Africa must be energetic

Global investors are looking to Africa as the next big growth story, Asia aside.

Easier said than done, as many corporate entrants into the continent have discovered to their detriment.

Tiger Brands, for example, is still counting the multi-billion rand cost of striking a disastrous flour mill deal with Nigerian tycoon, Aliko Dangote.

Africa is not without enormous risk. Poor infrastructure ensures the barriers to entry are high for outsiders.

Bureaucracy is a big killer, too, although little Rwanda has shown what is possible when an economy is liberated.

Despite the various hurdles, appetite for Africa is growing, which is wonderful for us. South Africa, with its own set of complex problems, remains a gateway to the continent.

Hard as it may seem right now, that can only benefit us in the coming decades as the African story unfolds.

But first we have some serious repositioning to undergo if we are to take advantage of this future economic renaissance.

Figures released yesterday show our GDP growth plunged to just 1.3% quarter-on-quarter for the first three months of the year. Year-on-year it was 2.1%.

The picture is not a good one. The same could be said for Nigeria, where crippling fuel strikes have added to the general malaise facing the west African nation.

Ironically, it’s biggest generator of foreign earnings – oil – is at the centre of Nigeria’s calamities this year.

With the oil price virtually halving, the government there suddenly found income drying up.

And because it has virtually no refining capacity, Nigeria exports its oil and then buys back the beneficiated product, paying its importers vast subsidies to keep the retail fuel price low.

But with no money to fund subsidies, fuel traders simply halted supply. Cue Nigeria’s shutdown.

It is quite apparent that the two biggest economies in Africa are suffering an energy crisis. Not exactly a fine showcase for the renaissance to come.

For what it is worth, Nigeria will have to diversify its economy away from dependance on oil. South Africa, as this newspaper has remarked before, must consider a similar exercise in respect of mining.

We are living proof of how constrained our growth becomes when commodity prices are weak.

But even more crucial to our future positioning as a foothold for foreign investment in Africa is sorting out our energy needs.

Erratic power supply is doing awful damage to our economic output and reputation. If there is one structural defect we need to resolve above all, then energy security is it.

There’s a whole African future depending on it.