How African governments can take action for a brighter future

By NJ Ayuk

I strongly encourage African governments to address and minimize the challenges of doing business in the region. To create a more favorable environment, several key measures should be implemented:

Reform Licensing Processes: While the current system for licensing rounds provides important benefits, such as ensuring companies have the necessary resources for exploration, it is also plagued by delays and bureaucratic obstacles. These hurdles can force companies to wait for years before receiving decisions, a situation that often drives them to seek opportunities elsewhere. We must streamline this process and consider moving toward direct negotiations to offer exploration and production (E&P) companies greater flexibility.

Encourage Natural Gas Exploration: It is essential to revise our production-sharing contracts (PSCs) to offer more attractive terms to investors, particularly to stimulate interest in gas projects and oil exploration/production. We need to establish clear terms for gas drilling from the outset to prevent companies that discover gas instead of oil from having to renegotiate their contracts. Predictability and consistency are crucial. We should provide investors with every incentive to do business in Africa, regardless of whether they find oil or gas.

Improve Deal-Making and Negotiation Tactics: To escape the “resource curse” and unlock our true potential, we need to negotiate better deals. This requires a stronger, more strategic approach to negotiations.

Combat Corruption and Enhance Transparency: Governments must demonstrate a stronger commitment to improving transparency in revenue management and actively combatting corruption. These issues are significant deterrents for potential oil and gas investors, and addressing them is crucial for attracting international interest.

Strengthen Human Rights Protections: Unfortunately, human rights abuses remain widespread across Africa, exacerbated by the pandemic. Our governments must tackle the root causes of political instability that underlie these human rights crises. Without meaningful reforms in this area, the high risk associated with doing business in Africa will continue to drive international energy companies away. As a continent and an industry, we cannot afford to let this happen.