Kola Karim speaks on Africa's oil and gas potential

Africa's vast potential in the oil and gas industry has long been recognized, but unlocking the necessary investments to drive growth and development has been a challenge. On the sidelines of the Africa Investment Forum held in South Africa, Kola Karim, Chairman of Shoreline Group, shared his insights on the ways to unlock investments in Africa's oil and gas sector. The forum brought together a diverse range of participants and players from both global and African markets, aiming to showcase the vast opportunities available in Africa and attract the financing necessary for future development. Karim emphasized the importance of collaboration in policy formulation, identifying investment opportunities, and creating value for all stakeholders involved, from financiers to local communities. When discussing the barriers holding back the level of investment needed in the energy sector, Karim pointed to the fluctuating commodity prices as a key factor. He highlighted the cyclical nature of commodity prices in Africa and the hesitancy of investors to commit during downturns. However, Karim also emphasized the long-term potential for investment in the sector, especially during low cycles, as it can lead to significant returns when prices rebound. He cited the example of companies that invested during the 2015 downturn and are now seeing the benefits as oil prices have risen from $27 to $70-$71. Karim also addressed the opportunities presented to local players in the oil and gas industry. As global oil companies restructure their portfolios, it creates space for indigenous companies to expand and enhance their businesses. He emphasized the importance of access to capital for local players, noting that while funding is available, the return on investment needs to justify the high cost of capital in Africa. Karim highlighted the challenges faced by African operators, such as the high cost of doing business in regions like the Niger Delta, which impacts the overall return on capital deployed. Despite these challenges, Karim sees significant opportunities for local oil companies to grow, acquire reserves, and participate in the sector's expansion. By leveraging financing opportunities and strategic investments, local players can position themselves for long-term success and contribute to the growth of Africa's oil and gas industry.