…I really do hope that not only Nigeria but more African countries will seize this fresh opportunity to industrialise, given the new attitude of the World Bank to the idea. The African Continental Free Trade Agreement (AfCFTA) is a great opportunity and platform to launch what I call “African Industrialisation 2.0.” It is important to note that it was not only Nigeria that deindustrialised on the back of the Cold War – that era when ideologies jostled especially in Africa. But now, with 2020 vision we can see what a great error it was.
Fortuitously, the very day I was contacted to write a second foreword for Professor Edward O. Ogunleye’s book, on the 17th of March, I received a report from the Wall Street Journal with the title “World Bank Embraces Industrial Policy, Abandoning Three Decades of Stigma.” Paul Hannon of The WSJ wrote about the contents of a new report by the Bank.
This is a momentous work by the World Bank, which according to Hannon had subtly or overtly ‘stigmatized’ the idea of Industrial Policies for and by developing countries, among which it has had great influence – alongside its sister agency, the International Monetary Fund (IMF) – for decades. Part of the WSJ report goes: “The World Bank Tuesday confessed to an error of more than three decades duration, moving to embrace industrial policy as tariffs, subsidies and a variety of other interventions become increasingly popular with governments in search of growth”. The report goes on to note that today, all 183 countries surveyed by the World Bank – developed and developing economies alike – have a policy that protected at least one industry. The Bank stated that the question was no longer about whether a country should have an industrial policy, but whether the choice and mix of policies are well suited to each country’s peculiarities. In other words, for the Bank, Industrial Policies is now a fait accompli – any country without one is ‘on a long thing’ as we say in Nigerian colloquy.
|
|
This development brings to mind the historicity of national development. I am aware that many African economists of repute – Professor EO Ogunleye inclusive – have dedicated their life pursuits and academic careers (his spanning 43 years) to the question of industrialisation in Africa and often faced push backs, especially in those heady decades. This is partly why most sub-Saharan African economies lay prostrate today, condemned to being receptacles of manufacture goods, secondary and tertiary products from smarter countries, and in a vice grip that almost none of these countries have been able to wriggle out from. But it looks like the world has come full circle, and ideas that existed as conspiracy theories just a decade or two ago are turning out to be the unvarnished truth.
As it pertains to the subject of industrialisation, the truth is pretty simple – every nation must find every opportunity to add value to their products, to leverage from primary to secondary to tertiary and quaternary products. Every self-respecting nation must at least try. The idea of hinging national development on David Ricardo’s 1820 idea of comparative advantage has since died. Countries must now look for new capabilities and capacities – according to Joseph Stiglitz and others. Whereas the world is said to be in a Fourth Industrial Revolution, it is apposite to note that most African nations missed the First Industrial Revolution (powered by the steam engine), the Second Industrial Revolution (powered by electricity), the Third Industrial Revolution (powered by the internet), and are now wrestling with the consequences of the Fourth Industrial Revolution (powered by robotics and artificial intelligence).
|
|
|
|---|
Nigeria’s first rash of industries – mostly owned by colonialists – disappeared during the SAP-era from the mid-1980s. Nigeria was asked to adjust structurally, leading to the restructuring and repositioning of many companies. Those enjoying governmental subsidies or were owned outright by the public sector folded first (most had struggled anyway). Conglomerates were thinking of higher returns and efficiency. China was absorbing those companies relocating from the West.
But the fault is not in our stars. I trace the first wave of industrialisation in Nigeria – and most formerly-colonised African nations – back to those companies established here by some Brits, French and Greeks. Some of those industries were also mere assembly plants situated here because it made economic sense for conglomerates to so do. These industries worked with clunky machines and employed a great many Nigerians, especially on the factory floor. But economics is a dynamic discipline; it is subject to innovation, just like the pure sciences. In time, companies thought of more efficiency, machines and technology improved, leading naturally to fewer and fewer people being needed on the factory floor.
Globalisation – the idea that suggested that factors of production should be able to move freely – became the zeitgeist of that time, even though it was greatly flawed. Capital and entrepreneurship could move freely around the world, deployed to maximise returns anywhere that could be found. Labour was less mobile, as people trying to relocate to developed nations where they could find employment more easily found themselves stuck in embassies in developing nations and being put through embarrassing inquisitions about their mission. Thomas Picketty, the French economist, has done immense work to show how the returns on capital and labour diverged never to meet again since the last 200 years. The return on labour, adjusted for inflation, has stymied, flatlined, plateaued, or stagnated, according to Picketty.
Nigeria’s first rash of industries – mostly owned by colonialists – disappeared during the SAP-era from the mid-1980s. Nigeria was asked to adjust structurally, leading to the restructuring and repositioning of many companies. Those enjoying governmental subsidies or were owned outright by the public sector folded first (most had struggled anyway). Conglomerates were thinking of higher returns and efficiency. China was absorbing those companies relocating from the West. South Korea had some assistance from the Americans who supported it against its northern sibling, plus a hard shove into industrialisation by no less than the brutal General Park Chung Hee. Singapore had some help from the Brits, to establish as a financial centre. Many of the industrial zones created by Nigeria’s Western, Northern and Eastern Regions folded in that era. Many became religious centres. Nigeria lost its textile factories in particular and they never returned.
The current administration, which I humbly serve in, has taken on similar reforms – around the naira, fuel subsidy removal, and even tax recalibration. But it looks like this time, we are wiser than in the 1980s. We understand ab initio that industrialisation is a sine qua non to socio-economic development. We know that some sectors must be protected. And we are luckier. For example, the oil refining sector, which had totally collapsed before now, leading to Nigeria importing 100 per cent of its fuel needs at a great cost (circa $30 billion yearly), is now back – thanks to Dangote Refinery Plc. Today, Nigeria imports some crude oil for refining (rather than export all its crude), and exports some refined products to the USA, Middle East, parts of Europe and of course sister African countries. Our crude exports have fallen by about 30 per cent; our petrol, diesel, kerosene and jet fuel imports have also fallen by about the same proportion. As an icing on the cake, we have some thriving private refineries, which employs over 60,000 people directly and another 200,000 indirectly. Good for the economy!
…I commend and revere my mentor, lecturer, project supervisor and inspiration, Professor Edward O Ogunleye for having being steadfast for 43 years in this pursuit, in a subfield where many fear to tread, withstanding great pushback from the most powerful entities of this world, and reminding Nigeria and Africa that we must stay focused no matter what. I am most honoured and humbled to have been under his tutelage between 1987 and 1991 at the then Ondo State University (now EKSU). I serve Nigeria today as a Special Adviser to the President on Economic Affairs, sitting in the office of the Vice President.
Let us hope that our new lunge for and experiment with Industrialisation 2.0 will be more enduring than the first one, but there are even greater challenges. The pace of technological metamorphosis is now dizzying. Industries are now more adept at running massive operations with few human beings. Artificial Intelligence is surely taking many out of work – including information technologists and coders. The space for growth is narrowing. And every nation is getting wiser. Will Africa – or Nigeria – be the next frontier for industrialisation? That is a tall order. It will depend on the speed and ingenuity with which we move. It will depend on not only government policies but also on the intrepidity of our entrepreneurs. Whereas we require foreign investors, we must also encourage domestic investors. Nigerians must put their monies where their mouths are. Africa looks like the last frontier of development.
Industrialisation is important for development, so why not here? In fact, many nations are now thinking of industrialising for domestic consumption purposes. China’s economic growth has slowed to a mere 5 per cent after over 15 years of double-digit growth. The next option for China is domestic consumption. India, with 1.5 billion people, launched a ‘Make-In-India’ policy designed to reduce the import of manufactures a few years ago. No one is waiting around on the industrialisation and economic development autobahn! Like our people will say on the streets, this is a case of ‘Datiemo!’
This is why I commend and revere my mentor, lecturer, project supervisor and inspiration, Professor Edward O Ogunleye for having being steadfast for 43 years in this pursuit, in a subfield where many fear to tread, withstanding great pushback from the most powerful entities of this world, and reminding Nigeria and Africa that we must stay focused no matter what. I am most honoured and humbled to have been under his tutelage between 1987 and 1991 at the then Ondo State University (now EKSU). I serve Nigeria today as a Special Adviser to the President on Economic Affairs, sitting in the office of the Vice President. This is a great privilege and a pip on the shoulders of our great Professor, that one of his starry-eyed sons made it this far. I commend his new book: Industrialisation in Africa; Sub-regional Imbalances, Ideological Diversity and Future Prospects, and the efforts of all who have contributed to this great body of knowledge. I believe that even in retirement Professor Ogunleye will even be more amenable to sharing his vast wealth of knowledge for the continued progress of his motherland and beyond. We’ve only just begun.
Finally, I really do hope that not only Nigeria but more African countries will seize this fresh opportunity to industrialise, given the new attitude of the World Bank to the idea. The African Continental Free Trade Agreement (AfCFTA) is a great opportunity and platform to launch what I call “African Industrialisation 2.0.” It is important to note that it was not only Nigeria that deindustrialised on the back of the Cold War – that era when ideologies jostled especially in Africa. But now, with 2020 vision we can see what a great error it was. Every nation must strive to be useful, and setting up industries to produce the essentials of life is one of the most difficult ventures anyone can embark upon. It is a game for the brave. Whichever African country can chest out and claim advantage given this new lease of life, good on them. I am interested in seeing Nigeria lead the way.
‘Tope Fasua is the special adviser to the President on Economic Matters.
