Leading African energy attorney NJ Ayuk does not believe in handouts as a long-term strategy for impoverished people or nations.
But he does think that the companies working on the continent have a responsibility to help their host nations build the infrastructure necessary to expand industrialization.
Bruce Falkenstein, Joint Operations Manager of License Management & Compliance for LUKOIL, agrees with that premise, which is the focus of chapter 10 in Ayuk’s new book, Billions at Play: The Future of African Energy.
Falkenstein has a 40-year career working in all facets of the international oil and gas industry. With regard to Africa, he has extensive experience managing offshore blocks in Côte d'Ivoire, Equatorial Guinea, Ghana, Cameroon, and Sierra Leone for LUKOIL and Vanco Exploration, and had great success in the exploration and development of oil fields in Egypt for Amoco (BP) in the 1980s and 90s.
“There is no getting around it: Africa is exporting raw materials it could be refining and processing, if it only had the capabilities, but not everyone is willing to admit that with the level of candor Ayuk does,” Falkenstein said. “What’s more, he has correctly linked infrastructure deficits to the lack of industrialization and describes workable solutions based on examples from around the world.”
Ayuk sees the irony in oil and gas produced in Africa being sent away to be refined, then returned as finished products that Africans pay a premium for. Roads, railways, and reliable electricity are key to building a manufacturing base in Africa, but they take resources—some of which should be provided by the international energy companies making millions on the continent, he argues.
“It is simply not ethical for American, French, Italian, and other companies to come here and not help lift people out of poverty,” Falkenstein said. “True, they employ indigenous workers and provide training, but one of the biggest benefits would be in committing to help build sustainable infrastructure and physical assets that will remain a plus for the people long after the companies have pulled up stakes and left Africa, and I will add that sustainability of the work force, also a key component of a venture’s ‘built assets’, is critical to the future industrial output of the nations and currently many of the work force assets are left behind without local supporting employment agencies after the stakes are pulled up. Sustainability is only achieved through alignment of the projects with both the real needs of the impacted communities and the spectrum of government stakeholders.
As Ayuk alludes to in chapter 9, Calling All Leaders! More on Good Governance, part of good governance requires that good leadership needs to be able to recognize the upfront additional cost to achieve sustainability results in reduced project risks and improved long-term project stability and economics.”
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