Tuesday, August 31, 2010

A 3-Way Development for Nigeria

Olusegun Aganga
Nigeria's Minister of Finance
                                                                                       
Developed and emerging economies transited through three stages of development: agrarian, industrial and information. Their transition through these stages of development wasn’t easy, as they made painful sacrifices, undertook painstaking researches and witnessed difficult moments. Must Nigeria go through the aforementioned systematic stages of development for many years for her to attain the position of a developed or a truly an emerging economy? Certainly, no. Leaders who shaped their countries and gave their people voice and direction, did so by putting in place a plan to serve as alternative model for their nation’s economic growth. For instance, China has emerged as a manufacturing and trading powerhouse in the world because of Chairman Mao’s ‘Great Leap Forward’ which was designed as an alternative to the Soviet model of governance.


Nigeria has for long-time been battling with political, social and institutional obstacles to her development despite the country’s huge oil wealth and human capital. Time has come for Nigeria’s political class to design for the country a new development model that will focus on promoting economic growth, structural changes and improving the potential of Nigeria’s human capital through both public and private channels.

Nigeria’s leaders, policy formulators and implementers should adopt a 3-way development model, whereby the country simultaneously develops her agricultural sector, small scale industries and human capital. That is, putting in place a process through which the country’s economy are transformed over define period, by the reinvigoration of the agricultural sector, propelling small scale industrialisation and placing the country in a position so that her citizens can take advantage of the vast opportunities the world economy offers. The 3-way development model proposes that Nigeria benchmarked China’s Chairman Mao’s model of agriculturalisation, industrialization, and collectivization. But how will a democratic and heterogeneous Nigeria achieve it?

Nigeria’s development efforts placed emphasis on urban development at the expense of rural development which leads to a substantial rise in inequality between Nigerians. For Nigeria to achieve sustainable rural development, the country has to tie its rural development strategy to agriculture. Notwithstanding the fact that most of Nigeria’s economic activities, especially in the agricultural sector are not part of the measured financial transactions, agriculture can play a role in Nigeria’s GDP per capita. This writer once advocated for a new agricultural scheme that encourages an all inclusive participatory technique- where youth, communities, local councils, states, the federal government and the private sector (financial institutions and private investors) will be major participants. Financial institutions and private investors shall be the financiers; governments at all levels will have well-defined roles, while the youths and small scale farmers shall be the primary targets. In addition, the scheme should be designed to be in four categories- ‘export oriented’, ‘large’, ‘medium’ and ‘small’ scales, along with a well-defined timeframe for government complete handoff from the scheme.

The federal government would be the guarantor of fund to be provided by financial institutions or private investors. This will be done through the issuance of federal government bonds. The scheme should work in such a way that local councils and state government would provide lands and other logistics. The private investors or financial institutions who will participate in the scheme are not to give money directly to the government in order to receive the bond-certificate, but it would be a kind of batter arrangement; where the investors; either financial institutions or private individuals would setup farms, in addition to putting in place all structures required in a standard farm. Afterwards, a bond certificate equivalent to the cost which is to be determined by both parties and NGO’s will be issued to them. This will completely eliminate corruption which is the main course of failure of most good programmes in Nigeria. To encourage investors to participate in the scheme, before the maturity of the bond, the investor would take a prescribed stake, between 5% and 10% in any of the farms they setup. They will also assist in monitoring progress on the farm. On top of being an added value to the investors, since, in addition to the interests they will get from their bond when it is redeemed, this will also give them rights to shares from the farms’ profit. However, after the maturity of the bond, their stakes in the farm would be transferred to the host communities.

Though Industrialisation entailed both technology and profound social development, Nigeria can develop a small scale industrialisation programme with systemic as well as systematic measures to steer resources into the productive process. This proposed 3-way development model strongly ties Nigeria’s small scale industrialisation to its agricultural output and to the much-talked ‘waste to wealth’ efforts, as Nigeria has a total area of 910,768 km² of arable land, 13,000 km² water; and twenty-one (21) agricultural institutions, in addition to generation millions of tons of recyclable wastes every day. This will help in sustaining and developing the agricultural sector, boost export of finished or semi-finished goods as well as reduce unnecessary importation. But what kind of small scale industrialisation Nigeria should embrace?

Looking around us we see Asian products, such as razor blades, pine needles, envelopes, keys and padlocks, cotton buds, toys, shoelaces, safety matches umbrellas, doormats, office square clips, treasury tags, table flags, carpets etc in our markets. Most of these items are produced from agricultural outputs and recyclables wastes by small industries setup with small amount of capital and powered by solar panels or small wind turbines. Most of these industries are owned and run by a family of two or three in Shanghai, Taipei, Manila or Bombay. For example, a part of the Ikorodu-Shagamu road axis of Lagos State is occupied by Indians, busy building steel mills industry, utilising raw materials sourced from steels generated by Nigerians as waste.

The Bank of Industry, the Central bank of Nigeria, NAPEP and the ministry of commerce and industry should ensure that Nigerian small-scale industries and interested individuals benefit from the recently released intervention funds. And, instead of giving money to all loan beneficiaries, government can setup small industries and handover the industries to some of them.

Factors such as considerable advancements in science and technology, establishment of broadly-based government and strengthening of institutions along with issues ranging from social to cultural, economic policies to institution development, geographic location to opportunities all led to exceptional economic development for some countries. Besides, human capital development has played a vital role that has led to significant socio-economic progress and improvement in the lives of large number of people in many countries, noteworthy is the rapid and long sustainable high growth performances of East Asian economies. Nigeria can utilise her human capital for economic development. Though, economists are of the view that, for human capital to spawn a perceptible impact on economic development, a nation needs to have a minimum of at least 70 per cent literate population. Nigerians are a very creative and dynamic people. Despite the absence of strong formal support, Nigerians have made sport, music, art and the film industries promising. Nigerian government can take advantage of this and use these industries to create jobs and generate wealth, by hunting for top quality talented Nigerians, provide them with world–class training by assisting private entrepreneurs to establish well-equipped record companies, modern film studios, sport development enterprises and remove every obstacle that hampers the flourishing of these industries. Information technology (I.T.) and software are also today major sources of foreign exchange for most emerging economies. India is leveraging from its massive investment in I.T. and software development. Nigeria’s human capital has the potentials to be major exporters of I.T. professionals.

China owes her development to Chairman Mao’s ‘Great Leap Forward’ of agriculturalisation, industrialisation, and collectivisation. Nigeria’s can benchmark Chairman Mao’s idea through agriculturalisation, small scale industrialisation and human capital development. Though, it took China decades to start reaping the benefits of the ‘Great Leap Forward’. Nigeria can reap from the proposed model within five to ten years, because the world today is very different from the one that was, some decades ago. All that the country needs are there, except that person that would push the right button- our Chairman Mao, so to speak.

Zayyad I. Muhammad writes from Jimeta, Adamawa State, zaymohd@yahoo.com, 08036070980