Automobiles run on gears. Whether manual or automatic, it is the gearing system in a vehicle that propels it forward. I find this technological analogy relevant to macroeconomic public management. The last two articles in this column have been about how we can re-engineer our common prosperity. Today we conclude the series by considering what I would term “the four gears” of prosperity and growth. I believe that re-engineering prosperity has to be driven by a Growth, Employment and Reconstruction Strategy (GEARS). Its four central pillars are: power and infrastructures, human capital, poverty and food security, and, last but not least, mass industrialization.
Top on my list of gears is power and infrastructures. If the Buhari administration could fix the power challenge alone, it would inscribe its name indelibly in the marble monuments of our history. Steady electricity supply is the one magic wand that, if fixed, would get our great Nigerian people back to work again. In fairness to the outgoing Goodluck Jonathan administration, some important landmarks were registered in the power sector. The successful unbundling of the Power Holding Company (PHCN), the privatisation of the power distribution companies (DISCOs) and the establishment of the National Energy Regulatory Commission (NERC) have resulted in slow but steady improvements in electricity generation and distribution. Power supply more than doubled from a low of 2,000 MW in 2011 to the current 4,500 MW. Although the government could not achieve its set target of 6,000 MW by December 2014, there is hope that the various energy projects that will soon be completed and commissioned will enable that target to be attained. As we understand it, some 10 power projects have already reached 70 percent completion.
President Muhammadu Buhari has issued stiff directives to the power companies to optimize electricity generation and supply. The Buhari magic seems to be working. Several cities now enjoy uninterrupted power supply of 14-16 hours for the first time in decades.
The slow progress in the development of the power sector is partly due to the fact that the cartels that control generator and diesel imports are still in their sinister business of undermining power generation and distribution. Also, the kind of blanket billing that the power companies are getting from the public means they have no incentives to invest further in the sector and to improve performance. It is therefore commendable that the National Assembly has prevailed on the power companies to jettison the extortionate standard billing format that has robbed the Nigerian people without providing them with the electricity they have paid for.
In spite of these achievements, I believe we can do even better. One major area that is yet to be fully tapped is the potential for rural sustainable energy systems, particularly solar and wind. In countries such as Israel, Spain and Germany, sustainable energy systems have made considerable progress. We need to learn from those countries. We could start, for example, with rural schools, by building off-grid rural solar systems to power the local schools, farms and micro-enterprises.
The National Integrated Infrastructure Master Plan (NIIMP), covering the next 30 years, is a highly ambitious infrastructure development plan that promises to place our country among the leading nations of the 21st century. More roads have been rehabilitated and developed by this administration than any other in more than two decades. More than 32 highway projects were under implementation by the previous administration. In the aviation sector alone, more than 25 major projects have been financed. The installation of navigational aids and Instruments Landing Systems (ILS) has improved flight safety. The recurrent airplane crashes of the Obasanjo years are becoming a thing of the past. Some 22 federal airports have been remodelled, with upgrades of obsolete infrastructures being implemented in major airports.
With regard to the transport sector, I have strong reservations about the way we are pursuing railway development. There is no country in the world with a population of more than 50 million that can make social progress without a robust rail network. It will not only boost the economy, it will serve the needs of nationhood by joining people and allowing citizens to travel freely from one part of the country to the other. For much of history, the railways were a bulwark of the economy. They also brought Nigerians together. Once they stopped functioning, Nigerians became strangers to each other.
We must therefore give top priority to rail development for economic as well nation-building imperatives. Without railways, it would have been difficult to imagine the history of industrialisation in Britain and North America. Railways are very central to industrialisation and economic development. For us to achieve this in Nigeria, we must completely move away from the standard gauge system which was created in colonial times to serve the colonial economy. We need a new design of railway lines that link up East and West, North and South. Just as Paris has become the heart of the rail system in France, we need Abuja to become the heart of the rail networks linking every part of our country. Unfortunately, as it stands, the Master Plan for Abuja does not have room for a robust rail system. More work is clearly needed to ensure that railways are placed at the heart of our national development aspirations.
I am also not satisfied with what we are doing in the housing sector. The approach seems to be that of encouraging so-called private “developers” to invest in expensive real estate that are outside the affordability of the ordinary people. This is not good enough. I used to live in North African city of Tunisia. The government in those days made a conscious policy of creating incentives for home ownership by the middle class. They would provide affordable mortgages and other forms of support to enable teachers, nurses, doctors and other professionals to build their own homes. This is the path that Nigeria needs to emulate, in addition, of course, to encouraging local private developers.
The second of the gears that should drive prosperity and growth is human capital development – in health, education, skills and training. I am aware that in the area of health, the SURE-P programme has been successful in vaccinations and primary healthcare. Nigeria has also made some progress in education at both the primary and tertiary levels. But we are still far from where we ought to be. I would recommend the Cuban and Venezuelan approach to health care which aims to provide universal access to healthcare to all citizens at a cheap and affordable format. We need to design a new universal healthcare system that will not leave out any citizen from access.
We also need to focus on primary and secondary education as the foundation for all educational development. We need to develop a new approach to building rural schools in the way the late Obafemi Awolowo successfully implemented it in the defunct Western region. I am deeply disturbed that History is no longer taught in our schools. We must bring back the teaching of History. Without history, people will never know where they came from. And if they don’t know where they came from they will not know where they are at present, not to talk of where they are going tomorrow.
It was recently announced that the government plans to introduce a free school feeding programme. At face value it looks great. But when you do the math you get worried. Feeding one child per day will require no less than N300. Assuming 10 million children in primary school, this works out to a total of N3 billion per day. And assuming 300 days of school attendance, we are talking of a whopping extra bill of N900 billion per annum. If we have that kind of extra-budgetary funds to spend on education, would that be the best use of scarce resources? What about the issues of corruption and rent-seeking? Who is going to monitor the programme? Would it not be better more cost-effective to provide school kids with a packet of milk once day? That would not only work out cheaper, it would boost their calcium and protein intake while galvanizing our livestock and dairy industry. The money saved could be deployed into reconstruction and rehabilitation of rural school buildings, computers and other hardware, free textbooks and better training for teachers.
We must also concede that some progress has been made in higher education. During the benighted years of military dictatorship, universities were considered to be the enemies of the state. Lecturers and ASUU were on strike most of the time. Standards fell precipitously. Academics scrambled to get out of the country in search of greener pastures. Today, relative calm has returned to the Academy. Standards are improving. But we are not yet where we ought to be. Only 20 percent of qualified pupils have access to higher education. It makes me angry that desperate parents have to send their kids to dingy third world institutions in Ukraine, Ghana and Malaysia, the value of whose certificates are rather questionable. It is vital that greater emphasis is placed in widening opportunities in the technical, engineering and applied sciences instead of business and the humanities.
More resources have to be poured into teaching and research through such agencies as TETFUND. We would like to see several Nigerian universities to be among the first 100 top universities in the world within the coming decade. This is very possible if we invest in talent and really build world-class universities. We should create “Genius Fellowships” in terms of consolidated funds for world-class scientists to emerge in Nigeria. Black Africa is yet to produce a Nobel laureate in the sciences. We need to achieve that feat within the next 10 years. We need to put our best talents at the forefront of world science and creation of cutting-edge knowledge capital.
Linked to this is the imperative of linking research to innovation and industrial development. Developing countries such as ours cannot afford the luxury of developing knowledge for its own sake. We have to sponsor research into our local resources and develop those into innovation and applied technology that will help solve some of our most pressing challenges.
A major lacuna in our education programme is literacy. Government needs to lunch a mass literacy campaign to achieve 90 percent literacy within five years. The experience of Cuba proves that this is feasible if government develops the right model both in terms of conceptualisation and implementation.
The third of the gears in our arsenal is tackling poverty and food security. The data on poverty levels remain contested. Some estimates place the incidence of poverty at 40 percent while others put the figure as high as 70 percent. One thing that is clear is that poverty varies from region to region in Nigeria. While Lagos and the Western region have a lower poverty incidence of around 20 percent, the North and North East may be as high as 70 percent. In tackling the poverty challenge, we need a regional strategy that takes account of the most deprived areas which are mainly in the North and the North East.
The theory of federalism is based on the idea that no regions should be left behind in terms of economic prosperity. Such a trend would alienate large sections of the country while eroding the legitimacy of the government. I would therefore recommend the creation of a “Special Development Fund for Depressed Areas”.
We can learn a lot from the success of the Brazilian experience in tackling hunger and poverty during the last two decades. Under President Lula Inacio da Silva, Brazil lunched the Zero Hunger Programme as well as the Bolsa Familia. The Zero Hunger programme was anchored on the premise that no child in Brazil shall go to bed hungry. They also lunched the Bolsa Familia programme of small social transfers to the poorest families, most of them single-parent homes in the most impoverished favelas. These programmes were successful in lifting more than 20 million Brazilians out of poverty within the space of a decade.
Tackling rural poverty requires focusing on agrarian reforms. Under former Agriculture Minister Akinwunmi Adesina, now president of the African Development Bank Group, agricultural reforms led to marked increases in farm output and food security. The distribution of fertilisers is no longer controlled by political cartels. With production having risen from 1.5 MT to 3.5 MT between 2010 and 2014, Nigeria will soon become self-sufficient in rice production, saving billions of dollars in import bills. The value chain linking agriculture to food processing and agro-based industries will gradually lead to a major industrial revolution in Nigeria. Linked to this is the development of the water sector. The government has rehabilitated 12 River Basin Development Authorities (RBDAs). Some 10 dams are at the point of being completed and are already generating more than 150,000 jobs.
Self-sufficiency in rice alone would lead to a foreign exchange saving of US$10 billion per annum. However, I have had misgivings about the Adesina philosophy which seems to encourage land grabbing by agricultural multinationals. The record of these companies in Latin America has been less than salutary. Their avaricious land grabbing tends to be at the expense of rural peasants who are rendered landless and dispossessed. These companies produce bananas, sugar rice and other crops which they export wholesale. There is little spill-over effects on local economies.
I would like Nigeria to learn from the Green Revolution that took place in Asia in the 1970s and 1980s, focused as it was on the peasant farmer. Rural peasant farming remains the occupation of over 50 percent of Nigeria’s population. Boosting the productivity of rural farmers remains the key to social and economic transformation. We should focus on the local farmer in terms of enhancing access to affordable inputs such as fertilisers, pesticides, herbicides, seedlings, tractors and micro-credit facilities. Boosting the productivity of the farmer will increase rural incomes and livelihoods, leading enhanced aggregate demand to the modern urban industrial sector. Of course, we should also encourage large-scale commercial holdings, but the priority should go to the rural farmer.
The fourth and last of our gears is mass industrialization. I am persuaded that agriculture-led mass industrialization is the key to our country’s prosperity. The people who have run our economy for the past decade have, unfortunately, never understood this. They operated largely within the paradigm of the so-called Washington Consensus, for whom technology and industrialization are pornographic words. A senior European official once told me to my face that Africans have no business talking about industrialization. I am aware that it would never be easy. Markets are getting saturated with the influx of cheap, useless Chinese goods. But given Nigeria’s size, we can always pursue a home-market industrialization strategy. Raymond Vernon of Harvard developed his product cycle theory which shows that industrial opportunities can still exist where countries can focus on cycles of technology in those sectors in which they have the best comparative advantage.
Let me place it squarely on the table: without massive industrialisation, Nigeria is doomed. How else are you going to absorb the rising sea of millions of unemployed youths? Every year thousands of graduates enter the job market. Many of them spend more than 5 years without finding jobs of any kind. With little or no options, some of them relapse into crime and prostitution. We need a strategy of rapid mass-scale industrialisation anchored on agriculture, enhancement of the value chain building on SMEs and linking them to bigger firms for domestic and export markets. Nigeria must pursue industrialisation as a form of warfare.
With regard to current industrial development strategies, I am worried about the trajectory that we are pursuing so far, that is largely centred on Lagos. Lagos, our commercial capital, is getting highly over-congested. In a few years’ time it is projected to become a mega-city of over 20 million people. There is no more room for expansion in Lagos in terms of the sheer physical space constraint. What I would propose is that we have 10 industrial zones as the clusters of mass industrialisation in Nigeria: Lagos-Ogun, Port Harcourt, Aba, Enugu, Kaduna, Jos, Makurdi, Maiduguri, Kano and Kaduna.
Industrialisation should aim to produce import-substituting items not only for domestic consumption but also for world markets. Nigeria is strategically placed to be engine of industrialisation throughout the continent of Africa. Given our relatively lower labour costs, we are better placed than anyone else to capture the markets of West, Central, Eastern and Southern Africa. We should build local industries based on total quality management. That movement, started by Professor William Edwards Deming of MIT was central to technological development in Japan. We need to embrace that gospel and create products that can compete with the best in the world.
Industrialisation and SMEs should be the vehicle for tackling the unemployment challenge. It has been estimated that the national average unemployment rate hovers at 20 percent. Youth unemployment, however, stands at over 40 percent. The figures are worse for the North and the North East, where they have been placed as high as 65 percent. Unemployment is a curse. The right to work is a fundamental human right. It is work that gives people a sense of dignity and fulfilment as human beings. Without dramatic improvements in job-creation for our young people, we would be living on a time-bomb.
We should aim to create 20 million additional jobs within the next decade. We need a different and more radical approach. For example, we should encourage and provide incentives for the states where the Youth Corpers are serving to retain them for 5 years, even if this requires the FGN providing some form of subsidy. At the same time, the strategy of infrastructure development should adopt the implementation framework of the “public works system” using direct labour where feasible. If it worked in the days of President Franklin Delano Roosevelt in depression America of the 1930s, it can work in the Nigeria of the early 21st century. Direct labour on the roads and rail development will provide jobs to millions of young people. It will have a ripple effect throughout the economy. In addition, all investors coming to Nigeria must be required to recruit local labour and should foreigners should be employed only where there is rigorous evidence that Nigerians cannot do those jobs.
A situation where foreign companies are bringing in their nationals even for the most menial jobs is unacceptable.
A major challenge of employment in Nigeria is the fact that our young people do not have the kinds of skills that are needed in global competitive markets. The government therefore needs to invest heavily in technical and vocational education. Germany and Singapore are world leaders in vocational training. We need to borrow from their models and design a framework that will provide millions of young Nigerians the opportunity to acquire skills that will make them more employable. Our educational curricula should also be re-oriented from the preoccupation with theory and rote learning towards greater creativity and innovation in the applied sciences – skills that can be applied to the real and economy and the global marketplace.
Obadiah Mailafia
