Old economic policies based on resource extraction and cheap labour no longer work says Gyude Moore. To move forward, Africa must embrace new thinking
In early December 2019, the Dangote Oil Refinery took delivery of the largest monument ever conceived to the impact of petroleum on Nigeria. The crude oil distillation tower, said to be the biggest ever constructed, weighs in at 2,252 tons and is nearly 113 metres high. The new refinery, which should become operational next year, reveals a great deal about Aliko Dangote's outlook on the future of both Nigeria and Africa. It is a bold bet--a $15bn wager on the direction of Nigeria's economy and place in the world.
But it is also a bet on the past. A reliance on oil is indicative of a dearth of ideas as our continent faces a future for which it is woefully unprepared.
Dangote has a longer planning horizon than the average African politician. Presidential candidates are guaranteed one term and possibly two, save for the odd president tempted to go for a third. Their horizon is thus limited to those two elections, their incentives seemingly incongruent with long-term thinking and planning. Too much private and public sector long-term planning involves doubling down on an industry whose future is increasingly questionable.
In 2015, Ali al-Naimi, the then oil minister of Saudi Arabia, made a speech in which he predicted that the kingdom might phase out its use of fossil fuels by mid-century. Financial Times columnist Pilita Clark commented that the statement represented "a stunning admission by a nation whose wealth, power and outsize influence in the world are predicated on its vast reserves of crude oil".
Naimi's statement was not driven by Saudi's environmental bona fides; Saudi Arabia was responding to the reality of the pace at which changes were occurring. The 2019 Coal Cost Crossover report from renewables analysis firm Energy Innovation claims that 75% of the US's coal power stations could already be run more cheaply on local wind or solar, with the percentage rising to 86% by 2025. Tesla is now America's most valuable car company. At a $93bn market capitalisation it is worth more than GM and Ford combined. GM may have sold 20 times as many cars as Tesla in 2019 and Ford six times as many, but Tesla's electric vehicles are seen as the coming growth market.
Big thinking required
There is a race for big ideas happening everywhere. Governments must now make strategic choices about where they...