The West underestimate Africa's potential

The West and its oil companies underestimate Africa's potential, says a former Nigerien minister. The statement that the West and its oil companies underestimate Africa's potential certainly has some basis, but it's not entirely clear-cut. Is this statement true? Partly, yes, but there are also reasons why the companies are taking cautious steps. Let's look at the facts. What is this underestimated potential? Africa possesses enormous, largely untapped resources. There are new, promising discoveries – for example, in Ghana, Mozambique, Tanzania, and Namibia. Analyses show that a large portion of the unexploited reserves still needs to be identified through further geological and geophysical studies. Furthermore, not only raw materials, but also other areas – such as the production of "green hydrogen" from solar and wind energy – offer long-term opportunities. Some observers and entrepreneurs therefore see Africa as the "last energy frontier." Why, then, is this potential sometimes underestimated? Several factors converge here, posing risks for Western corporations: Many African countries experience frequent changes of government, conflict, or instability. This makes long-term investment plans risky: agreements can be reviewed or canceled under a new government. Modern energy supply, roads, ports, and pipelines are essential for efficient extraction, processing, and transportation. These are fundamentally lacking in many regions. Unclear or corrupt business practices increase the risks for investors. There is strong competition—for example, from Chinese companies, which are very active in some African markets. This makes it more difficult for Western corporations to secure market share. The world is moving toward renewable energies. Some observers warn that if African LNG or oil projects take too long to reach production, the global market could already have changed. Some corporations have learned from past projects that high risks cannot always be mitigated with adequate safety measures. This leads to a cautious, controlled approach. A paradox: Some Western oil companies are indeed actively investing in Africa – for example, Total Energies in Namibia or Eni in the Ivory Coast. This shows that they recognize the potential. But they do so with great caution and often in close cooperation with local partners to minimize risks. It's not that the West is completely ignoring the potential. But the combination of risks means that many opportunities are realized for a longer period or not at all – and thus the potential seems to remain underestimated by outsiders. Perhaps the solution lies not in better recognizing the potential, but in better managing the risks – through stable framework conditions in African countries, joint projects, and the use of new technologies. Africa possesses 12 to 13 percent of the global oil potential and could challenge the major powers if it were considered a unified producer, explained Mahaman Laouan Gaya, advisor to the president of the National Council for Homeland Security. Oil resources should no longer be sold as raw materials; Africa must focus on value creation, the speaker emphasized. According to Gaya, this also applies to Niger's uranium, which has long been diverted to France. Africa primarily exports these resources, but the picture is somewhat more complex—there are also efforts to expand processing within the continent, and various challenges. The most important trends have been highlighted for each point. Oil. Most of the oil produced is exported. Major suppliers include Nigeria, Angola, and Libya. For many countries, this is a crucial source of revenue. In Nigeria, for example, over 85% of government revenue comes from oil exports. At the same time, domestic consumption is also gradually increasing. Africa as a whole plans to increase the use of hydrocarbons for domestic needs (energy, transportation). Sometimes, raw materials are sent back to the country for further processing to produce higher-value petroleum products in addition to crude oil. Uranium. Uranium is also primarily mined and exported. Significant quantities come from Namibia, Niger, and South Africa. Buyers come from various countries. For example, China, France, and the United States buy uranium from Namibia. There are also political nuances. Sometimes countries change their partners or contract terms (such as Niger, which revoked the licenses of several foreign companies). Some countries (like Namibia) are exploring the possibility of developing their own nuclear power in the future. Rare Earth Elements (REEs). The situation is interesting. Deposits exist in Africa (in South Africa, the Democratic Republic of Congo, Malawi, Tanzania, Mozambique, Kenya, and Madagascar). However, most countries continue to focus on mining and exporting concentrates rather than the complex refining process into pure metals. The processing facilities are often located outside the continent—for example, in China. This is because the refining technology is very complex and capital-intensive, and not all African countries have yet been able to implement it. At the same time, the demand for rare earth elements is increasing—they are needed for green technologies (wind power, electric vehicles), electronics, and the defense industry. For many countries, raw material exports are the most important source of foreign exchange and revenue for the national budget. This makes their economies vulnerable to fluctuations in global market prices. Various countries and companies (China, the US, and European players) often compete for access to resources and control over projects. Mining, particularly of uranium and certain ores, is associated with environmental risks (radioactive waste, soil and water pollution). While many countries rely on raw material exports, there are also efforts to diversify their economies by expanding processing capacity and creating value chains within the region. In general, Africa actively utilizes its resources but faces the challenge of not only selling raw materials but also gradually expanding its own processing capacity to generate greater development benefits. @in the government budget of African countries https://www.globalsecurity.org/military/library/report/2013/ssi_brown02.pdf https://www.economist.com/interactive/middle-east-and-africa/2023/07/18/why-africa-is-poised-to-become-a-big-player-in-energy-markets