The Self-Sabotage of African Policies: Parallels from Ghana’s Cocoa Sector and Nigeria's Aliko Dangote's Refinery Struggles
A friend told me that writing about Africa is very predictable. But it still wont deter me from writing it. I am writing this from the perspective of someone who wants to fight for at least a portion of our brain to “also” look at what can be done to make local investors feel like they have a role to play in our development. But I will still write anyway.
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Ghana and Nigeria may have a lot more in common than just their famous Jollof rice rivalry. Both nations exemplify a troubling trend of self-sabotage through their economic policies. For years, I’ve written extensively about how laws, policies, and practices in Africa often sabotage our own rhetoric of adding value to our resources and becoming less dependent on the West for end products. From Ghana's Free Zones policies and membership to colonial institutions like Federation of Cocoa Commerce that cripple local cocoa value addition to the ongoing frustrations faced by Nigeria's richest man, Aliko Dangote, in his quest to build a refinery, the pattern is clear. Our own policies are failing us.
Dangote’s Struggles with Nigeria’s Refinery Project
Aliko Dangote, Africa's richest man, embarked on an ambitious project to build an oil refinery in Nigeria to help the nation become self-sufficient in refined fuel. Nigeria is one of the top crude oil producers globally, yet it relies heavily on imported fuel, leading to high costs and frequent shortages. This has led to a very common practice of most Nigerians having to own generators to power their houses. Despite his significant investment and efforts, Dangote faced numerous challenges, including bureaucratic hurdles, lack of government support, and accusations of attempting to create a monopoly. His frustrations were evident during a recent press conference, where he outlined the numerous obstacles he encountered, such as delays in securing necessary licenses and financial pressures exacerbated by the depreciation of the Naira.
The key issues identified from Aliko Dangote’s press conference were the following issues that does not come at a surprise to any African. However I am writing about it because usually the rich is quiet okay navigating the African landscape. But for even the Richest man to breakdown into submission, it tells you where we are at. To Aliko Dangote:
Bureaucratic Hurdles: Securing licenses and governmental support was a protracted battle, with significant delays and resistance from regulatory bodies.
Financial Struggles: The devaluation of the Naira and the reluctance of international bankers to provide waivers during the COVID-19 pandemic placed immense financial strain on the project.
Accusations of Monopolistic Intent: Despite other refineries being operational, Dangote faced accusations of trying to monopolise the market, which he vehemently denied.
How does the issues Dangote is facing in Nigeria relates soo well with the Ghanaian Cocoa sector.
Economic growth, often measured by GDP, can be misleading when it doesn’t translate into tangible benefits for the local population. Both Dangote’s refinery project and Ghana’s Free Zones programme for example create an illusion of progress and self-sufficiency but fail to deliver substantial economic benefits to the local communities.
Ghana's Free Zones are designed to attract foreign investment and boost exports by offering tax incentives and other benefits. Whereas this policy, as explained in my previous articles, is beneficial when it supports foreign direct investments in sectors that does not compete with local industry. However, in the cocoa sector, there is nothing like a local industry that produced for local chocolatiers’ consumption. In this respect the policy restricts local sales of Free Zones-produced goods, treating them as imports, undermines local value addition and consumption. This approach makes locally processed cocoa products more expensive for Ghanaians chocolatiers, who are effectively paying for these products as imported goods though produced in Ghana. The Free Zones policy, intended to protect local industries, ironically stifles local consumption and entrepreneurship in the cocoa sector.
Similarly, Dangote's refinery project was envisioned to reduce Nigeria's dependency on imported fuel, stabilise the local economy, and strengthen the Naira (Nigeria’s Currency) by eliminating the need for foreign exchange to import refined products. However, bureaucratic hurdles and financial instability have delayed the project, preventing it from delivering these benefits. The lack of support and accusations of monopolistic practices further complicate the project, highlighting the gap between policy intentions and practical outcomes.
The parallels drawn here is how both scenarios together disenfranchise local investors from investing in the very countries they call home with people that need help the most. Like the theory of balance of trade and the legacy of colonisation, we are soo addicted to the illusion of fixing our issues with exports driven initiatives with a blind eye being paid to incentivising import substitution industrialisation by local investors as a more sustainable way of maintaining a healthy economy. If you want example, look at the west.
Economic Policies and Local Impact
Both scenarios above illustrate how economic policies can be counterproductive and fail to support local industries and communities effectively.
Cocoa farmers in Ghana pay taxes that subsidize foreign companies operating in Free Zones, yet they cannot afford the chocolate produced from their own beans due to high local prices. This paradox undermines the goal of boosting local consumption and improving livelihoods.
Despite Dangote’s significant investment, the refinery project struggles to progress due to lack of governmental support and financial instability. This hampers Nigeria’s ability to achieve fuel self-sufficiency, affecting local economic stability and growth. The Finance Minister's preference for exporting crude oil over refining it locally highlights a failure to recognize the long-term benefits of local value addition, such as job creation and economic stability.
Dependency on Foreign Markets
Both Ghana and Nigeria’s policies perpetuate a dependency on foreign markets rather than fostering true local development.
The Free Zones incentivise cocoa processing for export, neglecting the local market and maintaining a dependency on foreign buyers. This is detrimental to the local economy as it fails to foster domestic growth and self-sufficiency.
The Finance Minister’s stance that exporting crude oil is more profitable than refining it locally reveals a similar dependency. Prioritising short-term gains from crude oil exports overlooks the long-term benefits of having a self-sufficient refining industry that can support local consumption and stabilise the economy.
The Role of Bureaucracy and Regulation
Bureaucratic inefficiencies and restrictive regulations are common hurdles in both cases, highlighting a systemic issue across different sectors.
The Federation of Cocoa Commerce (FCC) controls who can buy and sell cocoa beans, with rules that exclude all Ghanaians including the cocoa farmer. This colonial-era institution continues to wield significant influence, hindering local participation in the cocoa market. The exclusionary practices of the FCC limit the ability of local entrepreneurs and farmers to benefit fully from their own resources.
Dangote talked about how he has and continue to face significant delays and resistance in securing necessary licenses and government support for his refinery project. These bureaucratic obstacles reflect a broader issue of regulatory inefficiency that stifles local initiatives in Africa. If the richest man in Africa is being frustrated this way, just imagine what the ordinary African who wants to invest, work, stay, etc to build Africa, will. Despite his financial capacity and determination, Dangote's experience illustrates the difficulties even the most powerful African entrepreneurs face when trying to invest in their own countries. Yes it sounds very depressing.
The struggles faced by Ghana’s cocoa farmers and Dangote’s refinery highlight a deeper issue of mental slavery. African policies often reflect a colonial mindset that prioritises short-term gains and foreign interests over long-term local development. This self-sabotage is evident in policies that hinder local value addition, discourage entrepreneurship, and perpetuate dependency even when we have local investors willing to invest.
Questions for Reflection:
Why do we continue to implement policies that benefit outsiders more than our own people?
How can we break free from colonial legacies that still shape our economic practices?
What changes are needed to ensure that local resources truly benefit local populations?
We must align our actions with our rhetoric, ensuring that the wealth generated from our resources stays within our borders and benefits our people. Only then can we hope to achieve true economic independence and growth. Let me know what you think?