World Bunkering > News > Autumn 2009 > Long-term vision needed

Why take the trouble to do business in Africa? Political instability, administrative difficulties and generally small markets can be off-putting. The simple answer is that Africa as whole is a vast market and a huge source of raw materials and energy. Over 900 million people live on the continent’s 30.3 million square kilometres. Africa’s GDP on a purchasing power parity (PPP) basis is $2,572 billion. Per capita GDP is only $2,975 even on a PPP basis. The economy is clearly coming from a low base but growth has been respectable, at around 5%, and the potential is enormous.

The continent’s potential has certainly not been lost on China whose major enterprises continue to invest strongly in the continent. The African interests of Addax Petroleum, which among many things is a major offshore bunker supplier in West Africa, are no doubt a significant part of the company’s appeal to Sinopec International Petroleum Exploration and Production Corporation, which is in the process of taking over the Canadian-Swiss-based company. From the bunkering industry’s viewpoint, African ports are handling increasing numbers of vessels and the need for refuelling is obvious. There is business to be done.

It is important not to to over-generalise. Africa, with over 50 separate countries, is diverse. Taking just the Indian and Atlantic Ocean coasts, East and West Africa are very different. In many ways, but certainly not all, South Africa can be seen as another separate market. Angola, Ivory Coast, and Ghana are major markets in the Gulf of Guinea. While East Africa has potential, it is currently a very small market. Mombasa, Kenya, could be an important bunkering centre but at present there is little activity, which insiders attribute largely to official restrictions.

Further south the prospect of offshore oil in the Mozambique Channel holds out hope for future bunkering activity. Andre Baard, general manager of Cape Town-based South African Bunkering & Trading (SABT) has clear views on how companies should approach doing business in Africa. He says: “SABT has positioned and resourced itself as an African bunker specialist. We plan to avoid the problem of being a ‘jack of all trades but master of none’ by building up an in-depth knowledge of the African bunker markets so that we can grow our market share and build on the strategic partnerships we already enjoy with suppliers around the continent.”

He stress that Africa’s massive natural resources cannot be ignored. He says: “We’re very excited about Africa. But we’re very unexecited about its corruption. Which is a big problem but we believe avoiding the African markets, even the ones with the worst track record, does not help to positively influence them. Our approach is to engage the players and through persistent communication and involvement try improve and to some degree normalise the bunker trade. We believe this approach is an imperative because we have a long-term vision in the African bunker markets. Like many of Africa’s socio-economic problems, if the first world buries their heads in the sand it will not make the problem go away! We now live in the Global Village where Africa is Europe’s neighbour.

“To this end, SABT work with selected local partners to help foster the business rationale that regularised markets most often generate more benefit for more players for longer periods as they grow steadily. To help change the ‘take now and run’ approach in some African bunker markets is a difficult task but SABT, in its own small way, is committed to try help to improve the reputation of some of these bunker markets by taking positive actions. We hope to act as a catalyst for change, even if it is only scratching the surface. “We do this by site visits and sharing our knowledge of the best bunker practices and try to adapt them to a uniquely African reality. Customers of SABT can be assured that when they entrust their bunker demand with us they will be helping us help Africa in the industry we serve.”

It needs to be emphasised that there is still a lot of confidence in the future and a feeling that economic development is really taking off. At last November’s IBIA Convention in Cape Town the managing director of Ghana Oil Company Yaw Agyemang-Duah outlined how economic development was changing the African scene. “A new crop of African leaders who want to develop their states along a democratic path have emerged and there is huge untapped potential in West Africa from the emerging oil nations like Ghana, Ivory Coast, Equatorial Guinea and Nigeria.”