How Northern African Countries Can Fulfill Their Potential
Oliver Evison
The emerging African continent will face drastic economic change over the next decade. Shifting demographics and better business environments will contribute to rising consumption rivaling that of major European countries like Germany, who spent $2.5 trillion on household consumption. Seven countries alone on the African continent hold more than half the continent’s population and, by the end of the next decade, one in five of the world’s consumers will live in Africa. Growing demand for fast moving consumer goods, especially in the North African region, will continue to cater to middle class households and low income buyers. That is not to say that luxury goods’ demand is decreasing. As the brand-loyal African consumer continues to see a rise in discretionary income, more and more points of entry will become available to high-tier luxury brands. Each point of entry will contribute to what, in due time, will likely be deemed the strongest retail economy in the world.
Unfortunately, the North African region is facing systematic pressures in energy production and consumption. Essential for enabling growth, consistent renewable energy production is necessary for North Africa to compete and become, as scholars predict, an economic hub. Geographically the region is a transit line between Europe, the Middle East, and the rest of sub-Saharan Africa. Its crude oil and gross natural gas production has and will never rival that of Saudi Arabia or Iraq. As a result, North Africa has led a shift towards solar and wind resources in the region and is considered to have some of the best in the world. However, the region is without many of the resources needed to make energy production efficient and available to be directly distributed to other global economies. Integrated multi-sectoral approaches to future energy sector planning could improve resource efficiency, productivity, and security. Such an approach could forever alter the scale and class of deployed energy technologies in the region. There have already been reactions to the increase in renewables in the North African region.
Saudi Crown Prince Mohammed Bin-Salman has backed the recent project city, Neom, which he hopes will be finished by 2025. Situated near the northern region, Neom has a strategic location designed to eliminate passage through the Egyptian-run Suez Canal which directly benefits Saudi oil and energy distribution. Furthermore, Bin-Salman has stated he wishes Neom to be run on purely renewables—a signal to the North African and Middle Eastern regions to modernize their energy strategies and legislation.
Over the last decade, North African renewable energy production has increased 40% via methods like wind and solar to electricity conversion. This drastic change has come despite recent social and political transformations within the region that pose threats to what scholars believe will be one of the strongest global economies by the next half-century. For those predictions to become realities, Northern African policymakers must continue to address immediate energy challenges the region is facing while focusing on future sustainability and economic growth. As major opportunities arise for private investment for North African energy use across all sectors, companies will begin to see the ability to create markets to bolster what will develop into one of the world’s strongest markets.
Sources:
https://atlantic-community.org/energy-in-north-africa-challenges-and-opportunities/
https://www.iea.org/reports/clean-energy-transitions-in-north-africa
https://www.iea.org/commentaries/north-africa-s-pathways-to-clean-energy-transitions