Houston, 25 February 2016
I would like to thank IHS for the kind invitation to contribute to this important forum. Energy is more than a commodity. It is the lifeblood of the global economy and a pivotal factor in international security.
We all have a stake in a dynamic energy industry capable of innovating to offer more affordable, accessible, and sustainable products to the market. Yet we face a moment of pessimism. The low oil price environment has magnified uncertainty and risk in the energy sector and beyond. The urgency of greater efficiency, smarter technology, and new growth drivers is fully reflected in this year’s CERAWeek programme.
Oil is Rwanda’s main import, and in the short term lower prices are helpful. But if the pace of technological progress slows down as a result, we will be worse off in the long run. Africa is not yet a major factor, in discussions about the future of energy. But Africa, and indeed Rwanda, offer strategic opportunities that relate directly to the current environment. First, Africa is set to emerge as a major consumer of energy products in the decades ahead. Africa has the world’s youngest population, and its fastest-growing. As the century progresses, most population growth on our planet will be concentrated in Africa.
Africa is urbanising at a faster pace than any other region, and our cities will continue to expand for decades to come. Africa is also much more than an exporter of commodities. Average growth rates have remained among the world’s highest, despite the financial crisis and the current price slump. Taken together, these trends mean that Africa will be in a position to help offset the risk associated with uncertain energy demand in the more advanced economies. But a few things have to be in place for Africa to achieve rapid and sustainable growth.
The first element is our responsibility as Africans to continue making progress on governance, security, and economic integration. Already there are results to take advantage of, such as the Northern and Central Infrastructure Corridors being developed in East Africa. The second critical element is electricity. Without an adequate supply of power, Africa will never become a middle-income continent. In one country in West Africa, for example, IHS estimates that 1 to 2 per cent of GDP growth is lost each year because of electricity shortfalls.
Compounded over a generation, that represents the difference between poverty and prosperity. Imagine how much additional value will be unlocked when Africa’s electricity deficit is addressed. The second main area where Africa has something to offer is as a partner for innovation. For example, robotics, drone technology, and mobile connectivity are already transforming the energy industry. The risk of cyberattack is growing as well.
In Rwanda, we have invested heavily in ICTs and broadband connectivity. A new National Cyber Security Agency will be operational later this year. A project to deliver health supplies to rural hospitals using cargo drones is being pioneered in Rwanda. The regulatory framework we have put in place can also support research initiatives with energy partners. The importance of curbing the methane emissions associated with oil and gas production has also been discussed here. Rwanda has been involved in the development of new technologies to safely convert methane gas from Lake Kivu into electricity at scale. The first major facility is now operational.
Rwanda, like many other countries, wants to generate more energy from wind and solar sources. But the inherent variability of renewables will strain existing power grids. Africa is an ideal place to pioneer and scale up the new automation and storage technologies required to distribute renewable energy effectively. Africa is changing for the better even though risk perceptions often lag behind reality. The new opportunities to be seized on our continent will yield solid returns for investors while building shared prosperity for our citizens.
The current energy market pessimism will have served a useful purpose for all of us if it somehow contributes to the wider realisation that Africa is more of an asset than a burden for addressing the global challenges ahead. Let’s work together to deepen our partnerships and get things done. Thank you very much for your kind attention.