Nigeria’s recent success in attracting over $8 billion in investments for deepwater and gas projects within a year signifies a positive shift in the country’s energy sector. This achievement surpasses the previously announced $6.7 billion investment target for 2024 and underscores the effectiveness of government reforms aimed at improving the investment climate. These reforms include enhancing tax conditions, streamlining approval processes, clarifying regulations, and bolstering the power sector to make gas-to-power projects more commercially viable. This influx of capital demonstrates renewed investor confidence in Nigeria’s oil and gas industry and highlights the potential for further growth and development. The successful attraction of these investments showcases Nigeria as a compelling example for other African nations seeking to attract capital and boost their energy sectors.
This success story, however, unfolds against a backdrop of broader concerns regarding Africa’s declining share of global upstream investment. While the continent attracted $340 billion between 2011 and 2015, projections indicate a significant drop to below $130 billion between 2026 and 2030. This decline, described as a “structural decimation” rather than a mere funding winter, necessitates a strategic shift in how African nations approach attracting and retaining foreign investment. To compete effectively in the global capital markets, particularly for deepwater and LNG projects, African countries must offer attractive project economics, demonstrate low carbon intensity, and ensure predictable regulatory environments. These factors have proven crucial in driving investments towards regions like the Permian Basin, Guyana, and Brazil, and their absence in Africa could further exacerbate the continent’s declining share of global investment.
The call for abandoning sentimental appeals to “African capital” and embracing investment discipline grounded in commercial logic and global competitiveness is crucial for the continent’s future. Capital, as Verheijen aptly stated, is rational and opportunistic, flowing to locations where risk-adjusted returns are competitive. This necessitates a shift away from emotionally charged appeals and towards a pragmatic approach focused on creating an environment conducive to investment. This includes clear policies, efficient regulatory frameworks, and a commitment to honoring contractual obligations. By focusing on these fundamental principles, African nations can position themselves to attract the capital necessary for sustainable development and growth.
While attracting international capital remains critical, the role of domestic investors, development finance institutions, banks, pension funds, and sovereign wealth vehicles in filling the investment gap cannot be overstated. These entities, often possessing a deeper understanding of the local context, risks, and rewards, are particularly well-suited to invest in onshore, shelf, and domestic gas projects. This focus allows them to capitalize on opportunities that international investors might overlook and contributes to developing local capacity and expertise. The emergence of African private sector champions, exemplified by Renaissance Africa Energy Consortium’s acquisition of Shell’s onshore JV and the operational success of the Dangote Refinery, demonstrates the growing potential of domestic players. These examples highlight the transition from colonial-era concessions to indigenous control and the substantial contributions African companies can make to the continent’s energy landscape.
Despite the strides made by domestic players, international capital remains essential for Africa’s energy sector development. International oil companies (IOCs) still account for a significant portion of production and capital expenditure in sub-Saharan Africa. Therefore, aligning with their evolving investment criteria is crucial. IOCs are increasingly prioritizing value over sheer volume, seeking low-cost, low-carbon, and de-risked assets. Africa must adapt to these preferences to remain an attractive investment destination. This requires a realistic understanding of the competitive global landscape and a willingness to negotiate terms that are attractive to both international investors and the host countries. Prioritizing investment inflows will pave the way for subsequent returns and benefits, creating a mutually beneficial relationship between investors and African nations.
The overarching message is clear: Africa must transition from being a recipient of aid to becoming an investment destination by design. This transformation hinges on policy clarity, commercial logic, and strategic intent. By implementing sound policies, fostering a stable and predictable business environment, and showcasing the immense potential of its resources, Africa can attract the capital necessary to drive its own development. The future of the continent will not be passively received but actively built through deliberate, unapologetic action, driven by a clear vision and grounded in the principles of economic competitiveness and sustainable growth. This proactive approach, combined with a commitment to attracting and retaining both domestic and international investment, will enable Africa to shape its own destiny and secure a prosperous future.
