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19.11.2021 Feature Article

The Old God

The Old God
19.11.2021 LISTEN

“Every country will arrive at their own emissions targets at their own pace … How can anyone expect developing countries to make promises about coal and fossil fuel?” said the delegate from India.

For two weeks now, leaders and delegates from various countries across the globe have met and deliberated on the global climate crises we have on our hands, one that has, closely attached to it, an economic implication—a battle between nature and the act of living. A crises borne from human’s drive at industrialisation—one whose end was to bring the betterment in the quality of life of humans. Industrialisation, as we have time since known it, has resulted in the depletion of the ozone layer. The planet is in trouble. The West, the developed world have reaped enormous wealths from industrialisation at the cost of the globe. Yet, the globe being just one, repercussions are being suffered by all—developed and developing nations alike.

Countries have met in Glasgow to discuss climate change. The COP26 Conference has been a deliberation, if you will, on the capping off of fossil fuels. As though to say we humans have all come to the end of the road and must strategise towards retreating—towards rectification. But ‘the end of the road’ is a tricky concept, isn’t it? Because where one’s journey ends is almost always where another’s begin. Because back at home, for us, the developing world, we are still on a strenuous journey, on a checkered road towards industrialisation. A journey kickstarted by the developed world as early as the 18th century, perfected with the years, so that now, even as we struggle on this road, they, on the other hand, have cemented their places as ‘highly industrialised nations’.

They have reaped enormous wealth and have wreaked havoc on the world in so doing. And developing nations, poor nations, seeking to have their share of industrialisation, are all of a sudden to be placed on the same hot seat as the developed world. “How can anyone expect developing countries to make promises about coal and fossil fuel?” This sentiment uttered by our delegate from India gets a ‘hear! hear!’ But the matter is more nuanced than that, you will find.

An Introduction
I sat down with Dr. Nii Darko Asante two weeks ago, even before the COP26 Conference commenced, to discuss the nation’s energy sector. Dr. Asante is one of the nation’s top, top minds, a chemical engineer with over 20 years’ experience under his belt. Having served with among others, the Energy Commission, lectured at the University of Ghana School of Engineering, he currently serves as Policy Advisor for the Energy Sector Recovery Programme (ESRP). He is aptly very passionate about the nation’s energy sector, specifically so, our hydroelectric power sector. His readiness to sit down with you and I on ‘Attempted Prophecies’ is needless to say, humbling. Now, back to the matter at hand…

On the other hand
It is pretty interesting this conundrum we find ourselves in. Let me just say that this article is not meant to directly discuss the issues brought up at the COP26 Summit. But it is interesting to note that as some are strategising against the world burning, back at home, we cannot help but revert to business as usual. And the matter at hand is: Ghana and Africa need to industrialise. And the question arising therefrom is: how do we utilise our energy resources to the best of their capacities to exponentially drive our industrialisation journey?

I ponder over our lateness a lot. A lateness owing, as you know, to a history we have had. Independence happened for us as a nation merely sixty-four years ago (which isn’t comparatively a lot in nation-years). There are many Ghanaians alive who can boldly say that they bore witness to the birth of their nation. So yes, relatively, admittedly, sixty-four years isn’t a whole lot in nation-years, so lateness was, in our case, inevitable.

The now developed world, enriched with resources forcefully taken from Africa and other parts of the world, coupled with their own ingenuity—one resulting in the birth of industry and the consequent steady and exponential increase in industrialisation—have been miles and miles ahead of their former colonies such as Ghana for some time now. Catching up has since independence been of dire essence—if independence was to matter greatly to us, that is. And Nkrumah hammered on this a lot. He specifically wrote:

“…Foremost of all, would be economic independence without which our political independence would be valueless…In planning national development, the constant, fundamental guide is the need for economic independence. In the industrial sphere, our aim has been to encourage the establishment of plants where we have a natural advantage in local resources and labour, or where we can produce essential commodities required for development or for domestic consumption.

…All industries of any major economic significance require, as a basic facility, a large and reliable source of power. In fact, the industrialisation of Britain, America, Canada, Russia, and other countries too, emerged as a result of the discovery of new sources of energy. Newer nations, like our own, which are determined to catch up, must have a plentiful supply of electricity if they are to achieve any large-scale industrial advance. This basically, was the justification for the Volta River Project.”

And just like that, right after attaining independence, like the Great Gatsby, Nkrumah embarked on the strenuous chase towards the green light, the ‘enchanted object’—industrialisation, towards Daisy—hydroelectric power.

The Proven Nexus
This unbreakable link existing between energy and industrialisation; industrialisation and development, was not concocted by Nkrumah. It was an empirically proven equation, with the developed world employed as test subjects. Way back in the 18th century, industrialisation happened following from a series of events, some of which were complete albeit meaningful coincidences. Human ingenuity was seen springing up from around the world, specifically, Europe and collectively adding to the stock of knowledge, inventions, technologies, one that will transform with the years into industry as we know it now. We have discussed the journey of industrialisation in past articles, so no need to delve back into it. We have hinted in these past articles how energy sources such as coal emerged in the 18th century to power the machineries of the early industrial era.

Coal was the first industrial-era energy source to emerge; and the textile industry, the first beneficiary of industrialisation. We covered this in the article ‘Generational Clubs’. In that article we summed up the industrial journey as such: “The Industrial Revolution can be dumbed down to this: human needs drove the inventions of machines to do our bidding; the invention of machines necessitated the derivation of new energy sources to do machines’ bidding—to power said machines.”

And this has been the case: as human needs and ingenuity have driven the evolution of machineries, there has been witnessed concurrently, an evolution in power—an evolution in the derivation of energy sources. Energy has been integral to the success of the industrial process; and industry, in turn, crucial to the development process, so much so that the narrative has been that the possession of competitive energy resources by nations places the perception of automatic wealth for said nations.

But there is always a thin line between the predictable and the unforeseen. Hence, for many nations, further deterioration instead of growth has resulted from the possession of power—energy.

Yet, it is safe to say that we are in agreement on the indispensability of energy in this modern era. What we must ask ourselves however is: in our journey and hope for the energy sector, right from the 1890s when oil and gas exploration began, to the late 1950s, post-independence when Nkrumah began his searching spree for financing for the Akosombo Dam, all the way to 2007 when discovery of oil and gas in commercial quantities was made, can it be said that this journey has culminated in the building of an industrialised country? Is Ghana’s industrial dream realised? It is a ‘no’ from Dr. Asante. But he is quick to add, “This has not been the fault only of the energy sector…It is true, we are not ‘there’ yet, but this has been so owing to a number of reasons—not just the fault of the energy sector.”

First, You Need The Numbers
Having energy alone is not enough. “Energy is necessary, but not sufficient,” Dr. Asante continued. One key factor that has stifled Ghana’s industrialisation, geopolitical as it is, has been the ‘market.’ Our market has always been way too small, way too fragmented. Right after independence, Ghana’s population stood at a little over six million. That is not enough market to keep a nation’s industries competitive…” Not as competitive as we and Nkrumah, for that matter, envisaged it. “We had surplus energy. We were above capacity. We had cheap and excess power, but we didn’t industrialise to the point we envisioned because we did not have the market. The African market has, even to this day, been fragmented. We are counting on AfCFTA to rectify this,” says Dr. Asante.

This arguably is why Nkrumah had attached to his vision for a competitive industrialised Ghana, the dream of a united Africa. As he uttered these words, “The independence of Ghana is meaningless unless it is linked up with the total liberation of the African continent…” on that very day of our independence, the man knew that aside the togetherness needed to fight for Black Liberation—literal as it was, owing to colonialism, racialism, and even slavery still, there was also a need for concerted efforts to fight for economic liberation. And Africa could only do that if it merged into one robust market. Many years later, after a number of trial and errors, the African Free Continental Trade Area (AfCFTA) was launched on 1st January 2021—secretariat of which is housed aptly in Ghana.

“The great powers in history have tended to have one thing in common: size matters. While a large market does not guarantee dominance in other realms, it certainly helps, perhaps more than any other factor.” This was the introduction to an article by Zhang Jun published right here in B&FT on 5th August 2021. ‘Size matters’, couldn’t be more apt.

Not Dutch Yet
“I don’t know what to call it, perhaps it is an endemic ‘get rich scheme’ mentality that makes us behave this way—treat these economic tools, in this case, electricity, then oil and gas, as the solution to all our problems. We seem to always believe that there is that ‘one’ thing [emphasis his and mine], that when derived will solve all our national problems,” Dr. Asante bemoans. Sadly, that has been our history with the energy sector. And as experience shows, that thinking is woefully flawed. Dr. Asante’s ‘Energy is necessary, but not sufficient’ statement bears repeating.

There is this fundamental human flaw we all suffer, no matter where on the globe we find ourselves. It is the tendency to place all our essence, our happiness in one thing. Without risking referring to real life people in the bid to cite examples, I will refer again to Gatsby—fictional, yet as true to life as they come. The poor, rich gentleman blessed with ‘an extraordinary gift for hope’ thought his whole life would all of a sudden amount to something if he got that one thing, the girl—Daisy. Maybe in Nkrumah’s case, this obsession was inevitable. Because in fact, hydroelectric power was then Ghana’s best bet to industrialise. But what seems to have ensued afterwards, is the extension and morphing of this one national event into a culture—one as injurious in persons as it is in nations.

In developing countries such as ours, some go the extent of dubbing this phenomenon, ‘Dutch Disease’—an economic cancer where the discovery and development of one segment of the economy (in most cases, natural resources) lead to the abandonment and deterioration of all other segments of the economy—equally crucial, equally potentially propitious. This is a flaw common to humans spread worldwide, but for nations such a flaw is fatal on a much grander scale.

So, it is great Dr. Asante brought the concept of putting all national eggs in one basket up, for it brings to mind my next question: “It has been fourteen years since the discovery of oil and gas in commercial quantities in Ghana, can it be said of the country that it has become a statistic of the natural resource curse and the Dutch Disease?” Dr. Asante is hesitant to give this a ‘yes’, and rightly so. Because comparatively, in the examples of nations falling under this phenomena, Ghana’s experience with fossil fuels can in no way be said to have reached that level of degradation of the fabric of state.

“We can however not overlook this tendency we have to think that when we ‘send’ electricity to a place, automatic development will ensue.” Dr. Asante is quick to add. Perhaps having waited on electricity earnestly for so long, having watched on as our first President passionately sought hydroelectric power out, this source of power’s place as a piece to the national puzzle morphed into the whole picture in our minds. “And our politicians, in a bid to win votes, fuel these sentiments with their rhetoric, ‘We will bring you electricity!’ in response to communities’ boldly displayed banners during election seasons that read, ‘No electricity; no vote!’” He adds. This is definitely not a rallying against the provision of electricity, for Dr. Asante has worked laboriously to ensure precisely that—the provision of electricity for the Ghanaian citizenry. What he is highlighting with this example is, as you know, the eggs and basket mess we seem to always put ourselves in—the one saviour we seem to always look forward to. After the derivation of energy, what next?

“Take the oil and gas sector, for instance, since discovery in commercial quantities, a nation already blessed with vast natural and human resources, declared itself from that point onwards suddenly rich. Meanwhile we do not drill enough to transform our economy. While nations are drilling millions of barrels per day, we haven’t even reached a million yet.” Our oil and gas industry, just like our electricity, is an important piece of our national puzzle, not the genie to the realisation of our industrial dream.

The Notorious Mix Energy Finds Itself In
Energy helps a great deal in fueling industrialisation, yet it does not have a genie effect on industry. There remains certain prevailing conditions that impede our drive at industrialisation.

“What we have experienced in the country is corruption that has significantly resulted in the loss of value. This is a problem preceding the threats of the Dutch Disease and certain geopolitical impediments characteristic of the energy industry. The sector has been rife with mismanagement—mismanagement stemming from our legal, regulatory, institutional frameworks alike. The laws have been fine for the most part, but it’s the enforcements thereof—that has been the problem. Our regulatory frameworks have been equally challenged,” Dr. Asante noted.

Regulatory framework against a backdrop of ineffective legal framework undoubtedly puts the whole energy sector in a challenged position. “Regulatory agencies tend to see their difficulty as a mark of their importance. These bureaucratic red tape strategies are used against both local and foreign investors alike. FDI policies and campaigns can bring in investments, our legal and regulatory framework can just as easily drive them out,” Dr. Asante continued.

The Ghanaian regulatory agencies and institutions seem to be the god of Sisyphus himself, tasking puny humans to engage in the act of rolling the same boulder up the same cliff, over and over again. Which is a complete shame, is it not? Because in catching up, a nation as late as ours to the highly globalised game of development, of nationhood, cannot afford to hone waste—corruption, mismanagement, red tape, etc.

“It is in that sense that some of us are excited about, among others, the tax reforms and the digitalization efforts of the incumbent government. Processes ought to be streamlined and simplified and must be done with immediate effect,” he continued.

And this conversation continues next week…
[Published in the Business & Financial Times (B&FT) - 19th November 2021]

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