Nigeria's leading finance and market intelligence news report.

Okey and Nigeria’s Struggle to Solve a Perennial Problem

2

A keener look into thriving economies shows that their foundations are built on people, not just on the size of their population, but turning them into assets.

In the distribution of Nigeria’s patronage, politicians consider certain ministries or agencies juicier than others. This “juice factor” is usually connected to how much rent or contracting occurs within the space. This is why NNPC, Customs, FIRS, CBN, Ministry of Finance, Power and Works Ministry are the ready places that you see average politicians and bureaucrats warm up to. There are also silent ones like TETFUND, NDDC and Ministry of Petroleum. Not forgetting the National Security Adviser with not only huge capital budgets but opaque spending. However, does that really matter? In the line of things, are we not meant to pay attention to planning and policy spaces such as Ministry of Planning, Ministry of Trade and Investment and others who mainly set policy objectives?

I have been paying a bit of attention to the ideas of Okey Enelamah of the Ministry of Trade and Investment, who came into government with a great record of success in the private equity industry. I must admit that it took a while to fully understand what he was up to; we are all witnesses to President Buhari’s ability at enlisting many “ghost ministers” only seen in newspaper articles, their impact hardly felt. In this space, Okey Enelamah, who leads one of the most important Ministries in Nigeria, seems to stand out. Let us review what he has been up to.

I like the idea of Made in the Nigerian Exports known as “Project MINE”. In a recent article, I made it clear that Nigeria keeps basking in small numbers that are heavily dependent on oil. 95% of Nigerian export value is still tied to oil, putting the Nigerian currency value in an unstable mode. A quick review of Nigerian export numbers which rose from $44bn in 2017 to $62bn in 2018, was still dependent on the upswing in oil prices. Compared to South Africa with exports of $103bn with a more diversified portfolio and a smaller population, Nigeria cannot fix its competitiveness challenges unless it asks itself: What am I going to sell to the world? However, as usual with lofty ideas in Nigeria, Project MINE is facing challenges as the Nigeria Export Processing Zones Authority (NEPZA) is resisting the transfer of N14.38bn into a Special Purpose Vehicle known as Nigeria Special Economic Zones Company (NISEZCO).

Under the Project MINE is the creation of the Special Economic Zones (SEZs), a model that India has rightly used to scale its infrastructure challenges, aimed at boosting exports. The federal government is raising $500m in equity in the next few years and it has identified Enyimba Economic City, Funtua Cotton Cluster, Lekki Free Trade Zone as the early investments. These are good ideas and the huge goal to “Increase and diversify foreign exchange earnings to at least US$30bn annually by 2025, by increasing manufacturing sector exports” is welcome. Side-stepping the bureaucracy might be a good short-term reprieve to achieve its aims and this might have a lasting effect on the implementation. However, as seen in the debilitating condition of Agbara Industrial Area, starting out such projects with its sparkling facilities is great but the big questions remain: how is it structured for maintenance? How does it not become just another idea ground to extinction by bureaucracy? That Nigerian government is looking for another N15bn to revitalize its Kano and Calabar export processing zones is an evidence of its poor perennial maintenance culture. Diversifying Nigeria’s export base which is interlinked with jobs, economic growth and currency stability is an existential challenge for Nigeria.

Also linked to the export growth plan is the recent $30bn export financing deal that Nigeria signed with African Export-Import Bank, Africa Finance Corp., the African Development Bank, Bank of Industry and Nigerian Sovereign Investment Authority. While the details are still sketchy, Nigeria needs to do more to support entities interested in manufactured exports out of Nigeria. This is tied to the entire competitiveness process of business registration, infrastructure for the movement of goods, quick port services and standardization of agencies. The route to making a country globally competitive forces it to raise its standard of service delivery. This is why I believe that Nigeria needs to be more export-growth oriented than reducing imports. Using limited imports to conserve foreign currency does not make a Nigeria immune from oil price swings, only a diversified exports base will do it.

I have also noticed an improvement in Nigeria Trademark Registration but the process needs to be more decentralized and faster. Wilbur and Orville Wright had it easier registering their patent and trademark in 1906 than what exists in Nigeria today.  We have to do more, but not for trademark registration alone but in improving our human capital development as a nation.

No matter how lofty the ideas of boosting our exports might sound, without investment in the human capital, it will always come short. Nigeria has a huge gap in technical and adaptive skills, creating challenges for manufacturing entities to find the right personnel.  A keener look into thriving economies shows that their foundations are built on people, not just on the size of their population, but turning them into assets. This is what we systematically destroyed. We did not turn our own citizens into assets, losing the opportunity to understand that the unit of diversification lies in optimizing human capital within societies that create opportunities to allow citizens to thrive. A look at economies staying ahead and diversifying apace shows their focus on the “Knowledge Economies”. They continue to succeed because they prioritize people over politics.

If President Buhari needs to keep a few of his ministers for his second term, Enelamah should get a shout. Nigeria currently has a diversified economic base but its foreign currency swings, public revenues and exports are tightly linked to oil. This is an anomaly that started since oil boo period in 1973 and each administration has failed to make a significant dent. It will be good to see where the Special Economic Zones (SEZs) anchor and the value they bring in another four years. This might be a chance to write a legacy in how Nigeria escaped a mono-product economy. Will the country hit it or miss it? The answer to this is beyond Enelamah as other agencies of government also have a crucial role in this huge task but he has re-started an important conversation.

 

Oluseun Onigbinde is the co-Founder of BudgIT and currently an Obama Foundation Scholar at Columbia University, New York

2 Comments
  1. […] Investment commitments to the Nigerian economy reached some $200 billion between 2016 and 2018, Okey Enelamah, minister of Industry, Trade and Investment, said at the weekend. He, however, admitted that the ability to convert those promises into tangible […]

  2. […] commitments to the Nigerian economy reached some $200 billion between 2016 and 2018, Okey Enelamah, minister of Industry, Trade and Investment, said at the weekend. He, however, admitted that the ability to convert those promises into tangible […]

Leave A Reply

Your email address will not be published.