The new normal in GhanaJune 19, 2020
Kwame Acquah, managing director of Research Development & Financial Consultants (RDFC), talks to The Energy Year about the impact of Covid-19 in Ghana, the role of digital technologies in the industry and the benefits of investing in young local talent. RDFC is a business and market development firm based in Ghana.
What are Ghana’s prospects for enhancing local content and strengthening domestic manufacturing capabilities as a result of the Covid-19 pandemic?
To a large extent, Covid-19 gives credence to the criticality of building local capacity. With strong local capabilities, we should (all things being equal) be in a position to easily transition seamlessly into the new “locked-down” and “inward-looking” era. The question is, how do we achieve the kind of local content that will prepare Ghanaians to lead in the industry but will also be balanced enough not to discourage foreign investments?
For policymakers, corporate leaders and supply chain managers, the key to success moving forward will be ensuring that we neither over-react nor return to the status quo. Getting that balance right will be the difference between winning and losing the war against Covid-19.
Over the past decade and a half, we have seen a steadily increasing push for more localisation in the sourcing of goods, services and labour – particularly in frontier markets as new oil and gas investments surface. Covid-19 gives us a reason to be more aggressive in the quest for local content. However, we need to balance that out with what is realistic and what is not.
Ghana’s local content initiatives range from prescriptive primary legislation to more collaborative public-private efforts to balance appropriately local economic development with the need to tap the global suppliers and labour that make an investment commercially viable.
Put simply, the metrics and factors we formerly used to determine what should be invested in and sourced locally and what should remain international need a re-think. Some elements should remain the same, but we will need to incorporate new variables in crafting our local content strategies.
Pre-COVID, “optimising” the balance between global and local largely meant making trade-offs between short- and long-term costs, quality of product and service, and capacity to deliver the right volume at the agreed time.
One factor that has increasingly shaped thinking around this balancing act is the longer-term view of the role multinational companies can play as socioeconomic development partners to their host countries.
Covid-19 presents a rare opportunity for us to fast forward the thinking on how to incentivise foreign players to prioritise the development of local suppliers, with the expectation that these local partners will eventually become competitive in the long term. This conversation needs to be had within the context of ensuring sustainable production regardless of challenges that events like the Covid-19 pandemic present.
One way to hasten the process will be through strategic alliances between and among local and foreign players for the delivery of capital projects. Where it is done successfully, such alliances are able to create significant value for all parties and fast track the process of technology and skills transfer. This should improve the capabilities of local players directly, increase local participation and prepare local players towards self-sufficiency.
Finally, the factors previously used to determine what should be invested in and sourced locally and what should remain international need to be revised. Some elements should remain the same, but we will need to incorporate new variables in crafting our local content strategies. What is clear as a result of Covid-19 is that local content development cannot be staggered any longer. The process must be swift, although realistic, as all parties local and foreign recognise its importance in ensuring project continuity and sustainability, regardless.
How do you see the role of digital technologies, big data and artificial intelligence in Ghana’s oil and gas industry amid the collapse in oil prices?
The oil and gas industry has generally been somewhat slower to embrace digital technology as compared to other industries. However, this is changing as the potential impact of effective digitalisation continues to be demonstrated in terms of billions of dollars saved in efficiency along with a slew of other long-term benefits.
With prices unlikely to return to their former peak and overproduction becoming politically unpopular, the time for operational optimisation through digitalisation is now. By embracing it, oil and gas companies may leverage a wide range of both long- and short-term benefits and opportunities.
Ghana as a nation has a decently growing tech ecosystem which is being demonstrated across multiple industries, for example, the agricultural sector. Additionally, Ghana has one of the highest mobile penetration rates in West Africa, outperforming many of its regional peers. Thus, the adoption of mobile technology into Ghana’s oil and gas industry is not a farfetched notion. It’s relevance and timeliness, however, are a matter of further debate.
Additionally, there is digitally enabled marketing and distribution. Modern retailers have been very successful in using digital technologies to gain a more comprehensive view of their customer. Oil and gas companies are using similar tactics to discover consumer habits and preferences, and subsequently optimise their pricing models and manage supply chains more effectively.
The most important consideration in the digitalisation of the industry is capacity. We may at this point have to decide as a country where our priorities should be. Digital technologies and AI represent the future. However, it is more immediate rather than long term, and the conversations need to be had now. We may need to tackle it from the sides, given that we still have some work to do on the local content foundation. Growth prospects in Ghana for digital technologies are nonetheless conceivable but have yet to gain critical mass in terms of traction and adoption.
What steps has RDFC taken to cope with the challenges stemming of the current crisis and adapt to the new environment?
RDFC has always attempted to be proactive and calculative rather than reactive. Although we did not anticipate the occurrence of the Covid-19 pandemic, like most companies we always factored elements of stress incidents into our decision making. We are therefore not in a panic mode, although we recognise the impact of the Covid-19 and the long-term effects it will have on how we work and perceive life.
We have activated some stress response protocols in dealing with the Covid-19 and its effect on the industry in general and our business specifically. Some of these include taking a long and hard look at our cost profiles in order to ensure business continuity during these lean times. The challenge is how long the Covid-led disruptions will last. The new normal and the need to adjust may not be an issue. The real issue is how the industry will collectively respond and how long prices will take to recover for projects to be attractive again.
The general position of the industry is that the Covid-19 pandemic is as much a humanitarian issue as it is an economic issue. Thus, companies like RDFC are taking the health and safety of our staff very seriously. Project scheduling has been reorganised in order to ensure the well-being of the various entities, which is taking much greater precedence over project gains.
Our approach going forward is to be as nimble as possible coupled with deliberate efforts to sustain operations while keeping our staff safe. These, we believe, will ensure RDFC is able to provide our clients and partners with value-driven customised solutions, both in the tumultuous and the recovery phases of Covid-19.
For instance, RDFC has taken the decision to become a certified B corporation in furtherance of its commitment to meet the highest standards of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose.
Clearly, the most effective way to mitigate costs and reduce the risks of operations within this new economic environment is to allow the flexibility for actors within the industry to come together and collaborate on projects while remaining independent upon conclusion of that project. This goes to buttress our argument for more strategic alliances and collaborations now and going forward.
What is RDFC’s position on and level of engagement with raising talent and the millennial workforce?
Within the constantly changing landscape of the oil and gas industry, RDFC sees it as imperative to reflect on how its own internal business model and service offering modernises itself to effectively resonate with stakeholders and customers alike, all the while staying current, relevant and appealing to their constituency.
The oil and gas industry is geographically dispersed and engineering intensive. As a result, the industry has a heavy requirement for skilled management and technical staff.
RDFC is committed to securing the future of the industry through the employment of up-and-coming talent. The younger (millennial) workforce takes a fresh view on how they can add value to the company and the industry. To perform this role efficiently, they require the infrastructure, tools and opportunities to turn their ambitions to reality. Thus, RDFC is very much keen on hiring young talent, and has taken initial steps to ensure that this young talent is not only recruited, but also consistently motivated and incentivised.
The company has devised a scheme of attainable succession plans designed to provide its young workforce with company goals to aspire to and the promise that hard work and innovation will eventually be rewarded.
In engaging with a younger workforce, RDFC has learned several lessons. On new technology, younger workers are typically more conversant with all the new technologies being developed and deployed into the world of today. Furthermore, younger workers are eager and prepared to learn how to operate these new systems, and they are usually happy to pass on what they know. With the present state of the industry gearing up for greater use of technology, the younger workforce will be better prepared for the use of the technologies of tomorrow.
On. diversity, younger workers come from diverse households, backgrounds and value systems. Their broader perspectives will be essential in the changing world and workforce. And finally, regarding boldness, younger workers can be extremely entrepreneurial and excellent out-of-the-box thinkers. The evolving landscape of both the industry and the wider world demands a new way of thinking, which younger workings are better equipped to handle.