Nigeria has been labelled a consuming country that devotes fewer resources to fully utilising the untapped potentials of its economic resources, a major reason why even after 65 years since it gained independence from Great Britain, it still hasn’t been able to catch up with countries in Asia that were in the same category as it were.
With Thailand earning as much as $1.3 billion from cassava exports in 2023 alone, a sharp contrast to Nigeria, which earned a paltry $1 million, many have continued to question the sincerity of the many industrial policies of successive governments that plan to take millions from poverty to prosperity.
In this reverting 40-minute interview, Banjo Oyelaran-Oyeyinka, a former professor of development economics at the United Nations University—Institute of New Technologies (UNU-INTECH) and the Senior Special Adviser on Industrialization to the President of the African Development Bank (AfDB), where he is coordinating the establishment of Agro-Industrial Processing Zones and Industrial Policy in several African countries, spoke with Channels TV Sunrise on Monday to speak on the challenges facing Nigeria and proffer solutions captured in his new book, “From Consumption to Production.”
Find below an excerpt:
How did we get here, to a place where Nigeria is consuming more than it produces? Have we always been like this pre-independence, into independence, and until now, how did we get here, prof?
Thank you very much. I like the historical context in which you have posed this question. Pre-independence Nigeria was a major exporter of almost all the big commodities—oil, palm, and groundnut, as we all know. And this is actually where most countries started; they started from being, you know, exporters—developing countries, by which I mean exporters of these kinds of goods—and from the farms because we all came from agrarian backgrounds.
Post-independence, there were big plans by this country to become an industrial nation. Almost all the development plants were huge investment plans, to build steel plants to build petrochemicals, just like the others in East and Southern Asia. Then came oil in the 1970s, and we experienced the phenomenon called the Dutch disease.
In simple terms, the Dutch disease is a situation where, when a country discovers oil or minerals and begins to export that commodity, what happens is that the dollar accrued from those excess revenues coming out of the commodity tends to escalate or lead to the appreciation of their FX, or currency, so you have a situation where people are still very nostalgic up til now where the naira was at par with the dollar, and remember, we are not America, we were not Europe, our currency was at par with those economies simply because we were exporting crude oil, and we did this for a very long time.
That’s what the Dutch disease does to you, and you have a problem in two ways. One is that it distorts policy; policymakers take their eyes off what you call the tradable sectors—manufacturing and agriculture.
Rather than invest the money that we got into productive infrastructure to build bridges, we did some of those things that we did, but they didn’t work out.
We continue on a profile of unsustainable consumption, and that’s the second thing that the Dutch disease does to you. Your import profile becomes extremely locked into imports of luxury goods.
Even as of 2021, when you look at our import profile and I’m trying to talk before or after COVID, you find that Nigeria, for example, exported crude oil worth about $34 billion and we imported finished products worth $77.5 billion, according to OPEC.
So, in other words, you don’t process what you require; you export what you produce; others process it; they create jobs in their country, and then they sell it back to you at 10 or 20 times the price. Let me give you a very poignant example: in 2021, China’s exports to the world were about $3.3 trillion.
The total African export total for all 54 African countries was $2.7 trillion; just one country overshadowed every other African country. And so you are in a situation where you are feeding others with raw materials and simply consuming their goods. This is our descent into a consumption society.
The second dimension is that we didn’t invest this money in changing the profile of our rural areas because this is what most countries do. Rural areas, as you know, don’t have proper healthcare infrastructure; they don’t have proper hospitals and schools; they don’t have roads, so people tend to migrate into the cities, as seen in the old organisation profiles that we saw in Europe.
I mean, many of us read Charles Dickens’s “A Tale of Two Cities.” People come to cities to work in factories. Because of the pool factory, the cities pull them to come to the cities to work in factories.
In our case, the rural area pushed us out, not pulled by the cities; we were pushed out by the rural environment because there was no life and there was no livelihood there because we didn’t invest enough to change the profile of our agriculture from being agrarian to productive industrial agriculture.
So, you find cities in Africa have also become consumption cities, as I term them, and the bad part of it is that you cannot hide poverty. Slums begin to form on the peripheries of these cities (you have Makoko; you have Ikorodu slums).
You have all of them all over the place, created by people who came out of rural areas with no skill or education and came into the cities in the hope of getting jobs that didn’t exist. So, this is the consumption city that we have created.
Prof, I listened with attention to your introduction about the monies we were making from exporting crude oil. You know, we just sat back and were counting dollars, so is it these same people who are used to just sitting down and counting dollars that you want to go back to the farms now?
Yes, yes indeed, and I think this is, uh, let me introduce another term, which is productivity. As you know, the difference between a rich country and a poor country is that singular word called productivity. If it’s on a particular Dutch farm, I’ll give you an example. On one hectare of land, you will get 20 tonne of potatoes, but in a typical African environment, you probably get one tonne. In a typical, you know, industrial farming environment, you probably get about 12 to 14 tonnes of maize.
In a typical agrarian society, you get 1, 1.2, and 1.42, so this is the issue of the productivity of the land and the soil of the people. Productivity also relates to human skills. You know, we are used to measuring those hard things, like you can count houses built. You can count on machinery.
But that soft infrastructure, or that soft what somebody calls brain infrastructure, the human skills (I don’t know whether you saw a video clip that’s going around by Tim Cook, the head of Apple, uh, where they were)—you know, people were complaining about going to China to manufacture, and he was saying we didn’t go to China because of cheap labour.
He said people have taken their eyes off of this history over the last several years. He said China is no longer a place for cheap labour. He said we go there because we have skills. He said those folks have skills because they have technical and vocational education. and he was given an example of the USA. If you collect, say, design engineers in the US, they fill a room. If you collect them in China, they will fill a whole football field.
This is the difference in the number of people you have who are skilled, even on the farm, in factories, and in everything else. Why is it that, up until now, we couldn’t even design a refinery by ourselves after 50 years? How is it, for example, that we cannot even build roads without calling some foreigners to be Ro skills? That is where the difference is in productivity.
Prof, how do we get to that production level you mentioned? When to get bank loans you have to pay about 25–30% interest rates and all that.
I must say that it hasn’t been for lack of effort. I think there have been efforts made, but they’re not nearly enough. Sometimes our efforts are too little, too late. We don’t do it fast enough. What is happening is that the country is huge, and we need a sense of emergency and urgency to do these things.
I know, for example, the FDB has been very supportive in terms of the productivity of the land. Basically, what you do is mechanisation is the right variety of this particular commodity. Those are the things that define the seed. As it says, the seed is what defines, uh, you know, what you saw is what you reap right, so if you sow a diseased seed, you probably get nothing out of it. If you sow a seed that is susceptible to drought and pestilence, you come back after 6 months and see nothing, but if you, for example, put it in the ground, you see that it is scientifically designed to have resistance to drought, insects, and all of that, and you would find out that it has grown.
I think we should start funding our research systems; we have not done that enough. You know, when you talk to people in agricultural science in Nigeria, they tell you all we get is salary. I supervised a PhD several years ago, and I was looking at Nifor and typical scientific research centres in Malaysia. The difference was just too mind-blowing. You know, they have gotten to a point where they are using this same oil palm for all kinds of things, while we’re still at a very rudimentary level.
For example, in cassava, Nigeria is the largest producer of cassava in the world. There’s a figure that you can find on the internet that says that all we got last year was $1 million because we simply exported the raw cassava.
Thailand, which is one of our competitors and is down to number four, got $1.3 billion. $1 million to $1.3 billion—why is that? Thailand is not going to export its cassava to you; they will take cassava.
I get that we eat garri, we eat fufu, and all of that, but we have the land and we have the people. Nigeria is a huge country with huge potential, and we have to make a dedicated effort to also put cassava into the industrial value chain.
From cassava, you can make starch; starch is the base; you can make ethanol; you can make methanol; you can make sorbetto. There’s a fantastic woman there in Inseyin, in Oyo State, who has almost singlehandedly built a whole industrial structure for herself.
She’s producing sorbetto; by the way, sorbetto is a sweetener that you use in toothpaste and confectionaries, and someone was telling us that building 25 of these factories is not even enough. All we do is import the sorbetto; we still import starch for God’s sake in 2024.
We still import. Nigeria shouldn’t be importing those things, so this is the thing we need to change.
What is the potential of Nigeria’s productivity to sustain itself as opposed to importing?
It’s about intentionality. We just have to be intentional about it. This is not rocket science; you see, in 1964 or so, that was when India achieved a Green Revolution, and that’s again very far away in this recent time when the bank has supported Ethiopia. I’m sure you have seen this news in the newspapers.
The African Development Bank-supported Ethiopia, starting with 5,000 hectares of wheat, a new variety of wheat that is heat-resistant. uh and
As I speak to you, I think around 2018, as of this year, Ethiopia is aiming to produce 2 million hectares of wheat from 5,000 hectares.
Ethiopia has become a net exporter of wheat. You must have heard Dr. Adesina say it in many of his speeches: It is not rocket science.
We did the same with Sudan. Sudan has become a major country for producing, you know, seeds, so it’s about being intentional; it’s about infusing a sense of urgency and saying enough is enough of poverty.
So, like I said, you know we have it; it’s not that people are not trying; we just need to do more; we need to do it faster and on a larger scale.
How are we going to replace those manufacturing concerns that have left Nigeria so that we can begin to produce those things that they were producing for us?
No, I think this is a challenge and also an opportunity for our country. You know, folks on the face of it say they are living because of the challenging effects domain. And all of that, many of the companies also live for reasons best known to them; for some of them, their business model has changed.
I know that two of them left at the same time; they left Nigeria; they left Kenya; they left a couple of other countries, so it’s not just about our challenges; we have our challenges in this country; we know the most difficult part is electric power, for example, and I think it is a correct thing that this government is putting the focus on it, but it should be done in a very radical way.
Nigeria cannot be talking about 5,000 megawatts of electricity in 2024. So the first level, I believe, that probably drove some of those companies away in those days was the lack of electric power. They were incurring too much money, and many of them were spending billions and billions on diesel, so we can mitigate that, and also, as you know, using other alternative fuels like compressed natural gas, there are technologies now that allow you to run your car in all three domains of society.
Transportation homes and, uh, factories, so factories need to. The government needs to provide an environment for these factories to be able to run on cheaper fuel. Even as we speak, they also provide them with the environment to ensure that we make the ease of doing business even easier, and this is the soft part of doing business that people complain about.
We have heard what we have seen in the past. We need to make life easy for those who are in production by making sure that we know all the things that create problems. Customs is one of them. I met a young man who was telling me that he used to import a particular intermediate good of almost 17 containers, and one day they hit a wall with some customs officials, and the guy was, they were asking for N20 million. You know this fellow, so anyway, it took them months and months to resolve the problem, but I said, How do you do it? Oh no, I reduced the 17 containers to one.
I just try to now produce whatever I can produce here. You know, every country needs to import certain things, but not import finished goods. Those who import intermediate goods, for example, are doing their business in the correct way at a time when they can make everything right here, so we shouldn’t also discourage those kinds of people.
He said he was paying interest to banks, and I got to a point where he said, ‘Look, these people are going to ruin my business. Let me just reduce it to a minimum,’ but now we’re encouraging him to look at other alternatives.
Please, why don’t you just cite that factory here? So this is the second point that we need to improve in the value chain that Ayo talked about.
A value chain is about starting from the raw material right up to the end of the chain. A value chain is a chain of activities right from the beginning, with different actors and different locations, and ensuring that there is a smooth and harmonious way in which, say, you take cassava in the beginning or you take raw cocoa until you get to chocolate.
