By Gad Senyuiedzorm Ashiagbor, Founder & Executive Director, AfricaNEV

An ocean of money and opportunities lie in the transport and energy sector. Gad Senyuiedzorm Ashiagbor lays a foundation for why Africa needs to take this opportunity seriously. We are talking about AN OCEAN OF MONEY. The global transportation industry is worth $7,000,000,000,000.00 ($7 trillion) annually in 2022. That is $583 billion monthly, or roughly $19 billion every day, or about $1.6 billion every hour or approximately $27 million every minute.

Every device used by humans needs a source of energy. So, let’s focus on just crude petroleum with respect to energy. The world consumes approximately 100 million barrels of crude oil per day or 36.5 billion barrels per annum. As of today (28 May 2022) Brent Crude is $119/barrel. Let’s throw away one (1) dollar from that price just because we can and use $118/barrel for our calculations. 

A trillion-dollar industry

This means the world consumes crude oil worth, $4.307 trillion annually, or $283.2 billion monthly, or $11.8 billion daily, or $983.3 million every hour. Don’t be impressed just yet, remember we used $118 per barrel instead of $119 per barrel for our calculations.

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Well, the difference of just that one dollar is $36.5 billion dollars per annum. Now, whichever African country you are in, quickly Google your country’s debt and compare it to $36.5 billion. So, next time you hear of a $1 change in the price of crude oil, feel free to bow.

Here is the real kicker though, this figure excludes; the entire natural gas value chain, refining of the crude, the transport ecosystem, government taxes, the insurance industries that depend on them, and what about the financial industry, metallurgy, etc. You get the picture.

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Together, transportation and petroleum are worth 11.3 trillion dollars annually, WOW.

Some questions for you dear reader. Don’t worry, a series of Google searches may yield the answers:

  1. What percentage of this transportation industry cash goes to Africa (zero in on your particular country) and which particular groups or individuals does it go to?
  2. What percentage of this crude oil industry cash goes to Africa (zero in on your country in particular) and which particular groups or individuals benefit from that cash?
  3. Whatever your answer to 1 and 2 above, do you see visible proof of that money in your community and feel its impact in your everyday life? Both positively or negatively?

The basic needs for transport and energy

Wherever you are on the African continent, it is very likely that you currently pay more for fuel today than a few months ago with subsequent inflationary pressures on your country’s economy. The politicians in your country may have various explanations for these high energy prices: COVID-19, War on Ukraine, etc.

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The point is: Firstly, both transportation and energy are fundamental to economic activity and impact us all. Remember Maslow’s pyramid (hierarchy) of needs? Beneath the basic needs is energy and transportation. You need energy to look for (transport) food (which is itself an energy source). Building/looking for a shelter also requires energy & transportation of the needed materials, ditto for clothing. This explains why energy and transport are such massive cash cows. 

Secondly, energy, in general, is dominated by fossil fuels (refined petroleum products and natural gas)

Thirdly, the energy business is rife with both political (e.g. Russia-Ukraine war) manipulation, and economic (e.g. OPEC) manipulation by various players. These manipulative actions for either economic or political gain impact the global fossil fuel energy market. I recommend “The Prize” by Daniel Yergin.

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Fourthly, as a corollary of point three, countries that are both non-producers and non-refiners of fossil fuels are at the mercy of the market and tend to be price takers. This means they lack energy independence.

Fifthly, most African countries, including the major oil producers like Nigeria, are net importers of oil. This is because they have either non-existent or small or inefficient refining capacity and therefore import most of their refined petroleum for consumption. Throw in the fact we tend to be consumer nations with high import bills with the resultant weak exchange rates. 

NB: when is Dangote’s refinery coming online again? Asking for West Africa, thank you.

Finally, most of our refined petroleum (diesel/petrol) products (I will estimate 70 to 90% depending on the African country) are used primarily for land transport in particular (motorbikes, cars, trucks, buses, construction equipment etc).

A strong case for the disruption of transport

Today, the global transportation industry is on the cusp of the biggest disruption in over a century. The acronym the Americans coined for it is CASE:

C – Connected, vehicles that are internet-enabled and so have connectivity

A – Autonomous, vehicles that will drive themselves from their origin to their destination without human input. Self-driving vehicles

S – Shared, if you have ever used Uber or bolt before, then you know exactly what is meant by this.

E – The internal combustion engine (ICE) is replaced with the electric motor and an alternative energy source. Hydrogen or a battery.

Clearly, when we talk about the disruption of transportation, we are talking about a number of technologies all at various stages of development and implementation. For example, connectivity (wifi or SIM card enabled internet access) exists in various high-end cars today (BMW, Mercedes Benz, etc).

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Car-sharing platforms (e.g. Uber and Bolt) are already in use in various cities, most of us on the continent is yet to see our first electric car and there are yet no truly autonomous cars as of today. 

Individually, these technologies each promise to shake transportation and energy. But together, this compendium of technologies, with electrification as the lead are nothing short of a nuclear explosion in the transport and energy industries.

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A lot of folks on the African continent seem to think it will take a while for us to be impacted since we tend to be technology laggards. Hence they can take their sweet time to prepare for the upcoming changes. To be fair, these Africans are not alone in this misconception. 

Global misconceptions around technology

The global automotive industry thought the same just a few years ago too. “We will let the upstarts prove the technology and create the market, then we will swoop in and either acquire them or flood the market with superior products at the same or lower price point” or so goes the logic. 

And it is a reasonable mindset to have. After all, we are talking about established companies with decades of experience churning out millions of cars with regularity, well-established supply chains, stable cash flows, and well-financed with massive cash piles for marketing and lobbying purposes. In other words, they have the power to convince both the consumer to purchase their products whilst simultaneously securing legislative power for laws that will favour their cause.

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I will spare you the numbers today but, let’s just say things are not going as planned. You just need to look at the range, price and battery sizes of vehicles from the legacy automobile companies: Volkswagen, BMW, Ford etc. Now, compare them with products from the EV startups: Tesla, BYD, Rivian etc. to know what I mean.

Today, the global automotive industry is running scared, they are desperately trying to find ways to survive the disruption of their industry. A country like Germany, with a large chunk of its economic base dependent on the automotive industry, should rightly be concerned.

Tesla, the pacesetter

All this could have been avoided if they had taken electric mobility a tad seriously from the beginning. Tesla, the pacesetter for e-mobility came up with the Model S in 2012. They snickered, laughed and sneered at them. They made various remarks like “this is a passing fad” or “EVs cannot compete with internal combustion engine (petrol/diesel) vehicles on performance”, or “this is an energy transition, not a disruption” or one of my favourites “EVs are a niche product” 

Maybe, instead of snickering from afar, they should have taken a closer look, buy one, or at least test-drive it, heck, tear one down etc. Then, you can make your comments and subsequent decisions from a position of knowledge, not assumption.

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But in a way, I understand them because as Upton Sinclair famously said “It is difficult to get a man to understand something when his salary depends on his not understanding it”. The question to you and I is this, are we going to put ourselves in the same situation the legacy car manufacturers are in today? Or, are we going to educate ourselves and maybe benefit from the upcoming disruption?

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Likely, you are not in the automotive, transport or energy industries, but you use energy for cooking, heating and lighting. You use a means of transport if not daily, at least weekly. In fact, the clothes you wear, the food you eat and equipment you use for your work were manufactured using energy and then transported to you with some transport device that is powered by some form of energy. The point is, whoever you are, and whatever you do, this concerns and has a direct impact on your life. The only question is to what degree it impacts you in particular.

An ocean of money

An ocean of money floating around the planet.

$11.3 trillion, or $11.3 multiplied by twelve (12) zeros, repeat after me, $11,307,000,000,000.00 or eleven point three trillion United States Dollars every year. 

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Four times (4) the GDP of the African continent.

$942,250,000,000.00 every month, $30,978,082,191.78 daily, $1,290,753,424.66 every hour, 21,512,557.08 every minute, $358,542.62 a second. That is $358,542.62 every single second. The disruption of energy and transportation is here my friend, wherever you are on the African continent, let us get ready.