JOHANNESBURG,
South Africa, April 12, 2021/ -- Since the discovery of major
hydrocarbon reserves between 2014 and 2017, Senegal has been a strong
advocate for positioning local content and capacity building as the key
to unlocking industry growth. While Senegal does have existing local
content requirements under its New Petroleum Code (Law No. 01/2019), the
emerging petroleum player differentiates itself from other producers
because it has the lead time to create local capacity in support of its
oil and gas sector before it happens, rather than as an afterthought. In
this sense, the country has placed a major focus on developing
in-country financing capabilities necessary for training, up-skilling
and engaging local companies and individuals.
A new local content
law was set to be signed by H.E. President Macky Sall in the first
quarter of 2020, yet COVID-19 has since delayed the implementation of
the reform, and the country has turned its attention to its Economic and
Social Resilience Program, which seeks to encourage public-private
partnerships, lend macroeconomic and financial assistance and support
private sector recovery. With first oil and gas set to flow in 2022,
many local financial institutions have yet to put in place a strategy to
leverage Senegal’s growing hydrocarbons market. To satisfy operators’
needs and international performance requirements, companies operating
locally require funding to up-skill the indigenous labor force, yet very
few local banks are able to provide viable terms and conditions,
forcing local companies to find alternative financing methods. Improving
access to funding for small and medium enterprises (SMEs) will be
critical to assuring local participation in the country’s emerging
hydrocarbon sector and enabling them to compete for offshore service
contracts.
“Financing economic opportunities for local content
will help meet the goals and vision of the Local content policies
advocated by President Macky Sall. The road to shared economic
prosperity in the oil and gas industry and Senegal travels through
two-way streets, where all are included, and none are left in the
margins of the marketplace”. Stated NJ Ayuk, Executive Chairman of the
African Energy Chamber.
“The quantifiable gaps in opportunity and
in access to capital for local companies should define the agenda of
the oil and gas industry execution of the upcoming projects”. Concluded
Ayuk
In an effort to increase financial inclusion, Senegal has
taken advantage of its strong mobile penetration, in which over 32% of
adults has a mobile money account. Meso-finance aims to serve as the
missing link for financing in emerging African economies by targeting
companies whose needs cannot be met by microfinance or commercial banks.
Meso-finance is an attractive model for SMEs that struggle to invest in
training and new equipment due to limited access to financial
resources.
Several commercial banks – including Bank of Africa
and Orabank – are currently implementing specific offers to target SME
development across sectors, with the underlying goal of fuelling demand
for petroleum-related services. Access to financing for SMEs is also
being developed by the private sector and foreign partners.
Invest
in Africa (IIA) is an organization comprised of major operators
Woodside Energy, BP, Cairn and Kosmos Energy, aimed at developing local
content capacity across the energy value chain. IIA unites several
partner banks and financial institutions in an effort to lower the risk
associated with backing local ventures, thereby increasing their own
access to affordable, well-equipped local service providers and
suppliers. As the market moves forward and more local players are called
in, synergies between the private financial sector and the government
will be critical to achieving shared local content goals.
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