By David Brough

GENEVA (Reuters) - Africa has potential to become a major exporter of biofuels, but investors must factor in a need for costly new infrastructure and overcome red tape before the sector takes off, a biofuels expert said on Thursday.

Meghan Sapp, managing director of Brussels-based HG Consulting, told a conference that southern Africa, Kenya and Nigeria were among countries with potential to produce sugarcane- and cassava-based ethanol biofuel for export.

"Biofuel production on a commercial scale in Africa is a fairly new idea but one that opens a lot of opportunities for both investment and local economic development," said Sapp.

Europe was likely to become the main market for African ethanol exports because of Africa's preferential trade agreements with the European Union.

Investors are looking for cheap sustainable forms of energy, such as ethanol, to respond to persistent high oil prices.

Sapp said that Africa was well-suited to biofuel production because it has plenty of available land, many climates fit for different biofuel feedstocks, and low labour costs.

However, she said poor infrastructure, under-developed legislation and a loose regulatory framework would hamper biofuel investments in Africa.

New biofuel plants will need good roads connecting to ports, and schools and clinics to serve the families of local workforces, such as sugarcane growers.

Later, Sapp told Reuters it could take at least 10 years before biofuel production achieves critical mass in Africa.

"Several ethanol projects are under way in a number of African countries which could be onstream before 2010," she said, referring to Mozambique, Nigeria and Sudan among others.

Africa is currently a marginal biofuel producer with an ageing vehicle fleet largely run on diesel, ill-adapted for conversion to biofuel use.

However, some countries like Malawi have been producing sugarcane-based ethanol for more than 30 years.

Early potential in biofuels is seen mainly in exports, although domestic sales to new vehicle fleets would help reduce reliance on fossil fuel imports.

A handful of countries including Ethiopia, Uganda and Nigeria are already developing biofuel blending policies for their domestic vehicle fleets.

Some African countries are also researching new applications for biofuels, for example cooking fuel that could be used to replace fire wood.

Sapp, whose consultancy focuses on EU and African biofuel policy and project development, was a keynote speaker at the two-day Sugaronline conference which ended on Thursday.