Developing Nigeria’s Economy: The New Challenges Of Industry Policy-Making

The future belongs to the things that can grow, whether it is a tree or democracy. Gone are the days when the Government’s view of the economy short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

Industrialization has always constituted a major objective of development strategy and government policy. Through industrialization, developing nations aspire to achieve higher economic growth, and to eventually attain developed nation status. Yet, it remains doubtful whether the approach of industrial policy-making in developing countries has indeed been successful in transforming their economies. In support of private sector-led industrial development, this paper argues for a primary focus on innovation-driven industrial policy to foster skills upgrading, enhance industrial growth and produce world- class exports, with lessons drawn from the experience of developed countries.

It explains why industrial policy-making must address the pursuit of innovation as a prime mover in economic development to put in perspective the importance of innovation-driven industry policy. To provide evolutionary perspectives of Nigeria’s industrialization process since independence from 1960s to 1990s, it analyses the industrial policy thinking behind the different stages of industrialization that has helped build the nation to its current state of economic development. It also describes the new wave of Nigeria’s industrialization in support of innovation, as articulated in its Innovation Manifesto.

The policy of this country on building an independent national economy should include the establishment of many-sided economic structure, the buildup of its own independent and solid bases for raw materials, the modernization of all the sectors of the national economy and the training of its own technical carders.

In the past the government has maintained the principle of producing and exporting products abundant in the country, demanded and competitive in the international market relying on the development of production industry with the oil-exploration industry as the core, light industry and agriculture in conformity with the actual conditions of the country.

At present the foundation of the independent national economy has been strengthened here in Nigeria. The Labour union set forth the economic policy in the post-colonial era on giving precedence to the development of the defense industry while developing the light industry and agriculture simultaneously so as to develop the national economy on its own firm track. The foundation of the oil industry has been consolidated.

The production bases of coal, oil and petrochemical materials industries, are turning out fireproof materials like magnesia clinker and light-burned magnesia, nonferrous metals including lead, zinc and cadmium and various second-stage metal products such as rolled steel, steel plate and wire, which are in great demand on the international market.

The foundation of machine-building and electronic industries requires modernization and the production potential largely increased on the basis of ultramodern scientific and technological achievements.

The Ajaokuta Steel Complex, the Nigerian Metal Complex, the Nigerian Machine Tool Factory, the Defence Industry Corporation Factory, the Nigerdock ship-Making Complex and other big-name factories have laid the solid production foundations and renovated the production processes to manufacture and export hydraulic and thermal power turbines and generators with a great capacity and high performance, compressors, CNC universal lathes, hydraulic excavators, motors and transformers.

Nearly forty-eight years of our nationhood; a day we may all cherish as a nation. Now is the time to look calmly at ourselves and identify the mistakes that we have made as nation. Of course we have in one way or the other made mistakes. Like what Confucius once said, it does not matter the number of times we fall but the number of times we rise when we fall. We cannot continue to fail the next generation.

There is no denying that millions of Nigerian jobs have been lost to outsourcing. It is a fact, yet it tells only half the story. Instead of turning back the clock to late 20th-century Nigeria, we need to fix what’s broken by preparing students and workers to succeed in a global, digital economic era. We do that by revitalizing school curricula with a more futuristic and global bent. We do that by creating a more equitable and effective national workforce training and retraining effort. The bottom line: Education and retraining must move up on Nigeria’s priority list–with the public, academic, non-profit and business sectors all working together.

Such long awaited by some and a nasty surprise to others, the conflict between the industrial age and the virtual age is now being fought in earnest, thanks to that modestly conceived but paradigm-shattering thing called economic reforms. What’s happening with global, peer-to-peer networking is not altogether different from what happened when the Nigerian colonists realized they were poorly served by the British Crown: The colonists were obliged to cast off that power and develop an economy better suited to their new environment.

Industrial policy has been characterized by a primary emphasis on attaining the desired macro-economic environment for industrial development, and at the same time, achieving the intended economic performance for a country. For more than four decades, the rapid growth of Asia’s tigers: Hong Kong SAR, Singapore, South Korea and Taiwan, which pursued government-initiated industrial policy, gave rise to optimism that industrial policy-making, if executed correctly, could be a major contribution to economic growth . Nigeria government is yet to demonstrate strong tendencies of refraining to play the role of a “central actor”, but rather that of a “facilitator” – which stems from the view that industrial development basically originates from societal demands and should thus be derived from the society rather than the state.

While politicians, industrialists and businessmen share the opinion that industrial policy-making may bolster economic development, it is also recognized that industrial policy, if implemented to “cut off” competition, may be counter-productive. The existence of government’s industrial policy instruments– subsidies for failing businesses may be inefficient and it was felt that with government subsidies, comes state control, which is repeatedly found to be detrimental to the market efficiency of business transactions. Indeed, past solutions centred on fiscal incentives that help industries improve the costs of production and factors of efficiency in the creation of goods and services have also become less effective .As many would advocate, one of the virtues of a free-market economy is that it reward.

Economic problems create social problems. Unemployment and inflation especially have political and social repercussions. The unemployment rate is the percentage of Nigerians actively seeking employment but unable to find work. Inflation is the rise in prices for consumer goods. The consumer price index (CPI) measures the change in the cost of buying a fixed basket of goods and services. Many economists and politicians believe that methods for calculating the CPI need to be revised in order to avoid overestimating inflation. Few things are more worrisome to consumers and politicians alike than the combined effects of inflation and unemployment marching upward together.

Already, much of the world–especially Asia–is busy liberalizing trade practices to fuel economic growth, and creating top-tier jobs to ensure ongoing success. They’re preparing for the next decade, when 1 billion new global consumers will reach middle-class standing. Tapping into the tremendous export opportunities that exist for Nigerian companies will require a workforce that is geared to think and act with a global perspective. There’s a lot of promise for a millennial generation of Nigerians who are willing to do what we have always been the best in the world in doing–adapting, learning and competing.

Economic development must be done step by step. It should begin with the strengthening of our economic foundation, by assuring that the majority of our population has enough to live on. … Once reasonable progress has been achieved, we should then embark on the next steps, by pursuing more advanced levels of economic development. Here, if one focuses only on rapid economic expansion without making sure that such plan is appropriate for our people and the condition of our country, it will inevitably result in various imbalances and eventually end up as failure or crisis as found in other countries.

The state must absolutely prioritize sustainable employment creation, which combines economic development with an expansion in decent work. Moreover, the state must have structures that can drive development through a combination of discipline and resorting for capital. At the same time, it must ensure broad participation in policy development, especially by organizations representing working people.

Our Fiscal policy must become more expansionary. Interest and foreign-exchange rates must be designed to support increased investment and growth in exports. In particular, targets for the Central Bank should include the current employment and growth targets. That generally requires a reduction in real interest rates to levels comparable or lower than Nigeria’s main trading partners.

Our monetary policy manipulates the supply of money and credit in private hands. Monetarism holds that the supply of money is the key to the nation’s economic health. The main agency for making monetary policy is “CBN,” whose formal title is the Board of Governors of the Central Bank Of Nigeria. The CBN uses three instruments to control the money supply. First, they set discount rates for the money that banks borrow from the Central Bank. Second, they set reserve requirements that determine the amount of money that banks must keep in reserve at all times. Third, they buy and sell government securities in the market, thereby expanding or contracting the money supply. The amount of money available, interest rates, inflation, and the availability of jobs are all affected by the CBN. Presidents try to persuade the CBN to pursue policies in line with the presidential agenda.