Editor's Note: Eliot Pence is a Director at the Whitaker Group, a corporate strategy firm focused on sub-Saharan Africa with offices in Washington, DC and Accra, Ghana. Mehrun Etebari is a senior research assistant at the Saban Center for Middle East Policy at the Brookings Institution
By Mehrun Etebari and Eliot Pence- Special to CNN
Iran’s efforts to build an African buffer against international pressure have hit a snag. With 54 countries (more votes than any other region) and growing influence in multilateral forums, Africa has been the focus of much of Iran’s economic and diplomatic engagement over the past several years. As recently as 2010, the Economist warned of “a new power in sub-Saharan Africa.”
Ideologically, the Islamic Republic has also long trumpeted its support of Third Worldism and sympathy for the economic and political struggles of sub-SaharanAfrica against the perceived neo-imperialism of the western powers. But the continent may not be the friend Iran was looking for. A combination of diplomatic missteps and growing interest in Africa’s energy feedstocks by some ofIran’s biggest customers threaten to further isolate the country.
Senegal — Iran’s purported “gateway to Africa” —abruptly cut diplomatic relations in 2011, amid allegations that Iran’s Quds Force was involved in funneling weapons to Senegalese separatist groups. South Africa, treading lightly between two allies (US and Iran) is said to be looking at ways to reduce its dependency on Iranian crude by sourcing from other African suppliers. South African companies — some of the largest investors in Iran — have considered divestment from long-standing joint ventures and crude oil contracts. Togo, the outgoing Chair of the UN Security Council, offers little security as a US firm recently invested $200 million in a power plant which provides half of the country’s electricity. The most notable friends that Iran does have offer little diplomatic weight (Zimbabwe and Sudan) and are themselves under hefty sanctions.
More concerning for Iran is that the threat of sanctions may accelerate a structural shift away from Iranian oil by emerging markets consumers. A Reuters survey published this month suggested that Asian countries, seeking to reduce exposure to sanctions on Iran, increased imports from African countries since 2010. A review of historical commodity flow data points to a deeper historical trend of reduced dependency on Iranian oil by major emerging consumers, at least in relative terms. Over the past five years, the proportion of crude oil that India and China import from Iran has decreased. This year, reports indicate they will reduce Iranian imports by 10% in absolute terms.Meanwhile, each country has increased imports from Africa, especially from Angola and Nigeria, on aggregate by over 50%. Africa’s largest economy is also looking closer to home;South Africa’s Department of Energy has said it is actively considering Angola,Nigeria, and Ghana as replacements for Iranian oil, which represents 29% of South Africa’s crude imports and 5% ofIran’s crude exports.
Consumers are increasingly turning their attention to Africa’s energy feedstocks, which have undergone rapid development in the past 18 months. Major finds in Mozambique and Tanzania are said to be reserved in part to India – Iran’s second largest customer. Ongoing exploration of West Africa’s pre-salt layer, where China has bankrolled the industry’s breakneck development, has already produced one new resource rich country this year (Ghana). Many analysts believe several more in the region are soon to come, with Namibia,Sierra Leone and Congo-Brazzaville topping most lists. While the threat of sanctions onIran’s oil cannot be considered responsible for this growing interest, it does provide added incentive for faster development.
Along with other regions, African resources have long been considered alternatives to Middle Eastern oil. But the reality is that the continent’s resource potential has been constrained by its reputation as a tumultuous place to do business. That narrative is slowly changing. Africa is home to seven of the 10 fastest growing countries and the continent’s growth is attracting one of the most educated Diasporas in the world back to the continent, providing the kind of domestic labor force increasingly critical for expanded exploration and production at a national level. As Africa’s economic development deepens, the continent will see further incentive in strengthening ties to western markets, and less in maintaining increasingly strained economic and diplomatic links with Iran.
The development of African oilfields is the result of many interrelated factors, but sanctions on Iran are building further demand for this new output. As part of a broader trend, Africa is contributing to growing global oil production at a time when sanctions cut off foreign investment and limitIran’s ability to produce its hydrocarbon resources, decreasingIran’s relative importance in the global energy markets bit by bit. In spite of its diplomatic and ideological outreach, Iran may find itself with fewer African friends and more African competitors the longer American-led sanctions remain in place.
The views expressed in this article are solely those of Mehrun Etebari and Eliot Pence.