Muhammad Sani Abdullahi is the commissioner of planning and budget in Kaduna State. He is a member of the World Bank Expert Advisory Council on Citizen Engagement. Ahead of the fourth Kaduna State investment summit, BusinessDay’s, Jumoke Lawanson caught up with Abdullahi who discussed how policies and investments can boost the economy and get Nigeria’s teeming unemployed youth back to work. Excerpts:
Nigeria’s economy is experiencing a slow growth and consequently 21 million Nigerians are presently unemployed, the bulk of them being young people. What is responsible for this and what’s the way out of the unemployment crisis?
Well, even when Nigeria was growing at seven percent, unemployment rates have always been high. What we’ve always had in the country is sort of jobless growth and the challenge for policy makers has always been to try to link growth with poverty reduction, with job creation and that is only when you focus on non-oil sector growth. I believe what we have seen in the past two and half years is non-oil expanding across our revenue streams and social programmes have also been expanded. It must necessarily follow a very private sector investment path, in the sense that we bring big -icket players that can hire 10,000, 20,000 and 30,000 people at a go. We hardly have companies in Nigeria today who on an annual basis can absorb 10,000 young people. This is where we need to get to; we need to push for inclusive growth, something that has been missing in our economic growth architecture.
Can you take a deep dive into how this should work in terms of creating jobs? In what ways, using a policy approach, should government invest that can create more opportunities to get people working?
Government’s job is multi-dimensional in this regard. I think that in Nigeria we are blessed with population. But that population can easily become a curse if we do not capacitate it. We need to ensure that our population is healthy, educated, and skilled. If I were to pick out a first step, it would really be: empowering our people with the necessary health, education and skills set to be able to compete. The second thing is the business environment, ensuring that big-ticket players can come in and rely on this population to be able to provide huge amount of skilled labour and also provide that absorption for goods that are starter-created. Our population, once we are skilled and have income, can absorb significant amount of economic products that can make the country grow. So I think government needs to focus on ensuring that its people are healthy, are educated, and are skilled and that the business environment and the incentives necessary to put in large scale, long-time investments that employ these people are there.
How has this worked in Kaduna? Can you share specific details and impact of any of your investments that brought about significant impact on employment in the state?
Well, for Kaduna, I’m quite excited that we have embarked on unprecedented human capital development programmes at every level of skill, right from our public primary schools where we are taking very tough decisions to ensure that the children of the poor can also have good quality education and move up the social ladder, to various vocational skill programmes from Kaduna start-up entrepreneurship programmes, Kadia, KadICT.
There are so many things we are doing to give young people and older people in Kaduna an opportunity, a second chance to be able to say, ‘listen you were not able to go to school, you are fleers, let’s train you free, these are all done free.’ We have partnered with a number of local and international organisations to be able to deliver these trainings and you can see some of the impacts already manifesting. There is a huge number of entrepreneurial young people in Kaduna today; 5-10 years ago these very young people were just staying at home, waiting for a white-collar job. But today, they are doing businesses from food and confectionary to manufacturing, to transportation. There is so much entrepreneurial spirit now being built in Kaduna.
In terms of the business environment, we have done a significant amount. We have moved on the ease of doing business index from number seventeen the worst in the north, to number one. Today in Nigeria, we are better than every single state that you have across the country in terms of setting up businesses; in terms of contractual, enforcing contracts, we are working on other parts. But we are cutting- edge leaders not only within Nigeria but internationally we are now recognized.
We have been able to attract over five hundred million dollars ($500,000,000) of investment into Kaduna that are employing huge numbers of people, hundred thousand direct jobs and almost five hundred thousand indirect jobs, and so we are working on this incrementally. We are quite proud of what we have done so far, and our plan is that over the next couple of years we’ll hit 3.7 million jobs in industry alone across the various sectors.
A lot of people are highly critical of investment summits and events. You just had the 4th of its type in Kaduna state, could you share the noteworthy outcomes of previous summits and how have they benefited the state?
For Kaduna, right from when we started our investment forum in 2016, our meetings have always tried to ask: how do we ensure that these summits do not become talk shops? How do we ensure that they are actionable, that they become something that draws investment in for the state, and the results are there to show?
Since we started Kaduna investment summit, there are a number of companies that have come into Kaduna that were not there before. If you drive into Kaduna today for example, you are passing what was once a barren land that now is home to “Olam factory in Chukun”. “Olam” is a $150 million investment that we initiated. It’s the largest poultry feed mill in sub-Sahara Africa. Already, there is a village, a small town developing around Olam because of the multiplier effects of its businesses. You have to slow down in your car when you get there because there are huge trailers there, there are restaurants, there are people that are making money off of Olam, and that’s just one.
Across the street from Olam, is the space for the new Dangote Peugeot which is also in partnership with the Kaduna State government. Dangote just put in his equity last week and that project is about to take off and we expect huge amount of jobs from this. That came from KadInvest, and if you go into the city we have Mohindra chapter, a new chapter assembly plant that is really going into mechanised farming across Nigeria. We have blue camel energy that is into solar panels and also capacitating our young people to be able to repair and fix solar systems. If you go into the middle of Kaduna, it’s ICT hubs all over, digital skills been done all over, tomato factories opening up, So there is really so much that we have seen over the last four years doing KadInvest, and like I said, five hundred million dollars ($500,000,000) investments, a hundred thousand jobs is not theory.
How instrumental has the state statistics agency which is under your supervision, been in ensuring that jobs are created in the state. Would you say your administration has been successful in this regard?
I think we have been successful. Data have been the life blood of our policy making, our formulation processes and our monitoring and so we have relied a lot on data. We have done a lot of surveys across data to be able to share with our business partners when they come; so you don’t have to spend a year doing surveys about your market; we already know for example, through our population dynamic surveys; what the population is projected to be over the next 20-30 years; how the structure of the population is and what their habits are. We have deep research on agriculture and the structure and how many households are involved and what they are doing and where the output is taken, schools, hospitals. There is a lot of numbers in Kaduna. We have very fresh up-to-date GDP figures that have allowed us to really plan and so what we have done is for you to be able to focus on those things that matter and to be able to use data actionably and to share this with our investors in a way that they can also make better decisions.
Kaduna state’s entrepreneurship program, KADSTEP, is seen as one of the initiatives of the government to great jobs but it has been criticized as impacting only a few people. Do you as a policy maker think that entrepreneurship can solve the unemployment problem?
Definitely, I think what cannot solve the unemployment problem is government thinking it can hire everybody in its ministries and create those jobs. We have to rely on businesses setting up and employing people and so we have to set up businesses at all levels; from the large businesses, the Olam that can put one fifty million dollars ($150,000,000) to the small ones that can start off with ten thousand naira (N10,000), a hundred and fifty thousand naira (N150,000), a million naira (N1,000,000).
This is what we are doing with KADSTEP. KADSTEP is a start-up entrepreneurship programme for people that have just started their businesses or are about to start and we force them, we take them through a twelve-week course in Kaduna Business School where they learn design thinking, breaking barriers, how to manage your accounts, how to put together a ledger, how to deal with banks, how to attract funding and it has been really good because over the past four years we have trained over six thousand people and you can see some of them setting up businesses in Kaduna that are hiring 5, 10, 15 people.
Now people could criticize it and say ‘Okay look it’s targeted to quite a number of people’ and I think what we just need to understand is that for every job that is setup in Kaduna that takes ten people off the street. For us it’s a success and we will continue to meet people at different levels of skill. KADSTEP for example focuses on people that have some level of education, we do have other; for example, our business apprenticeship centres’ that go to the local communities and pick up people from disadvantaged backgrounds that may not have gone to any school, then teaches them how to do pop, electrical work, mechanics work, and all these other things that can lead to better income. That really for us is critical to be able to identify for every level of skill we can design a programme around it and we are quite proud of what we have done so far.
Human capital remains a big challenge in Nigeria as young Nigerians lack workplace skills. How can Nigeria fix this issue?
Well, I’m quite happy you know the country has taken up a new human capital development programme. The president himself has appointed a special adviser on human capital development and I think that over the next two to three years, we are going to see some huge movements around that. The vice president has visited on a number of initiatives and human capital is multi-faceted.
It’s around a healthy and educated population, a skilled population, a population that has opportunities, and we have worked with the Federal Government on these frameworks and I’m quite optimistic that over the next few years there would be some major shift in human capital. The only problem is that there is always a lag between implementing these programmes and the impact you start to see. For example, training someone for four years, it might take the next two to three years for you to be able to identify that it’s your training that actually helped him. But I think there would be general movements, the government is very serious about this, the social investment programs have already kick-started those basic income-generating facets that need to be taken care of; programmes like the GEEP, the Nbill, the Npower are all human capacity programmes, but we need to do more, we need to do it at scale, because although those programmes are impacting, they are still not at the scale that the problems in Nigeria would require to be solved.
So there is also the issue of infrastructure. Can you talk about that too?
Infrastructure is critical in providing access to opportunities, in boosting economies and the deficit in infrastructure across Africa is huge. For us in Kaduna, we have invested a lot of time in understanding our infrastructure deficit. We launched an infrastructure master plan last year; a 32-year plan that ends in 2050, and we looked within that infrastructure plan around gaps in school infrastructure, education, health infrastructure, water infrastructure, transportation (roads) to see the gaps and where we need to get to if we are going to build an economy that is going to compete locally and globally in the next 30 years, And the amounts are huge and we are looking at how to fund it.
Definitely public sector finance is not going to be enough, we have to crowd in as much as possible the private sector through investments and how do we get bankable projects around social investments? That’s really difficult. That’s what we are trying to crack right now and so really this for us, is going to be the future.
Funding has become a major handicap to the ability of government to make critical investments that could boost the economy. Already, Nigeria has a debt to revenue ratio of about 60% which has triggered warnings from the IMF. How is your government looking to finance growth?
I think the future of finance is to continue to look at it as a big pile of which public sector financing is just a small part of it. Public sector financing would probably amount to 15-20% of what is actually required in building states. So we have to be able to look at how do we crowd in other sources of financing and from the private sector, from our international partners, debt financing, other sources of innovative financing that we can create, land swaps, equity deals.
I mean, we really need to get more creative and imaginative around the area of financing. We cannot continue to rely on those traditional sources that are not just going to be able to cut it. If you look at the pension funds for example, there are trillions of naira that are lying there. How do we unlock it in a way that is safe and secure for those pensioners but can also be used to fund critical infrastructure across the country. We have talked about this for a long time, but we still haven’t been able to crack the nut.
If you were asked to advise the national government on the present fiscal crisis and economic slowdown, what solutions would you offer?
I would say first of all, that you know we have emerged from the burns of it, but we now have to move to beyond 3.8% growth to be able to sustain any positive growth because the population growth is also an issue that we need to look at. If we are growing lower than our population growth rate annually, then actually we are not growing. So right now, we are at less than two percent of growth and our population is going at over three percent, and so we are still at a negative growth, but I think that in terms of jacking up those growth rates we need to do massive investments in infrastructure in a way that the multiplier effect builds out the economy, we need to look more deeply at the way that we are managing our currency. I think that we need to be able to link Nigeria to the global economy much more and be able to look at non-oil sector growth.
Start by looking inward first. What is your state doing to diversify its economy post-oil and what should Nigeria do at this time?
Well, we have always wanted to take Kaduna away from the dependence on federal allocations. When we came in 2015, about 85% of revenues in the state were federal revenues and for us that was very dangerous and so we wanted to build out our domestic resource mobilisation, our IGR and we have been able to do that.
We started from a low of about N13 billion – that was the highest Kaduna had ever made before and today we are at N29 billion. We are looking to get to about N40-N45billion in the near future. We think that is one critical way that we are diversifying and it’s by expanding tax base, getting more effective in collections and other things. But also, we are working actively to grow the Kaduna state economy by having these massive investments from all these private sector players.