As the African continent continues to square up to a deep recession, following the hard-hitting effects of the Covid-19 crisis, an improvement in the regulatory framework of the Public-Private Partnership (PPP) is being touted as the much-needed panacea to abate the fiscal pressure the pandemic has exerted on governments across the region.
General Electric’s Africa CEO Farid Fezoua and NJ Ayuk, Chairman of The African Energy Chamber, are two of the continent’s leading executives in the health and energy sectors.
Fezoua, a 15-year company veteran at General Electric is concerned about the weak framework of the continent’s Public-Private Partnerships (PPPs). He wants to see a more inclusive collaboration between consortiums in the execution of a Greenfield Hospital development through which the infrastructure gap in Africa’s health sector can be narrowed:
“Through an international investment consortium comprising of governments, private investors, and technology companies such as GE, such a development would cost hundreds of millions of dollars in debt and equity. PPP partnerships are an “efficient way to attract limited resources from investors.”
Africa’s issues of fragile institutions, poor leadership, conflict, corruption, and myriad legacy challenges have created a massive laxness in the continent’s corporate governance structure. The advent of the dreaded coronavirus pandemic greatly exposed the frailty of the many institutions in the region.
The Broker, a public policy consultancy, in its 2020 Development Policy report entitled Impact of COVID-19 in Africa: a scenario analysis to 2030, forecasts that ” COVID-19 is set to further constrain Africa’s progress towards attaining the 2030 Sustainable Development Goals (SDGs),” while noting that the “pandemic is expected to significantly reduce government revenue, health expenditure, and undermine debt sustainability in a number of African countries.”
The impact of Covid-19 crisis in various communities in the region has also posed a fledgling challenge for public-private partnership projects. The health and energy sectors of the PPP have suffered the highest revenue losses of the many countries in Africa. The financing gap is conservatively estimated at US $66 billion per year in the private sector where the majority of healthcare services are delivered.
Infrastructure is expected to play a significant role in post-Covid-19 African economies by way of rebuilding to put private sector skills to their best uses and direct their investment interests to meet public health priorities and goals.
New business models and partnerships applicable to Africa must be designed to meet the specific requirements of the continent in the face of the hard time African states are having accessing the global financial market. The danger of not strengthening the PPP is that the economic gains made in sub-Saharan Africa over the past five to ten years will be reversed.
Africa’s energy sector wasn’t spared the unprecedented shock of the pandemic. While necessary measures taken provided some short-term relief, the renewable energy sector mostly expected to participate in the fight against the devastating consequences of Covid-19. It is expected that strategic investment in sustainable energy, combined with stimulus measures could help fast track an economic recovery.
The African Energy Chamber, “the leading chamber of successful networks, transactions, and partnerships at the helm of Africa’s growing energy industries,” in its new publication entitled, “African Energy Road to Recovery: How the African Energy Industry can Reshape itself for a post-COVID comeback,” unpacked how Africa’s energy industry “can overcome the impact of the COVID-19 pandemic across the entire energy value chain.” The book expressed optimism that Energy industry leaders have stated that “while the African energy sector is poised for an impressive market rebound – and that opportunities for investment and growth will be exponential – the energy industry must first reshape itself to enable a post-COVID-19 comeback.”
The African Energy Chamber (AEC) has long been at the forefront of encouraging collaboration between the continent’s energy businesses and governments. Since consolidating its position as the leading bridge between Africa’s public and private sector, it has also achieved tremendous backing of executives from oil and gas, power, and renewables industries.
NJ Ayuk, the AEC’s Chairman tells Africa Executive that the chamber mission is to give a voice to the continent’s on-going change and progression in the African energy industry. “Long before the unthinkable happened, and COVID-19 changed our world, I made a case for strategically harnessing Africa’s oil and gas resources to create stability and economic growth. Now, because of the pandemic, we find ourselves in a difficult place with faltering economies. But nevertheless, the steps that The African Energy Chamber put forth to help the continent reap the full benefits of its petroleum resources will still have merit when we emerge from this trial. If we start preparing now to set them in place, they’re even more likely to be successful.”
Whilst recognizing that the government has a role to play by giving businesses an enabling environment, Ayuk is confident that 2021 will greatly benefit Africa if ” we create an investment climate that supports the development of all energy resources. At the African Energy Chamber, he concluded that “We believe that supporting the energy industry and promoting free markets, the rule of law, individual freedoms, and limited government, is a duty for all Africans.”