Infrastructure: Okwuosa Seeks Cheaper Funding Sources, Wants AfreximBank’s Support

Emmanuel Addeh in Abuja

To improve infrastructure development and reduce capital flight from Africa, the Chairman Oilserv Group, Dr Emeka Okwuosa, has called for cheap funding for Engineering, Procurement and Construction (EPC) jobs, especially with help from organisations like AfreximBank.

Okwuosa stated this while speaking as a panellist at the ongoing Intra-African Trade Fair (IATF) 2023 Trade Conference in Cairo, Egypt, themed:‘’The Challenges, Opportunities and Solutions for African EPCs.”

Stressing that having access to cheap funds would enable more African companies to compete for EPC-related jobs within the continent and beyond, Okwuosa noted that except African EPC firms have such opportunities, the continent cannot compete with the rest of the world.

While referencing the critical role of funds in infrastructure development, he referenced the envisaged success story of the ongoing construction of the AKK pipeline at $2.4 billion, as a good case in point.

 “The issue of funding is not about access, but cost of the funds. Most Africa countries are not in a 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.

“This is because if you are bidding for an EPC contract, the cost, apart from your ability to execute in terms of your technical capacity, enables you to win and executive the project profitably.

“Competing with the European and Chinese companies is quite difficult because at the end of the day, the margin of an African company does not come close to competing with the financial muscles of the Chinese.

When this happens, the engineer explained that more often than not, rather than build indigenous capacity,  it gives way to capital flights which are repatriated to develop foreign countries, rather than injecting such in Africa.

He added: “I believe that 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 that capacity can be built. Also, we are looking at Afreximbank to solve problems and there are ways to go about it.

“When we talk about financing from placement of guarantee for a project of a billion dollars, the Chinese would present less than the budget because it’s being backed by their government.

“Afreximbank can leverage on its position of strength and be able to work with other financial institutions across African countries like the export-import banks of these countries,” he argued.

According to him, when the Chinese run a project, they come in with finance at a cheap rate, which are met with difficult conditions, including minimum involvement of local content to provide finance for labour, materials and equipment.

“If Afreximbank can take up the challenge, the value system will be improved. Another challenge is the ease of moving labour across Africa as well as building  of local content.

“When we tackle these challenges, capacity will be built. The ease of moving labour in Africa is very poor. For instance, Nigeria has, to a great extent grown capacity but the ease of navigating this capacity across Africa is not too welcoming and seems impossible. This should not be so, as we can grow capacity of African for Africa development, ” he stressed.

Another panellist, Ahmed Elsewedy, who is the Chief Executive Officer, Elsewedy Electric,  frowned on the current instability in the political system in Africa, as many projects are either delayed or frustrated by the system.

“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, often times, projects are dragged backwards thereby, undergoing renegotiation.

“This process can sometimes take more than two years to be approved. That alone is a major setback to the EPC projects across Africa and this does not look good. But because we are ready to work, most times we continue with the project despite being unattractive and not being profitable anymore,” he stated.

Also speaking on the challenges faced by EPC’s companies in Africa, another panellist, Hassan Allam, Chief Executive Officer, of Hassan Allam Holding, identified infrastructure deficit as well as lack of funding as critical factors setting back the sector.