.
The current sporadic democratization of almost all African states and the pragmatic advocacy of the people and the massive use of social media have strongly put to rest political instability, coup d’état and former era of sit-tight despotism.
Africa nations are seriously embracing extractive transparency initiatives and have come to understand the stringent legal repercussion or consequences of fraud and also knowing that there could be a whistle-blower next door that could expose any smell of rat or let the cat out of the bag.
These have helped to quench the stench of corruption to some extent since people involved in governance or the handling of public assets have come to realize the opprobrium that goes with accusation of fraud.
By the end of this year , throughout 2018 and 2019 there will be massive marketing of licensing rounds; marginal, small and large assets in Africa oil patch. Lot of actions will be in Nigeria, Angola and Ghana where the governments want to increase revenue through foreign direct investment. Also licensing rounds and lot of farm-in opportunities will be experienced in Senegal, Gambia, Guinea Bissau, South Sudan, Kenya, Uganda, Tanzania and Mozambique and Egypt.
One thing is sure enhance security and ease of doing business which spikes efficiency will continue to be the mantra and the major focus of investors in determining where their money goes.