• Wednesday, May 29, 2024
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BusinessDay

As Michael Porter arrives

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Peace

Later this week, Michael Porter, the renowned Harvard University professor, will be discussing the place of Nigeria in terms of how we currently compete in the global economy. the meeting where he will speak will bring together key government and private sector leaders, and hopefully they will make progress on issues that have become quite familiar to everyone.

Porter is visiting when the issue of competition is increasingly being associated with nations, showing the extent of the interwoven of microeconomic foundations into macroeconomy. So, what actually started off as looking at microeconomic foundations for macroeconomy policies has migrated to being able to see some macroeconomy strengths, based on microeconomy performance. By this, I mean the performance of companies and industries in the economy. The interesting policy issue here is that it is impossible to make progress on competitiveness without the collaboration and cooperation between government at different levels and businesses. I am sure Porter will emphasise this point!
For the purpose of this article, three interesting issues are of major concern me in terms of our competitiveness. These three issues constitute what I call triple uneviable indicators in our economy. The first point is that our agricultural performance and that of Africa in general is the worst in the world. That is, our yield per hectare of land is the poorest by global standards. It is made worse by the fact that it remains the same since 1960. It means since the 1960s, productivity in our agriculture has been stagnant. Consequently, increases in agricultural produce we have seen since then come from the cultivation of more land. This is a very uncompetitive scenario for aspiring and emerging economy such as Nigeria, especially as many see agriculture as Africa’s forte.

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Second, we have failed, and miserably, to convert our extensive natural resources to competitive positions. We have over the years, erroneously thought that the mere availability of natural resources confers on us competitive positions. The required sound macroeconomic policies to transform these platforms to competitive positions are often missing. Take for instance our oil industry, no doubt a fantastic platform for developing and nurturing world class oil companies, but what we have is a behemoth Nigerian National Petroleum Company (NNPC). Whereas, in Australia and South Africa, respectively, two truly and remarkable international companies in the name of Rio Tinto and De Beers have emerged using their natural resource platforms.
Third, despite a population of 140 million people, our market is shallow and our manpower weak. Our shallow market and weak manpower are quite interrelated. Our manpower is characterised by very low productivity, itself, a characteristic of uncompetitiveness and consequently attract and command very low income. Because it attracts and command very low incomes, the demand pull is very low, and thus in summation, our market is shallow. This particular aspect also demonstrates how low we have taken education, and I truly mean education, and not necessarily the glorification of certificates that is currently the case in the country.

Cutting across these three issues are poor macroeconomic policies. And it is impossible to speak of competitiveness without making progress on sound economic policies. Lately, because of the way we have come to regard economic policy, I have been very careful to show the understanding that macroeconomic policy is not equated to budgeting, which only concern is the expenditure and revenue profile of the government for a particular period. Yes, we have failed in this area as well, but the point is that, to move the country forward in terms of competitiveness, the concern should be macroeconomic policies that seek to unlock the potentials and value in our different economic areas.
And if these macroeconomic policies have not delivered the results we wanted in the past, then we must change the way and approach to them. If we call this reforms, then we must pursue reforms of the way things are done in our economy because we are not satisfied with the outcome of the present. And as I have written before: I hope we are not satisfied with the level of poverty and lack in the country. And we are not satisfied with the level of unemployment that ensure that only a fraction of graduating students get jobs and fewer get the kind of jobs they would like and the kind of wages they want. And we are not satisfied with the situation whereby the government is a wealth creator rather than a wealth enabler. This is all about competitiveness.
Improved competitiveness will ensure there are changes to our pattern of production and export. The yield performance in the agriculture industry will improve, and ensure two things. First, fewer of our labour will now be required in the agriculture sector. Second, and related, this will release labour for other economic activities in the economy. And I hope improvement in our competitiveness will put an end to the fragmentation of markets and labour that ensure only low incomes.
We could argue about so many things but it is not debatable that we will experience high and consistent growth, which will lead to development, if only we embark on the changes, or call it reforms, that bring about the results that we desire. Hopefully, Micheal Porter will inspire us to start making progress.