BusinessDay

Why has wealth creation been elusive in Nigeria? (1)

Nations, organizations, and individuals aspire to acquire assets that generate growth and income over a long period of time. But when growth and income are not generated as expected due to insecurity, high inflation, and rising unemployment figures, there is a need to reappraise policies and strategies that have disabled citizens’ aspirations over time. Public intellectuals and analysts have often said that the insecurity challenges which Nigeria is facing today are poverty-induced. Well, this is debatable. But as I write, there is controversy as to the number of Nigerians who are in or out of poverty in the past 2 years.

With unemployment hitting hard among men and women under 35 years of age, young Nigerians see their prospects diminishing rapidly. Young men and women struggle to survive after university education contrary to sweet stories they were told by their parents that a university education will make them become successful in life. But for many Nigerian youths, university education has not changed their lives for the better. Why? It is because most of our youths do not have jobs. Some employers say that many of our youths are not pro-industry.

For quite some time now, Nigeria’s economy has not been doing well. The economy has gone haywire. Since 2015, Nigeria has endured one of its challenging economic periods in history. Two recessions in a period of 6 years, driven largely by a blend of economic policies, a collapse in oil prices, and the COVID – 19 pandemics. These challenges have prolonged misery for many Nigerians including parents who in retirement have to look after the needs of their children who are graduates. When we have an unemployment figure that is about 33.3 percent with headline inflation of about 17.93 percent (YOY) in May 2021, and over 80 million Nigerians in poverty, one is tempted to ask: Why has wealth creation been elusive in Nigeria?

I am aware that no single factor can lead to the underdevelopment of a nation, and no particular policy or strategy can set in motion the complex process of economic development. The poor state of the economy for decades shows there is a missing link in Nigeria’s development plan. That missing link is the capital goods sector-led growth strategy. The missing link is responsible for low production activities in the economy. There are very few jobs because production activities are low. The unemployment rate in Nigeria has multiplied since 2015 to become one of the worst globally.

At the end of the year 2020, it was reported that about 23 million youths are in search of jobs, according to the National Bureau of Statistics (NBS). Most of the country’s unemployed youth see Nigeria as a place where they cannot thrive. So, what we see daily is the reverse transfer of technology, popularly known as brain drain. Brilliant minds run away from the country in search of better career opportunities. It has been argued by many technology policy scholars and development economists that the absence of a thriving capital goods sector in Nigeria is majorly responsible for the country’s import and technological dependence, high rate of unemployment, and underdevelopment.

It is the capital good sector, according to prominent scholars, that gives the economy the capacity to become innovative, to become reproductive in character, create wealth at will, generate employment, and effectively tackle the challenges of underdevelopment. We have made a stab at the capital goods sector in Nigeria but it is not booming. Why? We have not thought it through properly to reflect our unique circumstances and technological objectives.

What we need to create wealth for millions of Nigerians is a booming capital goods sector. Booming capital goods–led growth strategy is feasible in fairly large economies such as Nigeria that have natural and human resources with the potential to absorb the output of the capital goods industry. It is because our capital goods sector is not thriving, that is why most firms and agencies of government go abroad to buy machinery and spare parts at an exorbitant cost in foreign exchange. This can be seen in a recent report by BusinessDay, June 9, 2021, titled “Nigeria’s Record Imports Show Slow Progress in Local Production Drive.”

According to the headline report, findings from the foreign trade of the National Bureau of Statistics (NBS) show that import of machinery and transport equipment rose by 43 percent to N2.49 trillion in Q1 2021 compared to N1.74 trillion in the same period last year. This increase according to the report has not translated to reduced importation of manufactured goods as imports equally rose by 90% to N588.7 billion in Q1 2021 compared to N308.6 billion recorded in Q1 2020.

A Lagos – based economic analyst was quoted to have expressed his view that the protectionist policies of the government which are aimed at increasing local production are yet to produce required outcomes. Besides the failure of protectionist policies of the government, there are other factors such as import control regime leading to a shortage of machinery spare parts and other production inputs. That is why the protectionist policy tends to create bottlenecks to manufacturers instead of wealth. We want Nigeria to be the hub for technological entrepreneurship and innovation. This will not happen by mistake. It requires thinking and strategic actions by those in authority. Immediately the business environment is enabled, the private sector will key into it. Why can’t we consider having a thriving capital good sector for technological innovation, technological entrepreneurship, and technological learning by doing? We can do it provided there is the political will! Thank you. (To Continue)

MA Johnson, FIMarEST FSM FIoD MBA

Rear Admiral (Rtd)

Get real time updates directly on you device, subscribe now.