Uphill Task to Get Nigeria Producing Again

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Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed

Armsfree Ajanaku

The existential threat confronting Nigeria on account of its ballooning population is one reality proving to be a big puzzle. Even for the most creative policy czars, one difficult question has to do with how best to engage such a big population at a time when industrial production, and other economic activities, which generate massive employment, have seriously declined. Another dimension of the problem confronting those who understand the severity of this threat is: how will a country, which is currently borrowing on a massive scale to fund supposed development priorities cater for a very youthful population, which continues to grow at an exponential rate? According to the World Bank, as at 2018, Nigeria annual population growth rate was of 2.603 percent. In its country overview on Nigeria, the very ominous point is made about how despite expansion in some sectors, employment creation in Nigeria remains weak and insufficient to absorb the fast-growing labour force, resulting in high rate of unemployment (23 percent in 2018), with another 20 percent of the labour force underemployed.

A further scrutiny of figures on Nigeria would lead to an extrapolation that nearly half of the national population made up of the unemployed and underemployed, is clearly not contributing in terms of development, growth and national progress. It further implies that this huge chunk of the population that has been excluded from economic activity neither contributes meaningfully to the national tax net, nor does it propel the wheel of economic progress by spending to support economic activities as it most likely does not have the purchasing power. While these worrying indices make some fret about the danger, which lies ahead, given such a disengaged population, that has not strategically equipped with the right skill set, and put to work through massive job creation, there are others who try to look at the sunny side of things. These optimists argue that there are countries, which are more populous than Nigeria, which have successfully used their huge population number as a key element to project national power. China is an example; with around 1.4 billion people as 2019. Not minding its pre-eminent place as the country with the most human beings on earth, China has managed to strategically harness its massive population to achieve the feat of becoming the industrial and production hub of the world.

Little wonder, China’s unemployment rate, notwithstanding reservations that the figures are too low to reflect the true state of its situation, still has a considerably low unemployment rate for its huge population. So what is China doing right that Nigeria is not doing? The short and simple answer is that countries like China and the rest of the Asian Tigers are producing, while Nigeria has been stuck in its very bad habit of compulsive and conspicuous consumption. As things stand, the national currency is fast losing ground, and has consistently lost its value. This is happening as the fiscal authorities demonstrate no sufficient grasp about what to do to salvage the national currency. With unstable earnings from oil exports continuing to dominate most of the country’s fiscal plans, many citizens wonder why the long winding discussions about the imperative of diversifying the economy, have not been translated to real action on the ground. Beyond, the talk-based activity of policy articulation, the desperate fiscal situation Nigeria is currently stuck in, requires it takes important first steps to shed its anti-production toga by producing some of the basic things consumed in the country.

Considering the severity of the economic crisis, which has in no small measure contributed to the many manifestations of national instability Nigeria continues to experience, there is a dire need for bold new thinking and policy execution to Make Nigeria Produce Again (MANPA). Such a radical programme with the objective of resetting national policy priorities towards production should take inspiration from some milestones recorded in the past. There was indeed a time Nigeria was so productive that the same national currency, which is currently in tatters exchanged for 80Kobo to $1 (United States Dollar) in 1980. This feat, which would sound very impossible at the moment, was achieved at the time because there was a lot of local production going on within the country. In the automobile sector, Nigeria assembled its cars, and even locally produced the car parts with such companies as Peugeot, Volkswagen, ANAMCO and Steyr blazing the trail. Companies like Exide produced car batteries while Dunlop in Lagos and Michelin in Port Harcourt, produced tryes which raw materials were sourced from the rubber plantations of the Niger Delta.

In the textile sector, Nigeria produced clothes from textile made in mills in Kaduna and Lagos. There was the shoe company, Bata, which made the footwear Nigerians needed. It is an indicator of the wasteful, prodigal and dream-killing kind of political leadership Nigeria has produced over the years that these businesses were eventually made prostrate, and finally collapsed. When these major drivers of industrial production in the country were allowed to go into coma, Nigeria replaced vibrant production with unbridled importation. The fact that Nigeria has over the years cemented its place as a dumping ground for finished goods, is at the heart of the fiscal crisis the country is engulfed in. To worsen things, Nigeria runs a parasitic federal system wherein 36 wobbly states go to Abuja every month to collect monies they have not worked for. Since free money breeds laziness of the most extreme type, the result of Nigeria’s “feeding bottle” federalism has breed indolence, corruption and a most dysfunctional country, where nothing matters except compulsive consumption. It is therefore no coincidence that the Naira continues to take a beating.

Despite this very bleak outlook, there are a few institutions piloting innovative ideas, which suggest some sort of understanding of what needs to be done. The Central Bank of Nigeria (CBN) for instance has been pushing in the direction of using financing mechanisms to stimulate local production. Under the Governorship of Godwin Emefiele, supply of finance to the real sector to encourage local production has been ramped up. This approach reflects in such programmes as the Anchor Borrowers Programme (ABP), which data from 2018 shows 188.96 billion being disbursed through 19 participating financial institutions to 646,213 small holder farmers who reportedly cultivated 640,422 hectares. Other are the Commercial Agriculture Credit Scheme, the Paddy Aggregation Scheme rice millers, the Non-oil Export Stimulation Facility and the Export Development Facility. There is also the Micro Small and Medium Enterprises Development Fund, which saw N6.37billion being disbursed as loans and grants in 2018.

Despite the good intentions of institutions like the CBN, what it has been doing is largely to ignite a small spark, which could serve as promising practice, for the fiscal authorities with the primary responsibility policy implementation to replicate. Ultimately, the fiscal authorities have to closely study some of the ideas, which have been piloted, and then scale them up for long lasting impact. If for instance the core ideas discussed in the government’s Economic Recovery and Growth Plan (ERGP) of 2017 are followed through, the country could be on the road anchoring the economy on production. The plan for instance focuses on achieving macroeconomic stability and economic diversification. These it hopes to achieve by undertaking fiscal stimulus, ensuring monetary stability and improving the external balance of trade.

To achieve economic diversification, the policy had looked at giving attention to key sectors driving and enabling economic growth, with particular focus on agriculture, energy and MSME led growth in industry, manufacturing and key services by leveraging science and technology. The ERGP in its approach had enthused that the current administration was not lacking the “strong political determination, commitment and will at the highest level.” Three years after the plan was put forward, the results in the short term do not look promising. Nigeria continues to retain its ignominious distinction as the poverty capital of the entire world. It will take exceptional political will, backed by visionary leadership to take up the cause of “making Nigeria produce again.” Again, this uphill requires an informed, enlightened and transformative political leadership, which would look squarely at the precarious state of the country and make the right decisions.

It is not the kind of political leadership as recently exemplified by the National Assembly, which will blatantly decline to patronise made in Nigerian cars, but prefers to use scarce financial resources to import exotic Japanese brands, while exporting precious jobs overseas.