Emeka Okwuosa, Chairman/GCEO, Oilserv Group, and other stakeholders have called on the African Export-Import Bank (Afreximbank) to increase financial support for African companies providing Engineering, Procurement and Construction (EPC) in order to improve infrastructural development and as well reduce capital flight.
Okwuosa made this known while speaking at a panel session at the ongoing Intra- African Trade Fair, IATF2023 Trade Conference, in Cairo, Egypt, tagged ‘The Challenges, opportunities and solutions for African EPCs- Perspective of the EPCs.’
According to Okwuosa, having access to cheap funds would enable more African companies to compete for EPC related jobs within the continent and beyond.
He said that except African EPC companies are able to access more funds the continent can’t compete with the rest of the global economy.
Referencing the critical role of funds in infrastructure development which leads to economic transformation, he said, “When we talk about finance and funding, for us, in the oil and gas sector, we have a success story of the ongoing construction of the AKK pipeline at $2.4billion”
On how and why Afreximbank should drive the process, he said: “The issue of funding is not about access, but cost of the funds. Most African countries are not in position to access funding in a way to be able to compete in terms of cost of the funds relatively compared to the Chinese companies.
“I believe, the AfreximBank should step up and create more access to funding for African EPC companies, and at a good rate because that is the only avenue capacity can be built. Also, we are looking at Afreximbank to solve problems and there are ways to go about it.
“I will take into account the African Continental Trade Agreement and I’m sure there are some protocols that can be taken into account for a better synergy to be able to provide the basis for a more competitive financial system for such projects by Africans which will make a lot of difference.
“Another challenge is the ease of moving labour across Africa as well as building up local content. When we tackle this challenges very well, capacity will be built. The ease of moving labour in Africa is very poor.”
On his part, Ahmed Elsewedy, Chief Executive Officer, Elsewedy Electric, frowned at the current inconsistency in the political system in Africa, as many projects are either delayed or frustrated by this system.
He said, “the political uncertainty in Africa has made it challenging for EPC projects. For instance, in a switch from a government to another after an election, oftentimes, projects are dragged backwards thereby, undergoing renegotiation.”
On capital flight, he added that “capacity is never achieved when the projects are contracted to the Chinese or European companies. Africa has the capacity and the idea of taking the money back to China or Europe to develop, is a system and challenge that will never grow capacity.”
Speaking on the challenges faced by EPC’s companies in Africa, another panelist, Hassan Allam, Chief Executive Officer, of Hassan Allam Holding, identified infrastructure deficit, lack of funding as a crisis rocking the sector.
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According to him, “The first challenge is the infrastructure deficit. Most of the Africa countries are faced with infrastructure challenges which include logistics and that of supply chain which is impacted on project executions. The second which is limited access to finance and skill gaps in the African space and its contractors.”
Meanwhile there are indications that Africa loses more than $50 billion yearly to capital flight, due to foreign firms’ participation in the execution of EPC related contracts in the continent.