risk and reward: security threats in the gulf of guinea and investment
TRANSCRIPT
Risk and Reward: Will the Evolving Security Threats to West Africa Ever Affect Energy Investment in the Region? George Kobani
Risk Management: Maintaining an appropriate balance between risk
and reward
Threats
• Piracy
• Militancy / activism
• Terrorism
• Industrial scale oil theft
• Disenfranchised Communities
Reality Stats Vs. Perception Shipping activity vs. Piracy correlation
Piracy in West Africa
2014 (Jan-June) 2013
49 Attacks
63
Kidnaps
3
Fatalities
116 Attacks
134 Kidnaps
20
Fatalities
Impacts of Insecurity • Higher costs (compensation
premiums, security, etc.)
• Weak investor confidence
• Short termism
• Weak capital investment
• Siege mentality
• Less local engagement
Terrorism: Northern Nigeria’s Boko Haram
• Boko haram and its splinter group Ansaru have a fluctuating connections AQIM and al Shabaab.
• Boko Haram’s activities can have destabilizing effects in Northern neighbours Chad, Cameroon and Niger
• Boko Haram’s activates have particularly stifled investment in infrastructure, power and telecoms and business in Northern Nigeria
• Boko Haram’s activities and support base will be limited in Southern, Christian regions and coastal areas
High Risk Areas (HRA) Nigeria
HRA 1: Central Niger delta Bayelsa / Delta States
HRA 2: Eastern Niger delta Akwa Ibom/ Cross Rover States
Rewards • According to the report, Africa’s share of global FDI projects reached 5.7 percent in
2013, the highest level recorded in the past 10 years. The number of new FDI projects in sub-Saharan Africa (SSA) increased by 4.7 percent, with the average size of FDI projects increasing from $60.1 million in 2012 to $70.1 million in 2013.
• Growing insurgency in Nigeria and Kenya notwithstanding, Ernst & Young regarded them as one of the “emerging hotspots for investment”. Other countries are Zambia, Mozambique, Tanzania, Uganda and Ghana. South Africa remained the number one go-to place for investment in Africa.
• The African growth story is built on “strong macroeconomic growth and outlook, improving business environment, rising consumer class, abundant natural resources, democratic dividend and infrastructure development,” the report indicated.
• Africa has started diversifying economic activities, with oil-rich countries like Nigeria looking at other opportunities like Agriculture, thereby growing employment levels and creating a new consumer class.
Effective Strategy Execution • Purpose
• Planning
• Perspective
• Portfolio
• Partnership
• People
• Patience
Planning • Determining security costs and budgeting
through risk analysis and risk vs. cost • Transfer options: Service providers In-house-
Consultants • Assessment of resource pooling, selecting
security services vendors and managing • Insurance premiums: Community engagements,
risk insurance, • Security departments: From cost centre to
business contributor and enablers
West African champions
• UPS, Coca Cola, Airtel, MTN, GE, Tullow, Total
What can really go Wrong? • Failure of democracy
• Separating policy& politics
• Civil War / Sustained Ethnic Conflict
• Drastic change in government regulation / onerous business climate – Guinea Bissau
– Niger delta
– Liberia, Sierra Leone
• Organized crime networks
The best security is Economic opportunity