The African Continental Free Trade Agreement has not only simplified trade across the continent but provided an avenue for African countries to advance energy security on the back of regional distribution and investment.
Africa is well positioned to achieve universal access to electricity while boosting industrialization on the back of intra-African trade. With policies such as the African Continental Free Trade Agreement (AfCFTA) in place, opportunities for distribution, collaboration and commerce have significantly expanded. As the highly anticipated African Energy Week (AEW) 2023 conference approaches (October 16-20), leaders and key industry stakeholders will come together to engage in discussions about a crucial topic that will play a definitive role in shaping the energy outlook of the continent in the years ahead: leveraging the AfCFTA to achieve pan-African energy security.
Implemented in January 2021, the AfCFTA established the largest free trade area in the world. Spearheaded by the African Union, the agreement eliminated tariffs on a number of goods and services, thereby incentivizing and simplifying trade across member countries. For the African energy sector, the agreement has opened up lucrative opportunities for the trade of energy goods and services, and if leveraged, stands to play an instrumental part in scaling up energy security on a continental basis.
This pioneering agreement, embraced by a number of African nations, is positioned to overhaul trade dynamics within the energy sector across Africa. The AfCFTA’s wide-ranging effects offer various avenues for growth, heralding an era of collaboration, progress and prosperity. As Africa’s energy sector continues to expand and new markets are developed, the AfCFTA’s preferential trade privileges unlock a wealth of alluring prospects for private sector engagement in uncharted territories within the energy value chain.
In West Africa, for example, developments such as the Greater Tortue Ahmeyim Liquefied Natural Gas (LNG) project and the Sangomar Oilfield Development are poised to bring new supplies to both the Senegalese and Mauritanian markets. Co-developed by the two countries, both projects are set to come online next year. The projects are strategically placed in close proximity to high-demand West African markets, and using the AfCFTA, Senegal and Mauritania can advance African LNG trade, bolstering security for the energy-starved market.
Further south, five major oil and gas discoveries made in Namibia in the last two years are bound to yield significant benefits for the country. However, the AfCFTA has paved the way for Namibia to contribute towards both domestic and regional energy security. Neighboring South Africa is in the midst of an energy crisis, and Namibian oil will be highly valued. These new markets hold the promise of heightened demand, diverse investment prospects, and improved energy security. By promoting cross-border cooperation, AfCFTA opens doors to a collective energy future where resources are efficiently harnessed and distributed, fostering stability and advancement.
AfCFTA’s impact extends beyond erasing trade barriers; it paves the way for regional expansion. The energy sector, often challenged by intricacies and cross-border complexities, can now thrive through harmonized regulations and streamlined procedures. The growth of infrastructure, including cross-border transmission lines, pipelines, and transportation networks, will flourish as nations collaborate to establish an integrated energy market.
However, the AfCFTA will be integral to not only the oil and gas market but the broader energy and mineral sectors. Zimbabwe’s lithium market, for example, is well-positioned to reap the benefits of this agreement’s transformative influence, as is Ethiopia’s power sector. Zimbabwe holds the largest reserves of hard rock lithium worldwide and is rapidly expanding the domestic value chain. As Africa’s energy transition accelerates, the AfCFTA can be strategically utilized to support the deployment of renewable energy technologies. Ethiopia, for its part, has the potential to generate up to 60 GW of hydropower, and is looking at increasing regional power trade.
In this new era, the private sector emerges as a pivotal force in driving regional energy expansion. The AfCFTA empowers private enterprises to expand beyond borders, capitalizing on a continental marketplace. Leveraging this expansive platform, private entities can accelerate investments, foster innovative technologies, and form strategic alliances. This not only expedites economic growth but also bolsters job creation and human capital development throughout the energy value chain.
Stepping into this picture, AEW 2023 will host a dedicated session titled, ‘Unleashing Africa’s Energy Potential: The AfCFTA’s Influence on Shaping the Continent’s Future.’ Industry experts, thought-leaders and African energy leaders will discuss the role the agreement plays in Africa’s energy sector and how countries and companies can leverage the AfCFTA to facilitate investment and development on a much larger scale. From the prudent exploitation of hydrocarbon and renewable resources to the reinforcement of intra-African collaboration, this panel discussion is poised to delve deeper into the profound and far-reaching influence of the AfCFTA in shaping the forthcoming energy landscape across the continent.
AEW is the AEC’s annual conference, exhibition and networking event. AEW 2023 will unite African energy policymakers and stakeholders with global investors to discuss and maximize opportunities within the continent’s entire energy industry. For more information about AEW 2023, visit https://aecweek.com
