A Call for National Industrial Policy

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Reuben Jikeme Umunna

In 1963, South Korea’s GDP was comparable to Nigeria’s in 1950. This means that value of finished products and services in both countries were comparable during this period.
Using 2018 data from the World Bank, an average South Korean is three times much more productive than a Nigerian today.

What leadership decisions brought about these tremendous changes and how did this change that began around 1945 lead both countries down to two distinct trajectories.

I have chosen South Korea for this article for three reasons. One, unlike developed nations of the west that began industrialising more than 200 years ago, Republic of Korea began its aggressive transformation agenda from an agrarian society after its independence in 1945 – 75 years ago. Two, to accentuate the fact that with the right attitude and commitment it is possible for Nigeria to industrialise. Three, to provide a sense of what may have been an alternative outcome, but for the economic development path Nigeria’s leadership decided. In other words, to bare the path dependence of economic and development choices.

Path Dependence of Economic Growth Strategies
The end of WW II marked the beginning of a new economic order – one driven by knowledge and not natural resources endowment. Lagging Japan, South Korea was amongst early Asian nations that was quick to realise that the future currency for global power would be knowledge and acted on it by decisively by pursuing its Science & Technology (S&T) agenda. Up until 1962, the republic of Korea and Nigeria were largely agrarian societies.

However, the leadership of Republic of Korea decided on a different socio-economic development pathway. In 1967, Korea created its Ministry of science and technology, as a central government agency responsible for its National S&T policy. South Korea invested heavily in developing human capital, educating her people in readiness to absorb and adapt technology, and to provide goods and services for global market consumption.

Beginning 1962, South Korea employed the use of multiple Five-year economic and social development plans to align its national science policies with its socio-economic goals. Between the first and sixth Five-year economic and social development plan, South Korea had transformed its economy from largely a technology importer to a technology independent nation by 1991 – within a period of 30 years.
According to World Bank data, South Korea’s Gross National Income per capita, the average income earned by a citizen of a country, increased from US $120 in 1962 to $7,440 in 1991.

For Nigeria, the chosen socio-economic pathway was different. Following the discovery of oil in Oloibiri in 1956, Nigeria focused on expanding its crude oil extraction sector, transforming its economy from an agrarian to a one based on commodity. The disproportionate attention crude oil exploration received, and still continues to receive, denies the nation the opportunity to fully develop and strengthen its science and technology sector.

To capture the reluctance with which Nigeria is adopting S&T as a tool for national economic growth, I briefly examine the development history of our National Innovation System (NIS).

The Federal Ministry of Science and Technology (FMST) was initially established in 1980 and re-established in 1985, evolving fundamentally from the National Science and Technology Development Agency (NSTDA)which was created in 1976. One year after the re-establishment of FMST, the first national science and technology policy was produced. Since then, the policy has been reviewed twice, in 1997 and 2003, to address the institutional frameworks required to foster interaction among the various elements of the NIS.

In 2017, Vice president Osinbajo inaugurated Nigeria’s first industrial policy and Competitiveness council – 32 years after the re-establishment of FMST and 14 years since the most recent review of national science and technology policy. However, a clear, well focused socio-economic policy agenda and strategy that breathes life into the National Innovation systems remains absent. Hence, institutions that make-up the NIS remain fragmented and continue to act independently.

Strengthening National Innovative System Institutions
The rather lengthy period it took the government between establishing FMST and Inaugurating Nigeria’s first industrial policy and Competitiveness Council reflects the sense of urgency and importance allotted to increasing the production per capita in Nigeria using S&T. Or better put, the gap mirrors aggression with which the government is pursuing the use of S&T as a tool for economic diversification.

Although the cultural and historic landscapes are very much different, a lot can be learnt from the South Korean economic development pathway, which draws heavily from its neighbor – Japan.
Japan was the first non-western nation to industrialize through an effective mobilization of technology from Western nations. Since overcoming the geographical friction of technology transfer, several Asian countries such as South Korea have found it easier to regionally mobilize technology for both local and national economic growth and well-being of its people.

Unfortunately, Africa’s case is not so bullish. No African Nation, till date, has achieved industrialised nation status. Mobilising technology across geographic international boundaries, otherwise known as technology leapfrogging, requires strategic planning and commitment. And it cost money too.

Lots of it! Between 1951 and 1984, more than 40,000 separate contracts were signed by Japanese firms to acquire foreign technology using licenses. Over that 34-year period, Japan paid US$17 billion in royalties. By 1981 South Korea’s external debt stock stood at $32.4 billion as it borrowed to fund gaps between investment and available domestic financing for its multiple Five-year economic and social development plans.

Under the Obasanjo led administration in 2004, Nigeria attempted to understand and perhaps refocus the national innovation system. In partnership with UNESCO, the Nigeria government set up an international advisory board for the reform of the Science, Technology and Innovation (ST&I) system to review investment, industry, and innovation in Nigeria. An initial US $1 million was jointly committed by the Government of Nigeria and UNESCO/Japan Funds-In-Trust. This was part of an initial ground works for a donors’ conference, which came at a time the administration was planning to call to fund implementation of a multi-year plan of action on science, technology and innovation. Since the change in administration in 2007, concerted effort in that direction has gone moribund.

Strategies & Recommendations
With over 5,675 billion cubic meters of gas reserves Nigeria, however, occupies a vantage position. Japan and South Korea have limited natural resources. Not only did both countries import most of the energy it required to industrialize, it continues to import coal, natural gas and Uranium that it needs to fire its power plants. Yet, these countries have continued to successfully churn out goods that are globally competitive in the global.

Endowed with natural resources, Nigeria need not to borrow to educate or re-tool its workforce in readiness to absorb imported technology. A percentage from the exportation of petroleum products can be banked in the development of human capital in preparation for massive reception of scientific and technological methods and know-hows. However, the educational system must be redesigned, so that it educates for economic development, meaning it must be adequately positioned to deliver high quality and practical education that must continuously evolve to support the improvement and adaptation of technology through basic and applied research.

A viable strategy to mobilise and domesticate technology from distant geographical locations, is to use recurring multi-annual economic & social plans to map the functions of relevant parastatals under federal ministries such as Education, Science & Technology, and Industry, Trade and Investment to national industrial policy goals.

A strong commitment to a clear national industrial policy that is agnostic to power transitions is central to sustainable development. Through the federal ministry of Industry, Trade and Investment, the federal government must be able to chart national economic pathways, inward from global market demands using multi-annual economic and social plans.

The FMST must be able to decouple these economic and social plans and map integral parts of it to various parastatals under her in line with the national science and technology policy. The federal government should use national industrial policy regimes to organize, delegate, and the national innovation system in ways that outcomes can be transparently monitored and measured.

Although Vice president Osibajo’s led industrial policy and competitiveness Council is a good step in the right direction, an industrial policy that ties science, technology and innovation to national socio-economic goals is still unavailable.

Umunna is an expert on the politics of science, technology & international affairs and he writes from the Johns Hopkins University School of Advanced International Studies, Washington DC