AFRICANS MUST INVEST IN DEFENCE TECHNOLOGIES FOR THEIR OWN SECURITY

By Lord Aikins Adusei

The killing of Gaddafi on 20 October 2011 by NATO-backed rebels came as a shock to most Africans. While it is regrettable that he died such a terrible death, he was partly responsible for his own misfortune. He failed to build the defence capabilities that could defend Libya against the country’s many European and North American enemies. While Libya under Gaddafi had some of the best weapons in Africa, these weapons were not Libya made. They were designed and built in Europe, America and Asia. In other words, Gaddafi relied on military technologies developed by France, Britain, Italy, Russia, China, and the United States. Despite the billions of dollars of oil money, Gaddafi didn't help Libya to develop a sophisticated indigenous defence industry capable of producing some of the world's best defence systems such as Israel's David Sling, Iron Dome or the Jericho III intercontinental ballistic missiles (ICBM).

The negative consequences of Gaddafi's reliance on foreign particularly Western defence technologies became all too clear when these same countries used their other superior war machines to degrade the ones they had sold to him. Gaddafi's defence easily crumbled when NATO's onslaught started. Part of the reason is that the West who had sold him his weapons knew the weaknesses of the systems they had sold him and exploited these weaknesses to their advantage.

But Gaddafi is not the only African leader whose failure to develop an indigenous defence industry cost his government and country.

In 2011, during the post-election crisis in Ivory Coast, the entire Ivorian airforce was destroyed by France within some few minutes. Laurent Gbagbo could not fight back when France invaded his country. This was because like Gaddafi's Libya, the Ivorian airforce relied on defence systems and technologies made in France and other European countries. France was aware of the defence system and technologies the Ivorian airforce was using and hence used its other superior weapons to destroy Gbagbo's forces. If Ivory Coast had developed its own defence technologies and capabilities, France wouldn't have so easily destroyed the Ivorian airforce and humiliated Gbagbo.

Nigeria was humiliated by the United States when President Goodluck Jonathan's repeated request to the Obama Administration for military assistance to trace the Chibok girls and fight Boko Haram were denied. Nigeria could not trace the 276 Chkbok girls kidnapped by Boko Haram because the country lacked the defence technologies and capabilities capable of piercing through the thick dense Sambisa Forest where Boko Haram was hiding the girls. Up till now Nigeria doesn't have a well developed defence industry capable of supplying the country with submarines and advanced unmanned aerial (drones) capabilities because their strategic thinking about defence and national security are limited to recruiting few hundred men and women each year. In other words, while technologies have changed the nature of modern warfare, Nigeria continues to invest in human beings rather than technologies for its own defence.

While over the years, the North African countries have acquired sophisticated military capabilities, they are all similar to Libya under Gaddafi i.e. their military capabilities and the technologies behind them are from non-African countries. They aren't indigenously designed and built. While South Africa is self-sufficient in its defence needs, its weapons are of second and third tier type, meaning though they are good, they are not the world's best. In the words of Wezeman et al (2011, p.14), 'the lack of indigenous arms-production capacities means that most African countries are fully dependent on arms imports [abroad].' This must change and ought to change fast.

The tragedy of Gaddafi should be a lesson to all African countries to stop relying on the generosity of foreign countries and commit part of their GDP to research and develop military technologies that could protect the continent from hegemonic outside invaders. Some of these technologies such as drones could have dual usage i.e. military and civilian use.

African countries should learn from Israel, which although small in size (in land and in population), has succeeded in building one of the most advanced and enduring defence capabilities in the world. Israel's Jericho III missile for example is capable of hitting many countries in the world including in Europe, Africa, the Middle East, Asia and North America. Its Iron Dome could shoot down missiles sent by enemy forces. Africa can also learn from South Korea which has moved from being a recipient of military aid from America to a major supplier of defence hardware.

Besides gaining control over its own security, the economic advantage of Africa developing and building her own weapons systems is also very huge. In fact, Africa's economy could grow and expand tremendously to provide jobs for tens of thousands of the continent's engineers and other technical experts. At the same time developing and building defence industry will help to save the tens of billions of dollars Africa sends to support European, American, Chinese and Russian economies annually through the purchases that African countries undertake.

Every year African countries together spend tens of billions of dollars importing tanks, helicopters, helicopter carriers, self propelled guns, armoured personnel carriers (APCs), submarines, combat aircrafts, trainer combat aircraft, frigates and other defence systems. In 2013, Angola spent $6 billion on its defence part of which was used to import arms from across the globe. In 2014, Algeria bought 1 helicopter carrier from Italy, 48 air defence systems from Russia and about 50 self propelled guns from China. In 2014, Algeria placed orders for 2 submarines and 42 combat helicopters from Russia and 926 APCs from Germany. In 2013 Algeria spent $10 billion on its defence including arms purchases. In 2013, Ethiopia took delivery of the first of about 200 Ukrainian built T-72 tanks.

According to Wezeman et al, (2011, p.14) between 2006 and 2010 South Africa received 15 JAS-39 combat aircraft (as part of a total order of 26), 24 Hawk-100 trainer combat aircraft, 2 Type-209 submarines (of a total order of 3) and 4 MEKO-A200 frigates mainly from Germany, Sweden and the United Kingdom. Namibia imported 12 Chengdu F-7 combat aircraft from China between 2006 and 2008.

The Economist (2014) also notes that Chad and Uganda have been buying Russia built MiG and Sukhoi fighter jets. Cameroon and Ghana have also been importing transport planes and fighter jets from around the world. Indeed in 2013, Ghana took delivery of four new Mi-171 helicopters from Russia. Ghana also took delivery of three Diamond DA 42 MPP Guardian surveillance and training aircraft from Austria and two C295 transport planes from Airbus. It is also scheduled to take delivery of Brazilian built Embraer 190. Ghana intends to spend more than $300 million for its military acquisitions. African countries spend additional fortune buying spareparts from foreign weapons manufacturers.

These tens billions of dollars that is used to import the weapons and spareparts go to support the economies of the countries where they are imported from, creating jobs for the populations in these countries and providing profits and revenue to the companies and the countries concerned.

The money could be used to develop Africa’s almost non-existing defence industry to provide jobs, expand our economy and end our dependence on other countries. In South Africa where the defence industry is relatively well developed, the industry is estimated to have employed 13,646 people in 2007.

“South Africa is the only country in sub-Saharan Africa that has developed a sizeable arms industry capable of producing relatively advanced military products that can compete on the global market. In 2007 it was reported that 13,646 people worked in the South African arms industry, producing a wide range of military equipment. South Africa is the only country in sub-Saharan Africa that plays a discernible role as a supplier of arms to other countries in the region” (Wezeman et al, 2011, p.14).

Although Nigeria and Sudan produce some military products, the industries are not well developed. This could change if African countries pull their resources together to invest in research and development and build their own defence systems. It will not only enable Africa to defend herself from parasitic foreign powers, but will also contribute to expanding Africa's economy, spearheard her industrialisation efforts and wean the continent from dependency on foreign countries.

Reference
The Economist (2014) “Arms and the African: The continent’s armies are going on a spending spree” http://www.economist.com/news/middle-east-and-africa/21633901-continents-armies-are-going-spending-spree-arms-and-african

Wezeman, P. D., Wezeman, S. T. and Béraud-Sudreau, L. (2011) “Arms Flows to Sub-Saharan Africa” SIPRI

19/12/2016

Obama is from Venus, Putin is from Mars. Obama is an Idealist, Putin is a Realist

By Lord Aikins Adusei

The current global political, and security environment remains chaotic, dangerous, and unstable. While the Obama Administration has done its best to address them, there is no doubt that the incoming Donald Trump Administration will inherit one of the most difficult and challenging set of problems since the end of the Second World War. Under Obama’s presidency, America has seen its global leadership challenged by China in the South China Sea and by Russia in the Middle East and Ukraine.

In 2015, United States' allies in Europe including UK, France, Germany and Italy defied US to join China’s newly established World Bank-style Asian Infrastructure Investment Bank. Australia and South Korea (two key US allies) have indicated that they would join the AIIB. Philippines, a long-time US ally is moving towards China’s orbit. China’s $45 billion investment in infrastructure building in Pakistan (part of the China-Pakistan Economic Corridor) has seen Islamabad move ever more closer to Beijing. Africa and Latin American countries are also deepening their relationship with Beijing in an unprecedented fashion. But that is not all. Under Obama's leadership, cybersecurity threats have grown greatly from Russia, China, North Korea and from terrorist networks with the US claiming that its November 7, 2016 elections were influenced by Russia’s cyber intrusion.

Much of the chaos we are witnessing (cybersecurity threats; the growth of ISIS and terrorism; instability in Ukraine, Iraq, Syria, Libya, Afghanistan, Yemen) are partly the result of Obama's idealist foreign policy strategic thinking. Unlike the realists Vladimir Putin and Xi Jinping who think their countries are in a perpetual geopolitical struggle and competition with the United States for global power and dominance (including economic, military, political, technological and cultural dominance), an idealist Obama does not share such thinking. In fact, while for example Putin is obsessed with power and revival of Russia’s lost global influence, Obama has been more concerned with humanity, how to help America recover and restore its tattered image after its disastrous invasion of Iraq and Afghan.

Indeed, since assuming the presidency, Obama has made a number of foreign policy decisions that are different from the hawkish policies of his predecessor. One of such foreign policy actions was his decision to withdraw US troops from Iraq at a time when Al Qaeda was not completely defeated and was still causing havoc in the country. That decision to withdraw US troops led to the lightning rise of ISIS and the danger it continues to pose to Europe, Africa and the Middle East. However, the decision to withdraw the troops is located in Obama’s belief that the world and particularly the Middle East would be more peaceful without the United States permanently stationing troops in Iraq. That thinking also informed Obama’s planned (and later botched) troop withdrawal from Afghanistan.

Obama's idealist philosophy was clearly demonstrated when became reluctant to use force against Assad of Syria. Even when Assad crossed Obama’s redlines, the US President still did not order troops to attack Assad as was anticipated. Besides, Obama gave a tepid support to Syrian rebels fighting to unseat Assad. While Obama ordered US planes to bomb ISIS positions in Raqqa, he provided only limited military assets to the rebels which contributed to the rebels poor performance on the battlefield. On the other hand, the insertion of Putin in the Syrian conflict on the side of Assad, strategically changed the direction of the conflict in favour of Assad. In December 2016, Aleppo, Syria’s biggest city fell to Assad after Russia’s increased bombardment from the sky.

Obama's idealist leaning also explains his poor support for Ukrainians against Russia's incursions into Ukraine and subsequent annexation of Crimea. Putin’s aggressive posture in Ukraine is in line with his thinking that the United States and her European allies were trying to undermine Russia by encroaching Moscow's sphere of influence. Putin saw the collapse of the pro-Russia government of Viktor Yanucovich as the final proof that the United States and Europe were determined to limit Russia’s influence in its own neighbourhood. Putin therefore reacted in a typical realist fashion: the immediate deployment of Russia’s military and cybersecurity capabilities. Putin annexed Crimea and provided direct military support to rebels in Ukraine. Rather than Obama providing huge military support to enable the government in Kiev regain control of the eastern provinces, he rather mobilised European countries to impose sanctions on Moscow, a proof that he was less enthusiastic in escalating the conflict with Putin. The sanctions did not cause Putin to alter his behaviour in Ukraine.

There are also other decisions Obama made which point to his lack of belief in war and guns as way of resolving global conflict. President Obama was initially reluctance to fight ISIS in Iraq and Syria. When ISIS swept across northern Iraq and took Mosul and begun pursuing Yazidis, Christians and other minorities, Obama’s immediate response was to fly humanitarian supplies to those who fled to the Sinjar Mountain to escape ISIS onslaught.

Even when Obama resolved to fight ISIS in Iraq, he decided to let Iraqi soldiers take the lead in the fight to recapture Mosul. That decision is a continuation of Obama’s earlier decision in Libya where he decided to the let the United States lead from behind. Rather than let the United States lead the war against Gaddafi, he preferred to take a back seat and allowed France and Britain to lead the fight against Gaddafi. Similarly, when Houthi rebels seized Sanaa, Yemen’s capital, and ousted President Mansour Hadi, it was King Salman and Saudi Arabia (not Obama and the United States) that became the decider. President Obama decided to let regional powers take the lead in regional wars as against say in 1990 when US intervened to oust Iraq from Kuwait during the Gulf War 1. Meanwhile Putin was very decisive when Mikheil Saakachvili’s government in Tbilisi provoked Moscow in 2008. Putin’s quickly made it clear to the leadership in Georgia that they would risk destroying their country if they continued to provoke Moscow. Putin’s defeat of Mikheil Saakachvili was very humiliating for George Bush who did nothing to help its caucuses ally.

Putin is the opposite of Obama. To paraphrase Robert Kagan, Putin is from Mars. Obama is from Venus. Obama believes in the rule of law; multilateral approach to addressing global problems. He is sensitive to domestic and international public opinion, has a strong faith in diplomacy and negotiation as tools to resolving regional conflict. Putin on the other hand favours unilateralism, and the use of hard power. While President Putin is aggressively asserting Russia's influence in Russia's neighbourhood (e.g. in Ukraine, Georgia, Belarus, and in the Middle East e.g. Syria), Obama has done little to counterbalance Putin in the geopolitical struggle for control of Eurasia i.e. Europe and Asia.

In Asia, China's rise as great power continues to overwhelm its neighbours particularly Philippines, Vietnam, Indonesia, etc. China is challenging US primacy and as a hegemon in Asia. While Obama responded to China's rise with his pivot to Asia policy (intended to encircle and contain China, and boost US position in Asia), China has successfully weakened the pivot through a series of strategies including adamantly continuing to develop and build military assets on the disputed South China Sea littoral islands.

Obama was hailed as a pacifist trying to bring peace rather than war in the world and was rewarded with a Nobel Peace Prize. Under his 8 year tenure as POTUS (President of the United States), Obama made it a top priority to end the more than half a century old conflict between Israelis and the Palestinians. Though he did not succeed, his effort to bring peace to the region was more genuine than some of his predecessors.

Obama also attempted to reset US relations with Russia and tried hard to work cooperatively with the Kremlin. One of his major efforts was to denuclearise the world by engaging Russia to cut the number of their nuclear stockpiles. US and Russia currently possess about 90% of the close to 20,000 nuclear stockpiles in the world. Both countries combined have 3000 nuclear warheads that can be deployed at any time. It was Obama’s belief that the world will be more peaceful without nuclear weapons hence his insistence on reaching nuclear deal with Iran. Indeed, Obama’s negotiations with Iran to freeze to Tehran's nuclear activities and to free the Middle East from arms race and weapons of mass destruction could not have happened under any Realist president.

Obama's decision to end more than 50 years of animosity with its southern neighbour i.e. Cuba, represents a major paradigm shift in US foreign policy calculations. His visit to Cuba is a testament to his in peace and good neighbourliness. That Americans and Cubans can freely visit each other, do business together can only happen under a leader who does not believe in a zero sum foreign policy making.

Indeed Obama’s Cuba gestures has brought the final chapter of the Cold War to an end.
Climate change has been touted as one of the leading political, economic, social and environmental threats of our time. Obama has recognised the threat a warming planet and changing climate pose to humanity. He has pushed for emissions cut with major polluters like China, the European Union, India and other major polluters. The Paris climate agreement represents a hope for humanity.

How will history judge Obama? In my opinion Obama will be judged as a president whose love for humanity, global peace (as against Putin’s narrow national interests) forced him to take decisions that made his enemies gear for his blood while his admirers wished he had governed for a long time.

ECG Privatisation: Privatising for who? The experience of Australia, UK

By Lord Aikins Adusei

The financial, managerial and technical challenges facing the Electricity Company of Ghana (ECG) have galvanised the apostles of privatisation, anti-state ownership of business and the neoliberal-free market capitalists to strongly advocate for ECG to be privatised.

Their argument is that selling ECG will make it more efficient, financially resilient and economically prosperous. ECG when privatised they argue, will bring huge benefits to Ghana in the form of security of power supply.

In other words power supply will be reliable and the current system of power cuts, blackouts and power rationing will be a thing of the past because privatisation will bring in additional capital, investments and technical and managerial talents.

In the long term prices will be stable or even fall and consumers will be happy. Taxes to government will increase and more jobs in the energy sector will be created. For the government of Ghana, money raised through the sale of ECG will enable it to increase expenditure, cut taxes or repay the nation’s debt.

At the same time privatising ECG will enable the government to access the $500 million Millennium Challenge Compact Funds promised by the US government.

But these are all illusions. In the first wave of privatisation that took place in Ghana in the 1990s, Ghanaians were told that the companies and individuals buying state owned companies would transform them into thriving enterprises providing Ghanaians with endless job opportunities and thus turning Ghana into a prosperous nation.

What they did not tell Ghanaians was that the IMF, the World Bank, the British and the U.S. governments through USAID were behind the push for Ghana to sell its assets as a condition for more loans. In other words these actors used Ghana’s poor financial situation to demand the dismantling of the state and its assets.

There is strong evidence that Mr. Jerry Rawlings and the PNDC resisted pressure to sell state owned-companies. But the IMF, the World Bank, the Ronald Reagan and Margaret Thatcher administrations piled on the pressure using several tactics.

A message from the White House to USAID representatives instructed that they should make sure Ghana sold everything.

Needing cash and unable to raise it at home, the National Democratic Congress party which replaced the PNDC went on a selling spree selling both performing and non-performing companies alike. By 1999 almost 70 percent of state owned assets had been sold. While majority of the state-owned companies sold went to Ghanaians, most of the high valued ones were sold to foreigners. As Prof Antoinette Handley of University of Toronto observed in 2007: “Of 212 divestitures, 169 were sold to locals. This may look like a high figure, but the firms sold to locals were overwhelmingly the smallest, least valuable firms and, in terms of value, may have comprised only ten percent of the total” [1].

One of the sectors of the economy which saw rapid privatisation was the mining sector. The most valuable company in the mining industry was the Ashanti Goldfields Company. For decades the company was controlled by the British firm Lonrho with Ghana having little to no shares at all. Lonrho needed to extend its leases in the 1960s and so it agreed to grant the Ghanaian government 20 percent share in the company to allow the leases to be renewed. When Acheampong’s military government took over power in 1972, it realised how Ghana had been shortchanged. How could Ghana which owned the gold be having only 20 percent shares while a foreign firm controlled everything? the leaders asked. Therefore, Acheampong seized another 35 percent for Ghana, bringing Ghana’s total shares to 55 percent.

However, in 1994 the Rawlings led-NDC government privatised AGC by selling 39.8 percent of its shares. Ghana received more than $454 million from the sale of AGC. What happened to that money is a story for another day. However, Ghana subsequently became a minority shareholder with only 15.2 percent shares in AGC when the NPP replaced the NDC in 2001. Ghana Consolidated Diamonds Limited and other mining firms were also sold.

How did the privatisation of AGC and the mining sector benefit Ghana and how will privatisation of ECG benefit the country? Several reports by the World Bank, United Nations, and Bank of Ghana have revealed that the privatisation of the mining sector has been detrimental to the economy and the welfare of the people of Ghana particularly the communities and farmers in the mining areas. According to the United Nations Conference on Trade and Development (UNCTAD), in 2003 for example, mineral exports from Ghana generated $893.6 million but Ghana got only $46.7 million or just 5% while the companies took the remaining 95% or 846.9 million [2]. Similarly, The UK based The Economist magazine reported that: “Gold accounted for 40% of [Ghana’s] exports in 2008, with a value of $2.2 billion. But the government received only $116m in taxes and royalties from mining firms” [3].

In 2003, the World Bank (the chief advocate of privatisation in Ghana) acknowledged that Ghana has not benefited from mining activities in terms of revenue, employment, infrastructure development and environmental sustainability and urged Ghana’s leaders to take steps to reverse the trend but nothing happened. Using very diplomatic words the World Bank wrote that:

“It is unclear what gold mining true benefits are to Ghana. Large scale mining by foreign companies has high import content and produces only modest amounts of net foreign exchange for Ghana after accounting for all its outflows. Similarly, its corporate tax payments are low due to various fiscal incentives necessary to attract and retain foreign investors. Employment creation is also modest given the highly capital intensive nature of modern surface mining techniques. Local communities affected by large scale mining have seen little benefits to date in the form of improved infrastructure or services provision because much of the rents from mining are used to finance recurrent, not capital expenditure. A broader cost-benefit analysis of large-scale mining that factors in social and environmental costs and includes consultations with the affected communities needs to be undertaken before granting future production licences” [4].

The suffering and agony of farmers and local communities affected by large scale surface mining and who have seen little benefits of mining to date was captured in a study by a Ghanaian scholar Jasper Ayelazuno in 2011. One female farmer from Dumasi in the Western Region told him:

“There is one important thing for us as peasant women in this village that I must mention. We are not educated to get a different job so we depend solely on our land. When we go to the forest, we can fetch firewood free for our own energy needs and to sell for income. But what has the Ghanaian state done? It has given all our land to the white man to mine for gold; and not to do underground mining but surface mining, destroying all our arable lands. In the midst of all this, I cannot say the state of Ghana is good to me or responsive to me. On top of that, the Ghanaian state has given the white man the authority to do whatever they want to us: I have my own land and I cannot have access to it; my water sources (the streams) have been polluted, etc. Up till date, the Ghanaian state has not come to our aid, either to check these mining activities or to provide us with potable water since the mines have polluted our water sources. For me, there is nothing that the Ghanaian state can do for me to view it as a responsive state; so both the past and present government have not helped us” [5].

Since the days of privatisation, more than 50,000 farmers have been displaced by the mining companies who continue to refuse to pay satisfactory compensation to the farmers. While a cocoa farmer could earn $25 a year from a single cocoa tree, mining companies only pay about $8 per tree when they cut the cocoa trees for their mining operations. The economic life of a cocoa tree is between 40 and 50 years [6]. This means most cocoa farmers lose between $1000 and $1250 per a cocoa tree. If this is multiplied by 50 or 100 cocoa trees the financial loss to a farmer could be between $50,000 and $125,000. This injustice is allowed to happen to cocoa farmers because of the mining companies’ closeness to Ghana’s elites. These facts and realities are hardly acknowledged by the torch-bearers of ECG privatisation.

The privatisation of ECG will not be different from what is happening in the mining sector, in fact its impact on Ghana may be far more severe because of electricity’s strategic role in the economy. ECG is a strategic asset, meaning it constitutes a vital part of Ghana’s economy and hence its security. For instance, a private company distributing electricity could decide to sabotage the economy by failing to distribute power to critical sectors of the economy.

One of the reasons why there are constant fuel shortages in Nigeria is due to the fact that import of petroleum products is controlled by few private companies and individuals who sometimes hold the country to ransom by failing to import and distribute fuel. They sometimes create artificial shortage to force prices up just to increase their profit margins. It is this energy and economic security fears which has led Prime Minister Theresa May of UK to kick against China’s involvement of the Hinkely Point C nuclear power project.

From the perspective of the Ghanaian state, the ultimate aim of electricity privatisation is to give consumers lower prices, promote efficiency and reliability, and drive better investment decisions.

But the experience of Australia, United Kingdom and the United States which have implemented electricity privatisation tells the opposite story. In the United Kingdom, the privatisation of electricity has resulted in six big private energy companies dominating the sector including British Gas, Npower, Scottish Power, E.ON, EDF Energy, and Scottish Power and Scottish and Southern Energy (SSE).

The profit-making motive of these companies has led to unusually high prices of energy in the UK. According to Prof Benjamin Sovacool of Vermont University, USA, "from 2004 to 2012 domestic electricity prices increased by more than 75 percent [an increase of more than 9 percent a year] and gas prices increased by 122 percent with gas prices increasing 15 percent from 2011 to 2012". According to the UK's Department of Energy and Climate Change "For several years prices have been the most influential factor in the movements in fuel poverty. Prices have risen at a rate well above that of income". This high energy prices has made electricity unaffordable for many companies, households and families leading to massive rise of households living in fuel poverty. Any time energy prices increase by 1%, more than 40,000 households become fuel poor. As a result, the number of households living in fuel poverty in all of UK has been rising steeply. It rose from more than 2 million in 2003 to more than 3 million in 2007 to more than 5 million in 2009. In fact, in 2009 about 18 percent of all households lived in fuel poverty and it has been estimated that as of 2015 more than 25 percent of households were living in fuel poverty [7].

Thus a combination of low household incomes,extremely high energy prices and high penalties for nonpayment of energy bills has made it difficult to contain the escalating rise in fuel poverty and its socioeconomic implications for millions of households. In fact, thousands of people die of fuel poverty every year especially during the cold winter and hot summer months. Between 2012 and 2013 over 31,000 died [8] while in 2014 over 15,000 people died [9]. Some families have to choose between food and heating and lighting their homes. Despite the presence of well-developed consumer advocacy groups and media campaigns, energy is the second most important factor after housing rent that takes away a large chunk of people’s income. Some families spend more than 10 percent of their monthly income on energy.

In Australia where some states have privatised electricity, Prof John Quiggin, an Economist at University of Queensland who spent 20 years analysing electricity privatisation in Australia points out that in states in Australia where electricity is privatised, "Privatisation has produced no benefits to consumers, but has resulted in large financial losses to the public".

Privatisation has resulted in dramatic rise in electricity prices as well as serious customer dissatisfaction and complaints. He observed that “Privatisation, corporatisation and the creation of competitive electricity markets were supposed to give consumers lower prices and more choice, promote efficiency and reliability, and drive better investment decisions for new generation and improved transmission and distribution networks. [Instead] prices have risen dramatically. A secure low-cost supply has been replaced with a bewildering array of offers, all at costs inflated by a huge expansion in marketing” [10].

His findings which is contained in a report titled “Electricity Privatisation in Australia: A Record Failure” include the following:

"Prices— have reversed their declining trend, and are highest in privatised States. Since the NEM [National Energy Market] was introduced, prices from 2005 have risen sharply.

"Quality — customer dissatisfaction has risen markedly since the NEM, profoundly for privatised States, where complaints to the relevant energy ombudsmen have grown from 500 per year to over 50,000’. ‘Reliability— has declined across a wide range of measures in Victoria [state], notwithstanding increased “physical audits” and expensive financial “market incentive” programs.

"Efficient investment — has not occurred, as the pricing mechanisms have not delivered coherent signals for optimal investment.’ ‘Efficient operation— resources have been diverted away from operational functions to management and marketing, resulting in higher costs and poorer service…The NEM and privatisation have reduced real labour productivity, as employment and training of tradespeople have been gutted and the numbers of less productive managerial and sales staff have exploded."

Consumers bear the cost of private owners’ debts— ‘In privatised States, customers’ bills include the cost of almost 10% per annum interest on the corporate owners’ debt on the electricity assets. This compares to government borrowing costs of closer to 3%. The NEM has mimicked these exorbitant borrowing costs to all customers.’ Private owners are receiving unjustifiably high rates of return based on the low investment risk — ‘The high rates of return to private owners for the low investment risk is unjustifiable and irresponsible. The private owners of price-regulated distribution assets have outperformed almost all investment classes, by making post-tax real rates of returns close to 10% annually since 2006.’

The examples from Australia and United Kingdom indicate that privatising ECG could deepen socio-economic inequality because affordability rather than access and needs will be the rule. Private companies, who will put profit-making above everything else, will use price increase as a strategy to make huge profits. They will expect Ghanaians to bear the cost of their investment through price hikes. Not all consumers in Ghana will be able to afford the huge price hikes. Electricity could even become a luxury commodity allowing those with the means to buy to live, leaving those without the means to live without it, with serious socio-economic consequences for them and their families. As Ghana seeks the best way to produce and distribute electricity, policymakers must know that privatisation is not always the answer and in Ghana’s case will be unbeneficial.

Notes
[1] Handley, A. (2007) ‘Business, Government, and the Privatisation of the Ashanti Goldfields Company in Ghana’ Canadian Journal of African Studies, 41:1, 1-37 (see pp 8 and 12)

[2] UNCTAD (2003) ‘Economic Development of Africa: Rethinking the Role of Foreign Direct Investment’ http://unctad.org/en/Docs/gdsafrica20051_en.pdf (see page 50)

[3] The Economist (2010) ‘Carats and sticks: mining in Ghana’ The Economist, 3 April 2010.

[4] World Bank (2003) ‘An assessment of the performance of Mining in Ghana’; http://lnweb90.worldbank.org/oed/oeddoclib.nsf/docunidviewforjavasearch/a89aedb05623fd6085256e37005cd815/$file/ppar_26197.pdf (see page 23)

[5] Ayelazuno, J (2011) ‘Continuous primitive accumulation in Ghana: the real-life stories of dispossessed peasants in three mining communities, Review of African Political Economy, 38:130, 537-550’ (see pp. 544-5),

[6] Tickner, V. (2008) ‘Africa: International Food Price Rises & Volatility’, Review of African Political Economy, 35:117, 508-514 (see page 4)

[7] Sovacool, B.K. (2013) 'Energy and Ethics: Justice and the global energy challenge'

[8] The Telegraph (2013) ‘Energy row erupts as winter deaths spiral 29 per cent to four year high of 31,000’ http://www.telegraph.co.uk/news/health/elder/10474966/Energy-row-erupts-as-winter-deaths-spiral-29-per-cent-to-four-year-high-of-31000.html

[9] The Independent (2015) ‘Fuel poverty killed 15,000 people last winter’ 30 April 2015 http://www.independent.co.uk/news/uk/home-news/fuel-poverty-killed-15000-people-last-winter-10217215.html

[10] Quiggin, J. (2014) ‘Electricity privatisation in Australia: A record of failure’ 20 February, 2014