Cooperation in the business, clean energy and knowledge sectors
The African continent offers vast economic opportunities with the potential to promote inclusive growth and poverty reduction. By 2050 a quarter of the global population is expected to live in African countries. Economic growth and expanding markets provide new trade and investment opportunities. Urbanisation is expected to continue at a rapid pace, which can spur new growth but will pose challenges as well. When fully realised, the African Continental Free Trade Area (AfCFTA) will be the fifth largest market in the world. It is expected that African countries will continue to make use of fossil energy sources, and, in particular, consumption of natural gas will be maintained in coming years. But more than half of the best solar energy resources in the world are in African countries. In addition to this, energy from fully developed wind power and hydropower would be able to supply both domestic and international markets. African markets are expected to gain an increasingly prominent role in the global economy in the future.
To realise their potential, many African countries are seeking cooperation in the form of increased trade and investment, improved frameworks for companies, support for business development, and more knowledge sharing and capacity building.
Reforms are needed to improve governance, strengthen institutions and increase private and public resource mobilisation. The large proportion of young people in many African countries means there is a need for investment in education, job skills and inclusive job creation. In some countries, the debt burden poses a threat to economic development. The success of countries in Africa will have impacts beyond the continent in areas such as economy, climate and the environment, health, security and migration. Promoting sound economic and social development is in our common interest.
Norway is working to facilitate necessary debt cancellation and to prevent future debt problems in vulnerable countries. Corruption is one of the major challenges impeding sustainable development in Africa. Good governance, effective national resource mobilisation and knowledge exchange are central components of Norway’s development cooperation.
Financing for Agricultural Small-and-Medium Enterprises in Africa (FASA) is a multi-donor fund launched by Norway and the US Agency for International Development (USAID) to improve financing opportunities for small- and medium-sized agricultural enterprises. Donor contributions are used to reduce investment risk and catalyse private financing. The goal is to support 500 small- and medium-sized agricultural enterprises and 1.5 million small-scale farmers while helping to create 60 000 jobs.
On request, Norway can provide African countries with knowledge, capacity, technology and financing in fields where it has particular strengths, such as sustainable resource management, economic governance and gender equality. Norway employs innovative forms of financing to trigger private investment and support sustainable African business activities and job creation through Norwegian programmes, the World Bank Group and the African Development Bank.
Norfund (the Norwegian Investment Fund for developing countries) has 62 % of its portfolio in Africa. Energy is a major focus under the fund’s Development Mandate and the Climate Investment Fund. In 2023 the Climate Investment Fund invested NOK 368 million in the South African-owned, independent power producer Pele Green Energy. The investment will contribute to the construction of 1 GW in solar and wind projects in South Africa that will provide electricity to the national grid and directly to industrial customers. This is expected to prevent an estimated emission of 2.3 million tonnes new CO2 equivalents annually.
Norway has common interests with various African countries when it comes to establishing international cooperation to promote sustainable use of natural resources and conditions to ensure that a greater share of productive resources and value creation remain in the countries of origin.
The Africa Group in the UN is at the forefront of efforts to combat illicit financial flows and to establish a UN Framework Convention on International Tax Cooperation. Losses from illicit financial flows out of African countries are estimated to be ten times larger than the official development assistance provided to the continent. Norway gives anti-corruption and combatting of illicit financial flows high priority. There is close cooperation with multilateral organisations to prevent illicit financial flows, combat corruption and tax evasion, and to introduce effective taxation systems for mobilising domestic resources in several African countries. As one out of two Western countries, Norway did not vote against establishing the process for a UN tax convention, and Norway participated in the UN bureau drafting the Terms of Reference for the tax convention negotiations.
The emerging African markets provide new opportunities for Norwegian business and industry. Many Norwegian companies are present in African markets and are showing greater interest in activities on the continent. Norwegian technology, expertise, goods and services are in demand in several African countries. The markets vary from country to country, which in turn affects which countries are the most relevant. Challenges include fluctuating and unpredictable policies and conditions, corruption, substantial differences in economic size and war and conflict. Norway has a number of export-oriented instruments that can provide advice, market information, loans, subsidies and guarantees to help Norwegian companies seeking to enter African markets. Greater insight into African markets, broader networks and political dialogue with the authorities of African countries on stable and predictable framework conditions for trade and investment are key to enabling Norwegian companies to succeed in positioning themselves and investing in African markets in the long term
The Nordic-African Business Summit is a forum focused on Nordic-African business cooperation. The Norwegian-African Business Association (NABA) organises this annual conference in Oslo. The event has become one of Northern Europe’s leading conferences for businesses and investors interested in African markets and business opportunities.
Under its membership in the European Free Trade Association, Norway has to date entered into four trade agreements involving eight African countries and has signed declarations of cooperation with two African countries. This network of agreements would benefit from further development to create stable and predictable conditions for trade and investment and to promote a greater degree of reciprocal value creation.
More than 600 million Africans lack access to electricity. Achieving economic growth, industrialisation, greater productivity, poverty reduction and improved public and private services will require a major push to increase access. Ever cheaper and better renewable energy solutions can bring clean electricity to millions of people. When renewable energy is put into production of goods, this gives advantage over goods produced using fossil energy, in European markets. However, to succeed in mobilising private investment in renewable energy, it will be necessary to reform African energy markets and companies in ways that reduce risk. Norway cooperates extensively with the energy sector in several African countries. As an energy nation, Norway can provide sought-after technology and expertise that also extend to energy revenue management and the implementation of transparent, predictable regulation of the energy sector. Norwegian companies are already invested in the oil and gas segment of the energy sector, and are focusing increasingly on solar and wind energy. There is great potential for mutually beneficial cooperation between Norway and African countries in this sector. Renewable energy will remain a priority area in Norwegian development cooperation.
Research, knowledge exchange and education provide the key to solving challenges in achieving sustainable development, enhance relations and expand cooperation. Student exchange programmes are of particular importance in this context. Norwegian and African institutions already cooperate closely in a variety of countries and subject areas, to the benefit of all parties. It is in our mutual interest to expand cooperation based on equal, academic and professional partnerships that have been identified and chosen by Norwegian and African institutions.
Research capacity on the African continent is growing. For more than 20 years, South Africa and Norway have co-funded a research partnership under South Africa’s National Research Foundation and the Research Council of Norway. Thematic areas include the ocean environment, sustainable fisheries management and seawater desalinisation, with a focus on challenges both countries are facing.
Digitalisation is already an important driver of economic development in African countries. Norway is among the world’s most digitalised societies, and Norwegian solutions can form the basis for developing relevant services in African countries. Through its partnerships in African countries, Norway contributes to lay the foundation for further progress in digitalisation of the public sector to the benefit of the authorities, the people and the business community.
Objective: Strengthened cooperation on business activities, knowledge exchange and clean energy
Priorities for strengthening engagement and cooperation in this area:
Regional and multilateral cooperation: Norway will work to strengthen efforts of the African Development Bank and the World Bank that are targeted towards the African countries. Norway will support reforms to increase development bank lending and efficiency. Norway will also support AfCFTA implementation by helping to develop the organisation’s capacity in areas where Norway has particular strengths.
Trade and investment: Norway will promote sustainable Norwegian solutions and highlight Norway’s role as an economic actor and attractive commercial partner in selected African markets where the Norwegian business community has expressed an interest in operating. Efforts will be made to encourage closer contact between Norwegian and African authorities on framework conditions in countries where Norwegian companies have interests. Norway will look for opportunities for increased business activity and will seek to bring together Norwegian and African actors where this is appropriate.
Resource mobilisation: Norway will further enhance its innovative financing mechanisms to promote resource mobilisation and private investment in African countries. Special focus will be given to risk capital, lending and guarantee schemes directed at sustainable African business enterprises, job creation and investment in the green transition. Support and cooperation to reduce illicit financial flows will be continued. Norway will participate in cooperative efforts to strengthen international debt management.
Tax evasion and illicit financial flows: Norway will continue to contribute to effective and inclusive global tax cooperation in international forums, in order to combat tax- related illicit financial flows as well as contributing to mobilising national resources for sustainable development.
Anti-corruption: Norway will continue to contribute to effective prevention and combatting of corruption on the African continent through cooperation with and support to UN and other multilateral organisations.
Knowledge cooperation and capacity building: Norway will strengthen its cooperation on capacity building and knowledge exchange with countries that carry out economic and social reforms. Cooperation will focus on areas in which Norway has particular strengths and there is a demand for Norwegian expertise.
Clean energy: Norway will seek strategic cooperation to promote the development of renewable energy, increase access to electricity and clean energy sources for cooking, expand grid capacity, and encourage regional trade as well as capacity building and structural reforms. Priorities will reflect needs, potential benefits, degree of local ownership and Norway’s strengths and advantages as a contributor.
Research and education cooperation: Norway will support Norwegian-African research and education cooperation through long-term, equal, mutually beneficial partnerships, and will work to strengthen the higher education and research sector in African countries. Norway will continue its grant schemes for African students who wish to study in Norway, and will support the promotion of reciprocal student exchanges.