In the early 2000s I decided to leave my job heading the African project finance team in a global law firm to become an investor. My experience of managing big telecoms, infrastructure and energy transactions — and, regrettably, often disputes — involving governments, project sponsors, investors, big contractors, multilateral and development agencies had left me dissatisfied. Much of the ownership of the assets being fought over remained in the hands of international conglomerates. Africa’s lack of capacity to raise the capital to own them directly — and to develop the technical skills necessary for growth — was a clear weakness.
I knew that if we could bring in the ability to do both those things, we could stimulate interest in building a domestic oil and gas industry in Nigeria. Over the next decade many domestic companies were established. These gained access to the international capital markets, helping them raise finance to buy and develop assets. In total, according to the Department of Petroleum Resources, the domestic industry now controls up to half of Nigeria’s reserves, though about only 10 per cent of production. But without much-needed investment these reserves will be written down.
Yet, nearly 15 years after the domestic oil and gas sector began to evolve, oil is no longer the country’s only “black gold”. If I take a comparative look at how Nigeria’s energy sector has evolved since the early 2000’s, compared with how its ICT and broader technology industry has emerged, and the opportunities that both represent for the future, the contrast is stark. Nigeria, and the rest of the continent, has been enjoying a technology revolution and the opportunity that it represents has the potential to affect every sector of the economy. According to Africa Infotech Consulting, Nigeria’s mobile penetration rate — a measure of the number of devices by population — is more than 90 per cent, less than 20 years after the first mobile network appeared on the continent. Recent reports suggest more than 10 per cent of Nigerians have a smartphone. The availability and cost of fast data have improved dramatically.
Just as with oil and gas, Nigeria’s technology industry has attracted global interest. In August Mark Zuckerberg, Facebook’s chief executive, visited Nigeria after his foundation invested in Andela, which trains and places African developers.
The opportunity offered by big data mining and analytics, and the innovative product and policy development that comes with it, is almost immeasurable. Bringing the ability to use data to improve product development and delivery, and applying those things to private and public sector challenges, is the single most transformative opportunity today. Yet data analysis is almost entirely undeveloped in Nigeria.
There are certain obstacles Nigeria must overcome if it is to realise its potential, whether in energy, technology or other sectors. These include providing entrepreneurs with the access to affordable capital and offering them access to the technical expertise. The regulatory environment must allow these industries to take off, while expansion also requires a reliable and ideally strong currency.
We have seen in the rise of domestic oil and gas that success can be achieved with only some of these things, as long as there is the right leadership in the private sector. But if we can combine that with public sector support and leadership to facilitate growth then technology can become Nigeria’s new “black gold” much sooner.
The writer is an investor in and adviser to technology, oil and gas companies