Agriculture is a major, if not the most important, pillar of our national system of production. Farming is the mainstay of the vast majority of our population. Endowed with abundant land and water resources, Nigeria’s agricultural sector has a high potential for growth. Our country’s highly diversified natural agro-ecological conditions allow production of a wide range of agricultural products, including tropical and more temperate products. Prior to the emergence of oil in the 1970s, Nigeria was a major exporter of agricultural commodities, including cocoa, groundnuts, cotton, rubber and palm oil. We were also food self-sufficient and our people were well-fed and happy.
Excessive real exchange rate appreciation and overvaluation following the oil booms and other distortions introduced by implementation of an import-substitution industrialization policy reduced agricultural competitiveness and incentives for investment in the agrarian sector. Large commercial private estates that made Nigeria a major exporter of tropical commodities declined in importance and large food manufacturers who used to grow a proportion of their own raw material needs withdrew from farming. As agriculture declined, Nigeria became a significant food importer and agricultural exports all but disappeared.
Nigerian agriculture is predominantly small holder, subsistence-based and weather-dependent. Most farmers produce mainly food crops using traditional extensive cultivation methods, making limited use of modern technologies and purchased inputs. The capacity of the agricultural research, extension and input distribution systems are weak, and, where available, modern technology cannot reach farmers. The country’s vast irrigation potential remains largely unexploited: less than 1 percent of cultivated area under irrigation. Activity in the sector is also characterized by significant post-harvest losses due to difficulties in reaching markets and the high cost of transporting produce to markets.
Although Nigeria does not face a ‘food crisis’ as such, and indeed has luckily never experienced famine anywhere near the scale of some our sister African countries, poverty-related nutritional deficits still prevail across significant sections of the population. The country is still dependent on massive importation of certain staples such as rice and wheat, sugar and tomato puree, in addition to the problem of low agricultural productivity which prevails across the sector in general.
The Agricultural Transformation Agenda under the administration of Goodluck Jonathan has sought to revitalize the sector in order to attain food security, increase production and productivity, generate employment, expand the export base and reduce food imports. Recognizing the importance of agriculture as well as the challenges manifested by weak economic linkages, weak policy environment and poor service delivery, the administration is embarking upon the process of developing a comprehensive agricultural development strategy. The strategy aims to transform the agricultural sector and ensure self-sufficiency in food production while generating surplus for use as industrial raw materials for export.
The last few years have seen some real improvements in the agrarian sector, thanks to the good work by outgoing Agriculture Minister Akinwumi Adesina. There is evidence that Nigeria is at the verge of being self-sufficient in rice production by year’s end 2015, with production having risen from 1.5 MT to 3.5 MT between 2010 and 2013. Some US$1.2 billion have been invested in the development of over 100 large-scale rice processing mills. At the same time, Nigeria is already the world’s greatest producer of cassava. Food is now accessible and affordable to most Nigerians. It is to be hoped that improvements in the value chain linking agriculture to food processing and agro-based industries will gradually lead to a major industrial revolution in our country. But we are not yet where we ought to be. Hunger and nutritional deficiencies still afflict a significant section of our population. Technology choices in agriculture remain rather primitive, hampered by energy, infrastructural and institutional constraints.
One worry which I have expressed in the past is the question of land grabbing by multinational agricultural corporations. If the experience of Latin America is anything to go by, government should not encourage the invasion of our agrarian countryside by foreign food companies. These firms have a tendency to displace peasant farmers, creating a situation of landless peasantry which is a phenomenon generally alien to our African way of life. It is patently dangerous. These companies also tend to produce largely for export, with little positive impact on local communities. South Africa took the right steps in outlawing foreign ownership of land within its own jurisdiction.
Linked to the modest achievements in agriculture and food security is the development of the water sector. The administration has taken to heart the commitment to the 2010 UN “Right to Water” for all citizens. The government has rehabilitated 12 River Basin Development Authorities (RBDAs). Some 10 dams are at the point of being completed and are already generating more than 150,000 jobs.
As established in the literature, an agricultural-led Industrialisation strategy should focus on improved agricultural packages, proper use of land and water resources, access to rural finance, robust markets and better roads and other infrastructures.
The success of the emerging Asian economies has been attributed to a number of factors, one of the most important being land reforms and increase in agricultural productivity and food security.
The countries of the Asia Pacific undertook, first and foremost, land reforms and agricultural modernisation. Investments in agriculture and technological advancement made it possible to feed their teeming populations under severe land constraints. Government’s support for research launched the “Green Revolution,” with the dramatic development and diffusion of modern rice and wheat varieties in tropical Asia starting in 1960s. This innovative process involved the development of grains that were more responsive to fertilizers, spearheaded by results-oriented agricultural research institutions that influenced the mass adaptation of modern grain varieties to local conditions, new agricultural infrastructure and effective irrigation systems.
The Malaysian experience is particularly illustrative of the benefit of an agriculture-led industrial strategy. Malaysia considerably benefited from an abundance of natural resources such as rubber, tin, palm oil and timber, in addition to discovery of oil and gas. While countries such as ours squandered the benefits of rich natural resources, Malaysia’s leaders had the presence of mind to use the primary sector export earnings to help finance the drive towards industrialisation within the framework of the country’s New Economic Policy. Revenues from oil and gas were used to finance poverty alleviation and economic restructuring.
In addition, land reform was undertaken, together with massive investments in infrastructure and creation of institutions and organisations for rural development which played a key role in the development of the agricultural sector. The state also provided subsidies for inputs notably on fertilisers, pesticides and credit which all helped to raise the productivity and income of rural agricultural households.
These changes were linked to liberalisation of the exports sector with the state taking an active role in boosting exports performance through the promotion of a free trade regime for exports. Through liberalisation of the Investment Incentive Act, astute management of the exchange rate and other measures it made exporters more competitive and also helped to attract massive amounts of FDI.
In summary, we would note that high productivity in the Nigerian manufacturing/industrial sector has been constrained by many factors, including the following:
(1) First, there is the question of low level technology and poor technology choice. While new processes and procedures have revolutionised the manufacturing industry in the industrialized nations, industries in Nigeria, especially textiles, cement, bakery, leather, paper manufacturing and many others are producing with 1970s machinery, giving rise to frequent breakdown and reduction in capacity utilization rates. Low technology is responsible for the inability of local industry to produce capital goods such as raw materials, spare parts and machinery, the bulk of which are imported. This factor also explains the very low value added and low productivity. Central to industrialisation is the need to a viable machine tools and precision engineering sector. This, in turn, is requires a viable iron and steel sector, which, in our case, has remained in the doldrums.
(2) Related to the foregoing is the problem of low capacity utilization in the manufacturing sector. Capacity utilization, which has been in path-decline since the 1980s, stands at between 30 and 40 per cent, indicating gross underutilization of resources. This has been blamed largely on frequent power outages, lack of funds to procure inputs, fallen demand for manufactures and frequent strikes and lockouts by workers and their employers.
(3) Thirdly, lack of funding is an acute handicap. Most of Nigeria’s banks, with the absence of effective risk ratings agencies, have been reluctant to lend to the real sector, preferring to deploy their excess funds into the stock market and speculative activities. Banks also tend to perceive manufacturing as a high risk venture in the Nigerian environment, hence they prefer to lend to low-risk ventures, such as commerce, in which the returns are also very high.
(4) There is also the fact of high operating costs — costs related to poor infrastructures and lack of adequate electricity. When individual businesses have to use diesel –fuelled generators, it adds a huge cost to their businesses and renders them uncompetitive. Increased cost, traced largely to poor performing infrastructural facilities, high interest and exchange rates and diseconomies of scale, has resulted into increased unit price of manufactures, low effective demand for goods, liquidity squeeze and fallen capacity utilization rates. Poor performance of infrastructural facilities, characterized by frequent disruption in electric power and water supplies and inefficient telecommunication and transportation systems, is a major constraint on productivity.
(5) For the life of me, I cannot understand how a country of more than 170 million people can function without a viable railway network. There is no such parallel in the history of world development. This largely explains why our highways have the worst carnage records in the world. Railways are still the cheapest means of transport. The dependence on road haulage and trucking adds enormous costs to production and logistics services. Lest we forget: In Britain the steam engine was central to the development of the rail system and to the industrial revolution that began in those isles, sweeping through France and the rest of the continent. The massive trans-continental railway in the United States and the gargantuan trans-Canadian Railway were central elements in the industrialisation of North America. Railways are necessary not only for industrialisation but also for nation building. Railway workers in early modern Nigeria lived and worked together. People travelled easily and cheaply. When the railways died as a result of our collective follies, industrialisation was impeded. Nigerians also became strangers to one another.
(6) There is also the fact of low skills. In spite of the availability of surplus labour, the education system churns out young people with poor technical and computer skills. The business and human sciences have tended to be more popular than the technical and engineering disciplines. Due to strikes by university teachers and poor government funding, standards have fallen. Many of our graduates are barely literate. To make matter worse, having had to bribe lecturers for grades gives them the wrong mindset and attitude to work. Some of our graduates believe they do not need to exert themselves to earn a legitimate means of livelihood. There is also the failure to develop a robust national system of innovation linking academia to the research institutes and industry to develop new inventions and innovative products for domestic and world markets.
(7) It can also be said that Nigerian business culture is more focused on trading rather than industrial production. There is quite simply the absence of an industrial manufacturing tradition, unlike, for example, Germany where small and medium-scale family-ownedMittelstand firms have been at the heart of its manufacturing prowess. Only few Nigerians are ready to take the kind of entrepreneurial risk in industrial investments that will make Nigeria an industrial-technological state. This is not only due to the poor business environment but also due to the absence of a robust industrial tradition. The poor image of the country also discourages potential foreign investors, even though a good number continue to be attracted to the high-risk, high-profit sectors.
(8) Finally, we would mention the lack of policy consistency and absence of effective institutional supports by government. In countries such as South Korea, Taiwan, Singapore and Malaysia, government is committed to nurturing industries and small businesses, providing knowledge, skills and a robust environment in which they can thrive. Such supports, unfortunately, are virtually non-existent in Nigeria.
(9) There is also the challenge posed by the WTO’s liberal international trading regime by which developing countries can no longer invoke the ‘infant industry argument’ to impose some kind of protection on local firms. The ECOWAS Common External Tariff (CET) took off in April this year while the Economic Partnership Agreement (EPA) with the EU is about to be ratified. While there are potentials for trade-creation, there are also strong prospects of trade dumping by highly subsidised European farmers, with many critics arguing that it would result in a massive influx of cheap goods from Europe to the detriment of local industries and jobs. In the West African sub-region, Ghana, Cote d’Ivoire and Benin had already signed up interim arrangements with the EU. Given the ECOWAS single market, Nigeria may no longer afford to stand on the fence.
(10) Linked to this is also the challenge of China. Nigeria’s trade and commercial relations are growing from strength to strength. Beijing has strong interests in the country’s oil and natural gas, solid minerals and infrastructures sector. At the same time, however, Nigeria has to contend with the problem of trade dumping, as substandard Chinese goods flood the market, with evidence of massive smuggling of textiles, mobile phones and electronics.
In concluding this lecture, permit me to echo the words of the Victorian English novelist, Charles Dickens: “It was the best of times and it was also the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us…”
These remarkable opening lines in A Tale of Two Cities echo the dilemmas and opportunities that we face as a country – in terms of where we are coming from, where we are at present, and the road ahead.
Nigeria stands at the crossroads of history. We have a historic opportunity to reinvent our country as a responsible and forward-looking nation and a leader of the African continent. We can also play the game losers by relapsing to narrow-minded sectarian tribalism. All is possible in this land of extraordinary talents and energy.
Despite the progress that has been made in recent times, risks, and, indeed, critical challenges lie ahead. In a situation in which both agriculture and manufacturing remain in the doldrums, it is inevitable that growth and development will remain stunted. The Nigerian condition, as this paper shows, will benefit from the pursuit of an agriculture-led industrial strategy that harnesses natural resources into creation of labour-intensive increasingly high value industrial products geared towards both domestic and foreign markets. Current macroeconomic reforms, though still not adequate, provide some progress along the road towards successful industrialisation.
We in Nigeria have just gone through a historic election. The great Nigerian people have given the mandate to General Muhammadu Buhari over the next four years. It is easy enough to dismiss the outgoing administration is wholly bad and ineffectual. There were areas where the PDP government failed woefully and there were areas where they did well. The beauty of democracy is that a successor government can correct the ills of the past while building on the foundations of what has been achieved.
The incoming Buhari administration has an opportunity to reimagine our collective future based on a clearer vision of national transformation. Our aim must be no less than to move from Third World to First. For this to be possible we must alter the dysfunctional collective mindset that has programmed our country to sub-optimal performance on most development indices. Industrialisation is the key. But industrialisation is not possible without a strong agrarian base, linked to massive investment in infrastructures and human capital. Our educational system must be overhauled to put a greater emphasis on the scientific, technical and engineering fields than on the arts and the humanities. Pride of place should be given to science and scientists.
Government needs to be reinvented as an “entrepreneurial state” that plays a central role in providing enabling environment to private sector led economic development. Clearly, much remains to be done in the areas of macroeconomic reforms and sectoral interventions. The battle against corruption and commitment to the rule of law must be taken to a new level, with the strengthening of the respective institutions and a vigorous exercise of leadership to achieve accelerated growth and the creation of no less than a New Nigeria.
On 23rd of March, Lee Kwan Yew, the founding-leader of Singapore passed away at the age of 91. In reflecting on production and the growth prospects of Nigeria I cannot help but refer to the legacy of this great Asian statesman. His remarkable achievement was to have turned a backward mosquito-ridden marshland into a first-rate forward-looking industrial-technological state in the space of single generation. His leadership and approach to statecraft have important lessons for Nigeria.
Lee Kwan Yew understood that nothing could be achieved without peace and harmony. He therefore took strenuous steps to create a Singapore nation with a sense of collective purpose and destiny transcending cultural and linguistic diversities.
Lee Kwan Yew was unapologetically an elitist. His doctrine of “leadership creativity” was anchored on the conviction that creative leaders should be willing to “learn from experience elsewhere, to implement good ideas quickly and decisively through an efficient public service”. When Deng Xiaoping, the revolutionary philosopher-king of China was embarking on his Four Modernisations, he sent emissaries to go and under-study how Singapore did it. I believe that the small city-state has important lessons for us – lessons not only in how to create a productive economy but also lessons in nation building, infrastructures development, the rule of law, human capital, national competitiveness, and, above all, effective leadership.
We need not be reminded that a major cornerstone for successful national transformation is governmental capacity. The capability of the state to implement its ambitious policies is key to successful public policy. Corruption and lethargy must be removed from the bureaucracy. There is a new science of government that goes by the name of deliverology, invented by Michael Barber, Director of the Prime Minister’s Delivery Unit during the premiership of Tony Blair. Barber has begun an influential global movement among the policy sciences community on the framework for effective governance and delivery. I would strongly recommend such a framework for incoming Buhari administration.
It is evident that government the world over is changing. Overwhelming demands are being imposed on states by mass publics while the capacity to deliver is becoming ever-increasingly difficult. Governments that succeed are those that are able to put in place the right framework and the right people to deliver on their electoral promises. Nigeria has never been short of good ideas. What has been lacking is the right people and the right framework for effective delivery. Unless we are resolved to take the bull by the horns we would be playing the game of losers.
Our country stands at the crossroads of history. The great Nigerian people recently voted for Muhammadu Buhari and the APC to lead them for the next four years. It is a vote for change – for the repudiation of grand corruption. This is not the victory of party but a victory for the people; for our bourgeoning young democracy. It is not the time for triumphalism but for sober reflection and resolve. President-elect Buhari may be inheriting empty coffers and an indebted treasury due to grand corruption as well as dwindling revenues from petroleum. This adds urgency to the need for macroeconomic and institutional reforms; for fiscal discipline and greater prudence in the management of our public finances.
Buhari cannot perform any miracles. But he would inscribe his name in marble if only he could prioritise and accomplish three things: secure the common peace while enforcing security, law and order; provide electricity; and rebuild our parlous infrastructures. These three alone could work magic for production, prosperity and jobs.
I am persuaded that Nigeria not only has the potential but also the innate capacity to become one of the advanced industrial nations of the twenty-first century. Ours is the manifest destiny of a prosperous democracy based on the rule of law, justice and peace; a moderating and civilising voice in international relations. A city set on a hill, we were meant by destiny to be the Argonauts of the African Standard of Civilisation. God forbid that we should continue to betray our destiny, bringing such a curse on ourselves by our bloodletting, strife, collective folly, corruption and wickedness.
Even the journey of a thousand miles begins with the first step, as the Chinese would say. What is required is that we restore confidence to our people, giving the youths hope in our collective future; building a framework for a just and lasting peace; harnessing our abundant natural resources into value-added goods for domestic and world markets; training our people and empowering them with world-class skills; nurturing a new nation based on the rule of law; reinventing a country at peace with itself and the world. Nigeria will rise again!
What is needed is not difficult to decipher. But it will never be easy to achieve. It will require national cohesion — a sense of common purpose and resolve — and with it, the ability to inspire our people in the pursuit of a new vocation of national greatness. This is the shape destiny assumes upon the earth.
(Abridged version of a Special Guest Lecture delivered on the occasion of the 36th Kaduna International Trade Fair, International Trade Centre, Kaduna, Monday, 27th April, 2015).
Q: Nigeria stands at the crossroads of history. We have a historic opportunity to reinvent our country as a responsible and forward-looking nation and a leader of the African continent. We can also play the game losers by relapsing to narrow-minded sectarian tribalism. All is possible in this land of extraordinary talents and energy.
Obadiah Mailafia
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