• Sunday, May 26, 2024
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What Michael Porter said…



For an hour last Thursday, Professor Michael Porter spoke comprehensively on how we should compete. As I suspect is the case with many others present at the event, some aspects of his discussion resonated with me, especially our focus on the division of the pie, rather than expanding the pie. Though Porter did not dwell on our economic history, but if he did, he would have mentioned that we pursued the right model before we chose to move in an opposite and ridiculous direction. Our current and ridiculous model of prosperity is to depend on inherited wealth. Of course, our inherited wealth is the flow of black gold underneath the soil of the Niger Delta. Inherited wealth is derived from natural resources. When this model is adopted, prosperity is limited.
Many of our policy makers, including our macroeconomic policy ones, will argue from eternity to eternity that this is not a new concept. Yes, it is not new knowledge, but it remains a new understanding until we do something about it. We have enough global evidence that no country has prospered by depending on natural resources. Countries may be rich, but they have not prospered, and I believe we can figure out the difference. In case our policy makers cannot figure out the difference, being rich is not sustainable, while being prosperous can be.

Time-and-time, we discuss, and sometimes very repeatedly, that our nation is blessed with vast human, capital, and natural resources. No question about that! But that is a dimension of the inherited wealth. It is what we do with it that makes us competitive or not. Because of our relentless focus on sharing, sharing, sharing and sharing, we have successfully relegated ourselves to the bottom of nations that can compete and do so effectively. It is instructive that our focus on sharing is tearing the nation apart, and ours have become a classic analogy of the scene at the burial of a rich polygamous man that did not train his children. Because they have not been trained to make themselves prosper, they fight over the few houses he’s got.

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I am especially glad that Porter emphasised that it is not what a nation competes in that drives prosperity, but how it competes in the what. This is an element of the segmentation theory I had written about before. A national competitiveness strategy must include a selection of industry that can best compete in the global industry. The evidence of the validity of this theory is there for all to see. In Nigeria, we produce shoes, clothes, toothpaste, soaps, wood, chairs, and many other things, but do not compete favourably in any of the industries that our produce compete. In that case, the global demand, including domestic demand, for our products is extremely limited and thus the income derived from that is limited and the prosperity that we derive from that is limited.
To compete, a nation must compete through its businesses and firms. The interesting thing here is that the nation’s competitiveness is an aggregation of the individual competencies of the country’s firms and businesses. Thus, Porter emphasised that government’s role is essentially to compete to offer the most productive environment for business, because productivity ultimately depends on improving the microeconomic capability of the economy and the sophistication of local competition.
If a nation is to expand the pie, as we do not currently do, and ensure unlimited prosperity, Porter mentioned two things that must happen. First, companies should become central actors in the economy. Second, government should create the enabling conditions for productivity and foster private sector development. Reading through that, I am thinking that you are thinking that we are not doing this, and its no surprise, we are not prospering. In the Nigerian economy, successive governments are happy to be the central actors rather than the private sectors. To maintain this anomaly, they fail to provide enabling conditions for productivity and private sector development.
If you do not believe me that the non provision of enabling environment is a deliberate action on the part of successive governments, and mind you, very related to the sharing of the pie theory, I will help with two examples. First, after many individuals and companies have complained and stressed the importance of power for the kind of progress that they want to make, our government finally acknowledges the need. However, for years and months after acknowledgement, we have not made progress in ten years. Remarkable! If you are very patient enough to listen to what the current government is saying, I will forgive you if you say to me after, that you still do not understand. Yes, I do not understand as well.
Second, for many months and years as well, many Nigerians have complained that the state of our roads is getting worse. Because they are getting worse, our traveling time is longer, our vehicles are not as durable as they should be, and we are not competitive as we should be, not minding the accidents and loss of lives. Finally also, our government acknowledges that this is true. Someone even wept! But after acknowledgement, I thought there would a purposeful and committed approach that should resolve the problems on some of these key roads. The government has explanations, and I have listened to many of those explanations. But, please forgive me if I still do not understand why it is not done.
So, after listening to the impressive and inspiring Michael Porter, I have personally learnt some things. The one I will share with you is that he is an extremely disciplined man. To the nation, I hope those of us present can make some progress. Thank you MP.