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African Business 2021

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The 2021 edition of African Business is the second issue of this useful guide to business and investment on the continent. The positive reception accorded the inaugural edition in 2020 was encouraging and we are optimistic that this publication and future issues will continue to meet the need for timely and relevant information in an exciting time for African business. African Business 2021 has articles on recent trends plus overviews of the key economic sectors on the continent and regional and country profiles. There is an in-depth analysis of the implications for trade on the continent of the introduction of the African Continental Free Trade Area agreement (AfCFTA) and an article on the growth and importance of exploration for minerals, gas and oil. Namibia and Botswana feature in an article on how cooperation can drive economic growth and an opinion piece focusses on the role that digital technology can play not only in the financial sector, but in the driving progress in a broader sense. Global African Network is a proudly African company which has been producing region-specific business and investment guides since 2004, including South African Business and Nigerian Business, in addition to its online investment promotion platform:


SPECIAL FEATURE Exploration could unlock great value for Africa Gas exploration is leading the way, but oil and mining are attracting international interest. The Deepsea Stavanger drilling rig has made two big discoveries off South Africa’s south-eastern coast. Total E&P South Africa is the lead shareholder in a joint venture investigating the block. Credit: Anton Swanepoel. The large differences between Africa’s proven resources and the amount of production presents clear opportunities, both for host countries and for extractive companies. Where Angola’s gas resource is 32 792.4-billion cubic feet (bcf), production is currently below 200 bcf. Nigeria’s production of 671.59-million barrels of oil is significant, but the resource of 30 079.99-million barrels remains vast. These figures are taken from Deloitte’s Africa Oil & Gas State of Play (November 2018). Deloitte predicts a 78% increase in exploration expenditure in African oil and gas between 2018 and 2025. This prediction was made before the year of the Coronavirus but there is every reason to suppose that countries and companies will support this trend. With global demand for socalled “battery minerals” on the rise in the era of the electric vehicle, African mining is starting to receive increased levels of exploration funding. There are 170 companies in Africa which are listed on the Australian securities exchange, ASX. The number of African countries where successful exploration for oil and gas has taken place continues to rise. It now stands at 28, with new reserves unearthed in Ghana, Niger, Mozambique, Uganda, Kenya, Senegal, Mauritania, South Africa and Tanzania. New finds in the oil and gas sector have significant downstream repercussions. Fertiliser plants and refineries become viable, for example. A lack of exploration not only inhibits expansion, it also reduces the life of an existing mine. The global figure for mining exploration in 2019 was around -billion and although this will be reduced in 2020, it is almost certain that Africa will attract an increased share. In 2019 Africa was ranked fourth in the world, with .1-billion, behind Latin America (.6-billion), Australia and Canada. AFRICAN BUSINESS 2021 16

SPECIAL FEATURE Exploration expenditure in African mining, 2019 Democratic Republic of Congo Burkino Faso Ghana South Africa Mali Ivory Coast Tanzania Namibia Angola Namibia Source: 4.2-million 4.2-million 0.3-million .4-million .3-million .8-million .2-million .7-million .9-million .3-million South Africa is currently attracting just 1% of global spending on mining exploration and is determined to increase that percentage. The nation’s Council for Geoscience is working on producing improved data towards that goal. Gas is leading the way on the continent, with significant finds off the coasts of Senegal and Mozambique attracting global interest. Both Mozambique and Tanzania are receiving major investments in infrastructure to support liquified natural gas (LNG). Most recently, Total and its partners announced major finds off the south-eastern coast of South Africa and Renergen has begun work on the onshore 187 000ha Virginia Gas Project which is reported to have one of the richest helium concentrations recorded globally. Both of these South African projects have been encouraged and overseen by Petroleum Agency SA (PASA), the promoter and regulator of oil and gas exploration. PASA has also awarded hydrocarbon exploration licenses over a further 30 132km² to six mining companies to prospect and drill exploratory wells in three provinces. Shell has bought into blocks west of the offshore Total discoveries, an indication of increased international interest in that geological basin. Offshore blocks in Western Africa are the site of active investment by multinationals. One example off Ghana is the .4-billion Pecan field. In North Africa, Egypt is transitioning to gas power on the back of large discoveries. A planned refinery and pipeline for Uganda could be major additions to East African capacity, where Kenya has led the way for some time. Eni is heavily invested in offshore drilling for oil off the Kenyan coast. Investment climate Reports that China’s steel blast furnaces were operating at 92% capacity in the first week of June 2020 was good news for African miners of iron ore (The Economist). When China is building, it needs commodities and this trend shows no sign of tapering off. The world wants battery minerals and Africa has them in large quantities. These include copper, cobalt, lithium, nickel, graphite and rare earth elements. This demand will continue to grow as everything from motor cars to smart phones needs storage. It is possible that automotive manufacturers will themselves start investing directly in mining to ensure a stable supply of vital minerals. The global appetite for natural gas is growing and so the discovery of gas fields off the African coast has come at the right time. Exploration itself is a complex task, involving not only estimates related to mineral resources but environmental impact assessments and metallurgical testing. The CEO of Minerals Council South Africa, Roger Baxter, in a presentation on how to promote a greenfields exploration boom, outlined in October 2019 the seven fundamentals that have to be in place to encourage exploration: • Stable, predictable regulatory environment. • Sound geological information. • Expeditious and transparent licensing. • Social licence to operate. • Good infrastructure. • Improving productivity and competitiveness. • Access to funding and incentives. 17 AFRICAN BUSINESS 2021

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