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Private business and the power market in Africa

When looking at direct foreign investment from international players like China, Europe and the US, Africa is booming on the whole. The World Bank and China are leading the charge when it comes to infrastructure development and the power sector will benefit greatly from these efforts.

No economic growth strategy can survive without the vital input from the power sector. South Africa has enormous potential in developing the power sector on the continent because of its experience, technology, innovation and creative approaches – the country is very well placed to understand the needs of the continent.

South Africa, holder of power market information

What are the positives that can derive from sub-Saharan Africa?

Although very poor in energy supply it is extremely rich in energy resources. In order to succeed it needs to harness these energy resources and make sure it is used in a regional manner, requiring regional integration and cooperation.  South Africa should lead the way.

So why is South Africa not at the forefront of developing the power sector on the continent?

Sifting through a myriad of information available and talking to executives in major companies throughout South Africa it becomes clear that they have all the information they need, but still Africa remains the elusive continent.

Some have experienced limited success and others have turned their back on the continent with the all familiar: “I hit a ceiling and can’t get past that”.

One of the main reasons is linked to the history of South Africa, being isolated during Apartheid meant that companies could not invest in what is commonly known as ‘relational capital’.  Former colonial powers and new ones were investing heavily in building relationships over time that served them well in their endeavours – South Africa does not have those relationships.

Lack of governmental support

Exacerbating this situation is also the inability of the South African government to support business. Government should help protect South African companies as they represent the national interests of South Africa as a country.  Unfortunately, South Africa does not have a well-defined policy and coherent strategy that supports business growth in the power sector in Africa. It is thus very much a situation of each company making it up as they go along.

If we look at other international players on the continent like France, their foreign policy supports their national interest. Business and diplomacy functions in tandem to ensure long term security for French national interests.

Furthermore the recent spotlight on the South Africa-Nigeria relationship through events like fines for MTN, imprisonment for others, the recent announcement of Sun International leaving Nigeria and more, makes one wonder what it is that South Africans are getting wrong and how to correct that. There is a myriad of information available led by reputable consultancies like E&Y, PWC, Deloitte, Frost & Sullivan. Let’s not forget Google.

It is also too easy to blame the current state of affairs in Africa on lack of strong regulatory frameworks, weak institutions, lack of political will and the lack of the rule of law etc., etc. As South Africans we must acknowledge that we lack critical self-analysis.

Yes, Africa is different and there are many variables in a relationship with Africa but once you have mastered the art of navigating the continent the rewards are enormous.

Africa, a unique gem

So what makes Africa so special and where do South African business improve?

We tend to think that we can apply western style analytics to the African context. In our understanding of Africa we are disillusioned when we cross all the t’s and dot all the i’s and still things don’t work out the way we want them to.

I remember sitting with one of the World Bank Country representatives in the Ivory Coast when he openly declared that “we sign multi-million dollar programmes with the government and all the details are contained in a 500 page document only to see that they put it in a drawer and go about business as usual.”

All the knowledge derived from specialist analysis cannot prepare one for the reality that is Africa.

Africa is not contained in statistics. It is not a continent where we visit the capital and live in upmarket 5 star hotels and hop in and out and think we ‘know’ Africa.  Being South African does not guarantee understanding Africa.

You have to invest for the long run in ‘relational capital’. This means spending time on the ground, getting to know the culture and the socio-political environment. Too often we use consultants to give us that overview in the comfort of our own offices.

It is often said in Africa that one cannot visit the village without paying respect to the village Chief. This is a very important proverb and anybody who understands the meaning thereof would reap the benefits.

In the South African business environment there is still the understanding that for socio-political analysis we do not need a strategy. This is no longer the case and companies will do good in the development of a foreign policy strategy for their business.

There is more than enough reason for South African companies to be at the forefront of the race to power Africa’s economic growth. South African companies has proven themselves to be reliable partners with innovative and creative thinking when it comes to powering Africa. South African companies just need to understand that doing business in Africa is for the long run and that a quick in and out will not do the job.


George Rautenbach, CEO, Africa Business Experts

After 20 years of working and living in Europe and Africa, as a South African diplomat and then as Chief of Staff to the United Nations, George Rautenbach has returned to South Africa to establish Africa Business Experts.

Africa Business Experts is a consultancy with a difference. It promotes diplomacy as business consulting, traditional diplomacy is no longer the pre-requisite of Governments but is also available to Business.

Ashley Theron
Ashley Theron-Ord is based in Cape Town, South Africa at Clarion Events-Africa. She is the Senior Content Producer across media brands including ESI Africa, Smart Energy International, Power Engineering International and Mining Review Africa.