The KODAK moment; Implications for Nigeria’s energy sector.

In 2012, the KODAK Company filed for bankruptcy. From being one of the largest companies in the world, this great titan became obsolete and dropped drastically in value. Following the events surrounding the exit of the company, ‘The Kodak moment’ was then used to represent a moment when executives fail to realize how consumers are changing and how markets will ultimately evolve in new directions without them. The term increasingly serves as a ‘corporate bogeyman’ that warns executives of the need to stand up and respond when disruptive developments encroach on their market. Wikipedia in simple terms defines it as “The situation in which a business fails to foresee changes within its industry and drops from a market-dominant position to being a minor player or declares bankruptcy”

Amongst the numerous reasons for the downfall of the Kodak Company, two reason stands out. First is the culmination of its failure to embrace digital photography -- a technology that it invented, and another classic case of myopia. Kodak was so blinded by its success that it completely missed the rise of digital technologies. Even though being one of the forerunners, Kodak spotted the development and did little or nothing progressive about it. Doing something and doing the right thing are also different things. Kodak invented the technology but didn’t invest in it. Kodak also mismanaged its investment in digital cameras, overshooting the market by trying to match performance of traditional film rather than embrace the simplicity of digital.

Kodak also failed in realizing that online photo sharing was the new business, not just a way to expand the printing business. It was a whole new sector altogether and needed them to not just integrate it into their portfolio, but to make it a priority and pay similar attention to it. A disruption was already coming into the space and they reacted passively to it. Although the real disruption occurred when cameras merged with phones and people shifted from printing pictures to posting them on social media, yet Kodak still totally missed that.

The Kodak moment is not devoid of huge lessons to take home and should not only be attributed to companies and corporate bodies. It is a fact that nations are run by administrators who are either appointed or elected to oversee the activities of these nations. This implies that expectations are bound to exist and thus results will be required. At the same time, there are various players in nations that influence the growth of the nation and cannot be neglected in discussions surrounding the economic or infrastructural growth of that nation. The acute sense of urgency to change is largely underappreciated or frankly absent among many profitable businesses and sadly, nations too. Therefore this strongly furnishes my position that nations have a lot to learn from this development and much more to do in response to it, Nigeria not excluded.?

A cursory analysis of the activities that led to the Kodak downfall will show numerous similarities to how a nation responds to certain global trends and developments that ultimately affect their own future. One very important area where the Kodak moment can replay is in the Energy sector of nations with particular reference to Nigeria. The persistent nonchalance to evolve calls for deep worry. Nigeria for one stands out as a country that has refused to adhere to signs of a global shift from fossil. The world is constantly seeking ways to decarbonize and evolve her energy consumption. Many nations have passes laws that promote green and discourage fossil. Meanwhile, the defunct giant of Africa has consistently made zero efforts to evolve.

Reality is clear, fossil has come here to stay, but, the real question is, Should more attention be channeled to or away from it. I believe strongly the answer is in the latter. While actively maintaining and running already established oil facilities, it is important to make efforts to promote the alternative energy industry and join the global shift to decarburization. A comprehensive examination of the various activities by the Nigerian government rather shows signs of neglect than concern. Other key stakeholders in the space are also largely guilty of this. Most of the policies, acquisitions and fund allocations in Nigeria are all towards the promotion of the fast fading fossil technology

Of these rather obscure developments, the most recent remains the recent publication by the federal government that 30% of the profits from the NNPC will be used for Oil Explorations in the North. Based on Section 9 of the PIB, at least 30 per cent of the profit generated by the proposed Nigerian National Petroleum Company Limited will go to the exploration of oil in ‘frontier basins’. Although the proposed law doesn’t identify the frontier basins, a statement by the President in 2019 identified the frontier basins as Chad Basin, Gongola Basin, Anambra Basin, Sokoto Basin, Dahomey Basin, Bida Basin and Benue Trough. Note that earlier in 2020, the Minister of State for Petroleum Resources, Timipre Sylva confirmed that over one billion barrels of oil had been discovered in the northeastern part of the country, adding that the exact figure was being ascertained. As flashy as this development sounds, it is pathetic that we are still at this place at this time.

In 2017, President Macron of France set the trend by banning oil and gas exploration. This was followed by an announcement from Belize, Costa Rica, Denmark and until recently, Spain. Looking closer at the Spanish, it mandated that the production of fossil fuels will end on Spanish territory by 31 December 2042 and requires license holders to submit a reconversion plan for the fossil fuel facilities they operate five years before the license expires. The law restricts fossil fuel subsidies by mandating that they be “duly justified by social, economic or social interest” and only in the absence of technological alternatives. So clearly, the world is not just moving away from fossil, but suspending its exploration while we continue to allocate funds for it. The world already has more than enough fossil fuels to push us well beyond the globally-agreed limit of well below two degrees Celsius, but Nigeria will have none of that.

Added to that, earlier last year Transcorp Consortium added Afam Power plant to their scoreboard. This comes a few years after the previous acquisition of Ugheli Power plant by the same hospitality giant. This move is with active plans to invest millions of dollars into the development of these plants and to scale up their outputs. Being largely a gas power plants, we can basically say we are set for increased carbon in our ecosystem. Scaling up the pollution of the environment while the world seeks to decarbonize. The alternative remedy to this – Carbon capture, cannot be feasible as it is extremely expensive and would not be considered for a private profit motivated company like Transcorp.

These activities are conscious efforts by the government and private stakeholders to promote an already dying sector that needs to be left alone. On the other hand, the nation seems to be paying very little attention to the renewable sector with the only major projects in the past decade being the on paper ‘Renewable Energy and Energy Efficiency Partnership project’, which supposedly supplies about 261,938 citizens with clean renewable energy and the Kastina Wind Farm. Considering that the World Bank has lent Nigeria about 350 million to build a solar power grid by 2023 that will help generate power for hospitals, rural areas, schools and households, the status quo is extremely disappointing.

If we keep this up, Nigeria may as well fall into the same quagmire Kodak quagmire. A bigger shift may be seen in the energy space and the fact that Nigeria currently does little to adjust to the current development means we could miss out on this bigger opportunity to join the moving train. The future of fossil is threated by two basic oppositions. The clamor for Environmental stability considering the effects of climate change is easily enough to raze the fossil era. Added to that, there is an increased orientation on the need for energy Sustainability. The country is currently making similar mistakes made by the Kodak Company by ignoring the need for integrated energy systems and decarburization.

When the photography company filed for bankruptcy in 2012, it wasn’t because they had a choice, it was because the world had left them behind. Nigeria is already behind on a lot in the world and desperately needs to catch up. Just like the Kodak Company, the old administrators need to accept the need to change or leave. The effects of staying stagnant in the current fossil era is clear. We will then be forced to take desperate measures to survive as a nation. The much explored oil will soon be obsolete in the market and we will have no one to sell to and nothing to serve as an alternative. Our policy makers need to get more involved in the discus and make sold moves to avert this impending danger.?