Prof. Peter Okebukola
By Prof. Peter A. Okebukola, OFR, Chairman of Council, Crawford University
Introduction
I am honoured to be asked to present the 2013/2014 Convocation Lecture of the University of Lagos which prides itself as one of Africa’s best. It is also exciting to have Mr. Hakeem Belo-Osagie chair the lecture. On account of Mr. Belo-Osagie’s huge contribution to global development especially through his leadership of high-impact international conglomerates, it is clear that Time magazine erred in not naming him one of the 100 most influential persons in 2014. I am sure the error will not be repeated in 2015.
I extend hearty congratulations to Council, Senate, indeed all staff and students of University of Lagos on the 2013/2014 Convocation ceremonies. Special congratulations to the Vice-Chancellor, Professor Rahamon A. Bello who has brought a freshness of vision to governance of the university. You will go down in history as one of the very successful Vice-Chancellors University of Lagos has ever had.
As a member of two teams engaged in Africa regional higher education rating and global ranking of universities, I confirm that University of Lagos is highly regarded within the Africa region and if it coasts speedily and sustainably along the current track of quality improvement, we can predict that in another 10 years or less, it will be the first choice university not only in Nigeria but in West Africa. I probably hear some murmur by members of the UNILAG community predicting the university to be the first choice in Africa by 2025 by aspiring undergraduates. While I share the optimism, I foresee the hindering factor of funds dimming the vision. The last one year has made it even more likely for the vision to be dimmed with the inclement economic environment in Nigeria. Two weeks ago at the 2015 spring meeting of the World Bank and International Monetary Fund, the forecast for the Nigerian economy was not as hopeful as was predicted about a year ago. The safer realm of thought is to plan for the worst while hoping for the best. This is the stimulus for the title of the lecture.
Over the last several months, three major clusters of opinions have been ringing sonorously in public discussions on the fate of Nigeria in a troubling era of lowering oil prices. In buses, market places, relaxation joints, newspaper opinions, TV discussions and academic forums, Nigerians of all shades and character have worn the garb of experts and have been voicing concerns. One cluster of opinion is for oil price to come to zero so that citizens from oil-producing states can stop harassing others about their superior status in the country and threaten a breakaway if their insatiable thirst for increase in derivation figures is not met. The second cluster regards this as a passing phase lasting less than five years. Holders of this opinion hinge it on history. Like a sinusoidal wave, oil prices have been known to rise and fall over the last 50 years. We should just weather the storm of the low season since the sun of better oil prices will rise again. Those aggregating around the third cluster, hold the opinion that seizing the opportunity of the low season of oil pricing to tighten loose ends around the Nigerian economy and casting only a faint look at oil in the future is the way to go. This lecture will take snippets from the three views and will anchor its main props on the third.
Initial Glimpses of the Nigerian Economy
That Nigeria is richly endowed with human and material resources is without question. That its path to economic and political development has since independence in 1960 been strewn with a plethora of challenges is equally without a doubt. That since the 1980s the Nigerian economy has been floundering due in part to leadership challenges, political instability, and poor development policies and implementation, is scarcely novel. Over the years, this trend has continued to generate development crises that have increasingly made Nigerians vulnerable to socio-economic hardships. Despite being the “Giant of Africa” with the largest economy in Africa, the most populous black nation, the 7th most populous country in the world, the 6th largest oil producing country in the world, the 4th world exporter of oil, the 21st largest economy by GDP ($1.058trillion by nominal GDP), and with immense capacity to make it into the First World, Nigeria continues to slumber as a slowly-developing country. In spite of these staggering statistics, the failure of the Nigerian state in socio-economic development status continues to baffle the citizens and the outside world, and why and how it flounders in every index of development. The global comparative statistics which rank Nigeria 124th in the world on GDP per capita (Purchasing Power Parity, PPP) and 152nd on HDI (Human Development Index,) are an eloquent evidence of the depth Nigeria has sunk in socio-economic profile.
To appreciate the significance of the foregoing low socio-economic development statistics, consider the following hard facts. There is palpable hunger in the land; unemployment is high; inflation is biting; budget deficits are insufferably high; debt profile is mounting to an intolerable limit, never mind official denials; street begging is a constant; prostitution is rife; fraud and crime rates are high; the manufacturing sector is in a depressed state, with 20 – 25 percent capacity utilisation; infrastructure, electricity, healthcare and transportation are in poor shape.
The linkages between building a nation and accelerating socio-economic development are rather clear and obvious. Building a nation of multicultural and multi-tribal settings such as ours, and building a nation out of a depressing economic structure as is presently the case in Nigeria, demands getting the basics right ab initio. Getting the task of accelerating socio-economic development right requires (i) altruistic, strong and effective political leadership to drive the nation; (ii) effective and honest governments at all levels (Federal, state and local) to enunciate policies and programmes; (iii) a private sector that is resolute to partner with governments all the way; (iv) a relentless effort and attention from public service that is determined to embrace reforms and changes in its modus operandi; and (v) a civil society that is willing to bear the inevitability of short-term pains for long-term future gains. This link must be viewed dynamically, in order to understand the current state and how the linkages can work seamlessly towards achieving the desired goal (Herbert, 2012; 2015).
An analysis of the political economy of Nigeria shows that the distinctive powers of the state are impaired and governance diseconomies are incurred as the country transits from one administration to another. For the most part of Nigeria’s history since independence, successive leaders and governments have continuously and impenitently governed in an unimpressive manner, ridiculed meritocracy and cultivated mediocrity in governance. Successive administrations have failed to show sufficient commitment to socio-economic development; instead, they tended to define the interests, economic prosperity and security of the Nigerian people from the lens of their own opportunistic interests and parochial concerns (Herbert, 2015). It is from this prism that the failure of the socio-economic development enterprise in Nigeria can be viewed and understood. Given the depressing economic scenario, just painted, how can we leverage it to accelerate socio-economic development? This is the key question of the lecture.
The Nigerian economy is celebrated as the largest in Africa. Paradoxically, a good proportion of the citizenry is unable to feel the political boast of the largeness of the economy on their daily lives. As observed earlier, poverty still ravages the land and youth unemployment is intolerably high. On paper, the land is flowing with milk and honey, but in the pocket of the common person, it is a semblance of a dry, arid desert (Okebukola, 2015).
If we were to literally open the chest containing all of Nigeria’s money, we will find a lowering of its contents ostensibly on account of depressed income from oil which is the lumbar of the economy. To further aggravate the dim outlook for a possible improvement in the contents of the chest, on April 2, 2015, the US, a major importer of Nigeria’s oil decided to cut import almost completely after a few years of scaling down import. By April 8, Britain, another country with sweet tooth for Nigeria’s oil, found huge deposits at its backyard. Even with China’s love for Nigeria’s oil, the ranks of countries angling for our oil is diminishing. When you add the middle-east glut, we really have some unpleasant days ahead for the chest of money. The gloomy days may be long, it may, prayerfully, be short.
In about four weeks, the Buhari administration will assume the reigns of governance and set in motion, its much touted machinery of “change”. All Nigerians eagerly await our gallop on the change horse in the economy, security, provision of infrastructure and the general wellbeing of the citizenry. The President-elect cautioned ten days ago that he is not a miracle worker but will do his best to brighten the lives of the common man and woman to sync with inhabiting a country that is said to have the largest economy in Africa.
Shortly after the election and gallant show of statesmanship by President Jonathan, investor interest in the Nigerian economy bounced back. The Naira picked up from N220 to the dollar to N200 in less than 48 hours. However, oil prices to which we largely hinge our economy refused to smile on us as a further dip in price was recorded for the greater part of March and April. It was $63 a barrel about a week ago. The International Monetary Fund (IMF), on Tuesday April 14, 2015, at the Spring Meetings of the World Bank Group in Washington, DC, projected that Nigeria’s economy would grow by a slower 4.8 per cent this year, from 6.3 per cent in 2014. According to the IMF’s World Economic Outlook (WEO) published this month, this will improve to 5.0 percent in 2016, which is still behind the 2103 rate of 5.4 per cent. This is the context of this lecture which will begin with how to bolster national income outside oil and proceed to how we can cut down wasteful spending to free funds for development. The third part of the lecture will propose sectors to which the meagre revenue can be invested for maximum socio-economic impact. The concluding section will highlight roles for University of Lagos in our quest to take advantage of a depressing Nigerian economy to accelerate socio-economic development. First, some conceptual clarifications.
Some Conceptual Clarifications
A depressing economy is both a challenge and opportunity to socio-economic development. But, what do we mean by depressing economy? To be sure, every economy faces depression every now and then. What are the economic ingredients that cook up the soup called depression? It is both necessary and fair to assume that this audience is composed of non-economists and economists alike. Aside the benefit to our distinguished non-economist audience, it is appropriate to contextualise my discussion with a clear working definition of what a depressing economy is.
A depressing economy or simply “depression” depicts the lowest point in an economic cycle, resulting from a severe and prolonged downturn in economic activity. In economics, a depression, also known as slump, is a distinctive inventory of the following economic factors (1) reduced purchasing power, or sustained volatility in currency values (2) substantial increases in unemployment or massive unemployment, (3) diminishing output, or reduced trade and commerce, (4) falling prices, or prices rising slower than usual, (5) a drop in available credit, (6) falling wages, (7) bankruptcies and rise in sovereign debt defaults, and (8) general lack of confidence in the future (Herbert, 2015). In the main, in a depressing economy, there is a prolonged decrease in consumer confidence and investments, causing the economy to shut down. It is often described as a more severe form of a recession that leads to extended unemployment, a spike in credit defaults, broad declines in income and production, currency devaluation and a deflationary economy. Is anyone in doubt that our country is experiencing these features?
Economic development does not exist, nor is it discussed, in isolation of the human factors that are included in the framework that drives it. The human factors of bounded rationality and opportunism that I bring into the framework nowhere appear, to my knowledge, as a set of key attributes in prior discussions of socio-economic development. Not that discussions of bounded rationality and opportunism have never previously appeared in economic discussions, but these have never previously been identified as key attributes and scant prior effort has been made to link each to the phenomenon of interest (socio-economic development).
The principal differences between the earlier economics literature and my approach in this convocation lecture are that: (1) I am more concerned than prior treatments with tracing out the ramifications of bounded rationality; (2) I expressly introduce the notion of opportunism and corruption and my interest is in the ways that both constructs affect the growth and development of a nation; (3) I espouse and draw on, directly and indirectly, the literature of the relationship between economic institutions and political institutions by Daron Acemoglu and James Robinson (2012); and (4) I emphasise that it is not depressing Nigerian economy or the factors that characterise it, individually or collectively, that occasion socio-economic development failure but, it is rather the joining of these factors with bounded rationality, on the one hand, and opportunism and corruption on the other hand, that gives rise to failure to take advantage to accelerate socio-economic development.
With respect to socio-economic development, there appears to be a considerable disagreement over the meaning and measurement of and what actually constitutes ‘true development’. An aspect of the controversy stems from international disparities in economic development, economic wealth and social welfare. The term ‘development’ is a concept which is contested both theoretically and politically, and is inherently both complex and ambiguous. Recently, it has taken on the limited meaning of the practice of development agencies, especially in aiming at reducing poverty and the Millennium Development Goals. Development indicators have evolved considerably over the years and this evolution has been inter-woven with disputes on the meaning of development. A major feature of this has been the contrast between economic indicators such as per capita income on one hand and broader views of development and wellbeing which include social and psychological dimensions at their centre on the other. Most recently a newly emerging focus is on the distinction between universal or objective wellbeing and subjective or context-specific wellbeing.
While the Millennium Development Goals have concretised the global sympathy for Nigeria and Africa in general, they also indirectly reflect upon government’s betrayal of their peoples, and the inferiority complex in global competitiveness. Throughout history, great nations have been built and great developmental strides attained, not by inchoate policies or untailored measures, but by well-articulated systematic policies of socio-economic development. Development policies and programmes must be circumscribed by a clear understanding of the crucial role of the forces of cultural and economic security on the development process of a country.
In recent time, there is a convergence of views that socio-economic development is a process that seeks to (i) identify both the social and the economic needs of a nation, society or community, and (ii) create strategies that will address those needs in pragmatic ways, in the best interests of the country or society/community over the long run. Social and economic development involves finding ways to improve the living standard of the citizens while also ensuring a healthy and secure economy capable of sustaining the citizens. Socio-economic development is captured or measured with indicators, such as GDP, life expectancy, literacy and levels of employment. Changes in less-tangible factors are also considered, such as personal dignity, freedom of association, security of lives and property (personal safety and freedom from fear of physical harm), and the extent of participation in civil society. The gap between rich and poor, developed and underdeveloped, or first and third world nations is a reflection of the variations in socio-economic development capacity. This now takes us to how economic institutions impact socio-economic development.
Inclusive Economic Institutions and Socio-economic Development
There is a clear relationship between a country’s institutional governance frameworks, economic policies, incentive structures on the one hand, and its economic progress on the other hand (see Acemoglu and Robinson, 2012). The concept of inclusive economic institutions redounds to a purposive national economic arrangement or framework that fosters economic activity, productivity growth, and economic prosperity. Accordingly, policies are designed that guarantee secure private property rights, since only those with such right will be willing to invest and increase productivity. For example, a businessman who expects his output to be stolen, expropriated, or entirely taxed away will have little incentive to work, let alone any incentive to undertake investments and innovations. But such right must exist for the majority of people in society. Acemoglu and Robinson succinctly captured it as follows:
Inclusive economic institutions, such as those in South Korea or in the United States, are those that allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills and that enable individuals to make choices they wish. To be inclusive, economic institutions must feature secure private property, an unbiased system of law, and a provision of public services that provides a level playing field in which people can exchange and contract; it also must permit the entry of new businesses and allow people to choose their careers. (p. 74)
Inclusive Institutions as Engines of Socio-economic Development and Prosperity
Country examples, developed and developing, indicate that there is strong synergy between economic and political institutions. In all the cases, all economic institutions are created by society. Whereas in a communist/command or military governance system, economic institutions are created by imposition, in a democracy, all economic institutions are created by society, a euphemism for government. Inclusive economic institutions play a critical role in socio-economic development, especially in economies that are experiencing downturn such as ours. In crisis situations, the aphorism that necessity is the mother of invention is invoked. In such circumstances, responsible governments resort to critical minds to provide workable solutions to the problems. That is why during financial meltdowns, governments come to the aid of critical private sector organisations, provide liquidity, and try to cushion the adverse effect of massive layoffs through large scale public works.
For a successful revamping or engineering of the economy, governments at all levels must make economic institutions inclusive. Inclusive economic institutions create inclusive markets, which not only give people freedom to pursue the vocations in life that best suit their talents but also provide a level playing field that gives them the opportunity to do so. Those who have good ideas will be able to start businesses, workers will tend to go to activities where their productivity is greater, and less efficient firms can be replaced by more efficient ones. Inclusive economic institutions also pave the way for two other engines of prosperity: technology and education. Sustained economic growth is almost always accompanied by technological improvements that enhance the production factors of production (people (labour), land, and existing capital (buildings, existing machines, and so on), that is, making them to become more productive.
Through the years, profitable businesses have been created by dint of hard work, innovation, ingenuity in scientific improvements and entrepreneurial dexterity. All these are made possible by economic institutions that encourage private property, uphold contracts, create a level playing field, and encourage and allow the entry of new businesses that can bring new technologies to life. It is therefore no surprise that it was U.S. society, not Mexico or Peru, that produced Thomas Edison, and it is South Korea, not North Korea, that today produces technologically innovative companies such as Samsung and Hyundai.
Relationship between Economic and Political Institutions
Politics, which is the process by which a society chooses the rules that govern it, begets democracy. In other words, democratic governance follows politics. Politics surrounds institutions for the simple reason that while inclusive institutions may be good for the economic prosperity of a nation, however, some people or groups, such as the elite or specific interest groups like the Niger Delta, will be much better off by setting up institutions that are extractive. When there is conflict over institutions, what happens depends on which people or group secures appropriability right in the game of politics – who can get more support, obtain additional resources, and form more effective alliances. In short, who secures appropriability right (that is, who wins) depends on the distribution of political power in society. The political institutions of a society are a key determinant of the outcome of this game. They are rules that govern incentives in politics. They determine how the government is chosen and which part of the government has the right to do what. Political institutions determine who has power in society and to what ends that power can be used.
In a truly pluralistic democracy, political institutions distribute power broadly in society and subject it to constraints – checks and balances. Instead of being vested in a single individual or a narrow group, political power rests with a broad coalition or a plurality of groups. Thus, there is an obvious close connection between pluralism and inclusive economic institutions. If the distribution of power is narrow and unconstrained, then the political institutions are absolutist, as exemplified by military regimes. In contrast, political institutions that distribute power broadly in society and subject it to constraints are pluralistic. Instead of being vested in a single individual or a narrow group, political power rests with a broad coalition or a plurality of groups.
Research has shown that there is a close connection between pluralism and inclusive economic institutions. The key to understanding why some countries, such as South Korea and the United States, have inclusive economic institution is not just their pluralistic political institutions but also their sufficiently centralized and powerful states. Countries with extractive political institutions concentrate power in the hands of a narrow elite and place few constraints on the exercise of this power. Economic institutions are then often structured by the elite to extract resources from the rest of the society (the country). Extractive economic institutions thus naturally accompany extractive political institutions. In fact, they must inherently depend on extractive political institutions for their survival. Inclusive political institutions, vesting power broadly, would tend to uproot economic institutions that expropriate the resources of the many, erect entry barriers, and suppress the functioning of markets so that only a few benefit.
In the light of the foregoing, can we affirm that Nigeria has inclusive economic institutions? How about inclusive political institutions? To be sure, our democracy does not bear the semblance of pluralism: it is rather winner takes all. We are yet to build pluralistic political institutions. Although Nigeria may appear to be sufficiently centralised, if not over-centralised, certainly, the federating states are not powerful, economically and politically. Our economic institutions are not inclusive in the mode canvassed by Acemoglu and Robinson (2012). The experiences of developed and fast-developing countries suggest that political and economic institutions, which are the ultimate choice of society, have to be inclusive to encourage and sustain economic growth. Anything to the contrary means they are extractive and thus constitute impediments to economic growth. As Acemoglu and Robinson assert, nations fail when they have extractive economic institutions, reinforced by extractive political institutions that impede and even block economic growth. Thus, the politics of institutions – that is, the choice of institutions – is central to our quest for understanding the reasons for the success and failure of nations. The choices we make determine whether our economic and political institutions are sufficiently equipped to promote socio-economic development. Our failure in this regard in no small way explains why, as a nation, we have gone rancid in economic and political development.
Taking the Economy off Life-Support: Reducing Wastage in Public Expenditure
The theme of this lecture would have been different if we did not have a haemorrhaging economy with holes punctured by corruption in high and low places, both visible to the naked eye and subject of outcry by whistle-blowers and invisible and off the radar, yet massive enough to be harmful. The 2013 corruption perception index by Transparency International ranked Nigeria 144 out of 177 countries it surveyed making Nigeria 33rd most corrupt country in the world. In 2014 Nigeria ranked 136 out 174 countries indicating a marginal improvement but still showing Nigeria as the 38th most corrupt country in the world.
The pension fraud and alleged massive corruption in the oil and gas sector are two celebrated examples of the high-profile mention. Together, the high-profiles add up to a conservative N450 billion between 2012 and 2014 alone! The invisibles are even more deleterious. Let us take two common examples. Almost on a daily basis, scores of government officials at the federal and state level with pockets laden with estacode are on board planes to conferences and meetings where just one or two persons are invited. It is typically a planeload of Nigerians in contrast to contingents of one or two persons from other countries, most of which are richer than Nigeria. No sooner than the conference starts, members of the huge Nigerian delegation are out shopping and midway through the conference, jet out to other destinations outside the country where the conference is holding to see family and friends or go negotiate the purchase of their new houses. It is estimated that such jamborees cost Nigeria about N98 billion annually.
The second example is the cost of inflated contracts. Data from the Bureau of Public Procurement (BPP) put this at about N569 billion in seven years for the federal system alone which the Bureau’s eagle eyes picked out. Add about N350 billion from the state and local government side and we have a huge leakage (of a major economic artery) on our hands.
Another area where public expenditure is haemorrhaging is the cost of running the executive and legislative arms of government. Over the last eight years, this cost has eaten up a sizeable proportion of the national budget with pitifully little for capital development. Strident calls for trimming down have fallen on deaf ears since the beneficiaries are accustomed to living a life tailored to high expenses and cannot imagine an alternative world with lesser income. Since the Buhari administration is a “new kid on the block”, it stands a good chance of causing a scaling down of the new actors. The indication of this is positive as there is some talk last week about General Buhari hinting a drastic scaling down of cost of running government as one of his immediate tasks after May 29.
Still on scaling down the cost of governance is a call to re-visit the report of the Steve Oronsaye Committee on rationalisation of federal government parastatals and agencies. A segment of the report of which I am on familiar turf is the merger of NUC, NBTE and NCCE to a Tertiary Education Commission which is the model in most countries. The new Commission will have the functions of NUC, NBTE and NCCE run by three departments and cut down on the overheads which the agencies spend on an annual basis. The Oronsaye report found a cost reduction of about N860 billion for 2012-2014 if government implemented I subject to adjustment based on government’s position on the report. This huge amount could have gone into creating more jobs, running a more efficient government and ploughed into capital development.
Add corrupt judiciary and weak anti-corruption mechanisms and we have serious deterrent problem of a haemorrhaging economy on our hands. Add also, the lack of political will by government to confront corruption and impunity of the corrupt. There are high hopes that this is about to end with the in-coming Buhari administration. Let us now take a peep at the possibility of accelerated socio-economic development and the good governance we anticipate from the Buhari administration.
Good Governance: The Path to Socio-economic Development
The challenges that Nigeria has faced since independence in 1960 are as much political as economic. The country has made several attempts to tackle them simultaneously, by creating a stable democratic political and economic-governance system devoid of discretionary, corruption-ridden, patrimonial system. But, the harder successive governments tried, the more intractable the challenges became. Since 1999, however, we have witnessed, albeit with a measured level of success, attempts to establish a pluralist democracy both to underpin the economic system and as a goal in itself.
The focus on good governance as a pathway to socio-economic development mandates a paradigm shift in development policy away from the programmes of the past, which focused only on the economic aspects of governance, relying on economic aggregates, to one which examines socio-economic and political measures simultaneously. This approach is an advance on economics-centred approaches, but it has some inherent limitations that must be addressed. The parameters of governance cannot be determined simply by combining checklists of economic and political measures; for practical purposes, the agenda should include a checklist of desired attributes in the economic and political realms. Good governance as we are angling to have with the Buhari administration is most likely to be secured through mutually-reinforcing institutions and practices that support economic development and sustainable growth. These institutions and practices must be the end-product of wide stakeholder engagement (through public deliberation) and participation, with a high degree of consensus. The deliberative process is both a means and an end in itself, but may not necessarily be linear or time-efficient. Furthermore, the institutions of governance must take root and be sustained over time before their impact can be assessed.
Under the auspices of the African Peer Review Mechanism (APRM), Africa’s Self-Assessment for Good Governance concludes that poverty can be most effectively tackled through the promotion of democracy, good governance, peace and security as well as the development of human and physical resources. Key socio-economic thrusts such as promoting gender equality, allocation of appropriate funds to the social sector, as well as promoting new partnerships between governments, the private sector and civil society, are also essential in this area. The APRM process focuses on four thematic areas to assess state’s compliance with a wide range of African and international human rights treaties and standards. These are: (i) Democracy and Good Political Governance, (ii) Economic Governance and Management, (iii) Corporate Governance, and (iv) Socio-economic Development. Where is the cultural context in all of these?
There is unanimity with the proposition that economic development is a derivative of complex and important sociocultural imperatives. However, there is much less agreement on the attributes of these imperatives and how and why they have evolved to take on economic development configuration. It has been posited that economic development is mainly to be understood as the product of a series of cultural innovations (Herbert, 2012). History has shown that there is a cultural dimension to economic development, vice versa. For example, the general concession that the existence of formal economic institutions, such as property rights, rule of law, contract enforcement facilitates economic development also presupposes the institutionalisation of certain norms or social values that promote market exchange, savings, and investment. This is the context of the relationship between culture and economic behaviour. Let us now swing to how we can increase the national income envelope outside oil.
Increasing the Income Envelope Outside Oil
The magic bullet for piercing the armour of over-dependence on oil is diversification of the economy (Okonko-Iweale, 2015). In simple language, it means “shining our eyes” on other potentially-lucrative sources of income. For us in Nigeria, the list of such sources is long but for the purpose of this lecture, we shall narrow our gaze at a handful. These are agriculture, entertainment industry, taxation and telecoms. As we shall see, these sources can net about 80% of total annual earnings making oil green with envy. Let us begin with agriculture.
More Revenue from Agriculture
Agriculture was a winning horse for the Nigerian economy three decades ago, taking a back seat with the appearance of oil. Since it is still fit as a fiddle, it can be called again to active duty. In the last three years, the agriculture horse has sprung into action and recent data show, the contribution of the agriculture sector to growing the economy has been rising.
Nigeria is extremely conducive for productive agriculture, with a combination of 88% arable land, adequate water supply by rain, rivers and other bodies of water and a high supply of cheap and young labour. It is also a great access point to all of sub-Saharan Africa, sharing borders with Benin, Chad, Cameroon and Niger. It has massive ocean access which can facilitate trade to neighbouring African countries and global markets.
As indicators of potential revenue from agriculture, it is estimated that in 2010, Nigeria imported N635 billion of wheat, N356 billion of rice, N217 billion of sugar and despite its huge marine resources, N97 billion of fish. This import dependence creates a lot of room for local producers, processors and distributors. Today, the import level has dropped and if current reforms in agriculture are sustained, agriculture can contribute to not less than 40% to the country’s GDP.
We can model the Delta Beyond Oil programme of the Uduaghan administration which has achieved a reasonable measure of success in recent years. The Centre for Human Security of the Olusegun Obasanjo Presidential Library’s Feed Delta Project confirms the achievability of this goal. The project observed that although a significant gap exists between ability to feed all Deltans with little out-of-state import and current food provisions, the Delta State Government since its creation, has been paying increasing attention to the production of sufficient food for its citizenry. The Ministry of Agriculture and Natural Resources provides direct assistance to farmers for agricultural mechanisation, tree crop development, agricultural credit, provision of improved and high yielding planting materials and other agricultural inputs, farm settlement scheme, communal farming, livestock and fisheries development. Other services provided through the Ministry include veterinary, produce inspection and agricultural extension services and produce inspection.
A noteworthy initiative of Government in promoting agriculture is the establishment in 2003 of the Songhai-Delta Project. The project is an integrated agricultural system which combines research, crop production and industrial processing. The objective is to enable trainee graduates set up their own enterprise thereby expanding opportunities for youth rural employment. There are farm units for various products like poultry, fish farming, grass-cutter, pigs, food processing units and in-house schemes for the production of fertilizer based on the conversion of organic waste from within the settlement as well as mechanical fabrication of farming tools and equipment. The scheme also has processing units for such crops as cassava, soya beans, and palm oil. The centre has turned out a large number of trained youths in the areas of crop, fisheries and livestock production and agribusiness entrepreneurship.
Agricultural programmes/projects geared towards food production such as the Rapid Food Production Programme, Live and Own a Farm Programme (LOAF) have been integrated into the mainstream of the Ministry of Agriculture and Natural Resources to achieve that same purpose of increased production. There is also the Farm and Infrastructure Foundation (FIF), an agricultural consultant firm to work in collaboration with the State Ministry of Agriculture & Natural Resources to achieve the following:
- Strengthening production capacity of small-scale farmers;
- Support to large scale farmers;
- Research and Development;
- Market Development and linkages; and
- Institutional Restructuring, strengthening and policy reforms.
From the five broad areas, two major projects were developed. The Farmer’s Support Programme and the Youth Empowerment through Agriculture Programmes. These two programmes are aimed at meeting the food needs of Deltans, providing raw materials for agro based industries and employment for the teaming youth.
Bolstering Income through the Entertainment Industry
One of the magic rebasing pills which arithmetically shot Nigeria’s economy literally overnight to the top of the pack as Africa’s largest about a year ago is the entertainment industry. This industry which accounts on the average for about 2% of the GDP annually has several elements notably Nollywood, Nigerian music and dance as well as comedy. If the industry has been in the backwater to make such sizeable contribution, we can be guaranteed significant increase in such contribution if more focussed attention is paid to its nurturance and growth through improved investment.
Taking the case of Nollywood which is Africa’s lead in the film industry, we found recent interest by government especially by President Jonathan to reveal untapped potential of the actors, directors, marketers and producers. In a recent session of the cream of the group with Chief Olusegun Obasanjo as part of a collaboration with the Centre for Human Security (CHS) of the Olusegun Obasanjo Presidential Library, Abeokuta, it came out clearly that if certain inhibitions and restrictions were uprooted, Nollywood and the creative art industry can grow at 33 percent and contribute over $6 billion to the newly rebased Gross Domestic Product (GDP). Nollywood is now estimated to be worth about N853.9 billion ($5.1bn), about 1.2 percent of the revised GDP.
Internal strife among the guild of actors, producers and directors; pirating of Nollywood films; technical deficiencies in production owing to inadequacies in equipment; challenges of marketing to a global audience; and preponderance of diabolical themes were some of the hurdles to progress narrated by the Nollywood group during the interaction with CHS. Imagine a world for the economy of Nigeria when these hurdles are scaled. Let us see how we can open a door to this world and take care of another goose that is laying the golden egg for the Nigerian economy other than oil.
Internal strife among the actors is induced by territoriality. This is not a new phenomenon globally as historical records document inclement relationships among Hollywood actors in the 1950s over to present day. Murders have been extreme consequence of such friction and on the soft end of the spectrum, severe handicap of the capacity of the actors to perform at their best. The antidotes which have recorded some measure of success in Hollywood include clear specifications of roles in contracts for actors, forums for social gathering such as clubhouses, and establishment of counselling and emotional support centres. The Nigerian group can walk along these paths too. The leadership of the guild of actors need to work towards demolishing barriers separating ethnic and informal social groups among the actors. Through the implementation of several social programmes, the informal groups can be stimulated to talk to each other more, share resources and ideas and be more collaborative than competitive or individualistic.
Pirating of Nollywood films has taken a heavy toll on the industry. After huge investment in producing a film, in some cases funded with bank loans, thousands of the product at dirt cheap prices will flood the market even before the first few genuine copies roll of the production line. This has been very frustrating for the actors, a frustration conveyed to government on several occasions without perceptible corrective action. The more anti-piracy government agencies strike the dens of the pirates, the more the pirates emerge with more ingenious evasive tactics. A creative solution needs to be found especially one that taps into the huge potential of technology to track film pirates and bring them to justice. Talking about justice, it is often the case that pirates escape the long arm of the law through the shameful connivance of some law enforcement and judiciary operators.
Technical deficiencies attributable to inadequacies in equipment can be addressed through a special loan scheme with low interest to the Nollywood operators. In 2014, President Jonathan made some money available to support the Nollywood film industry. Sadly, this gift suffered three calamities- lack of release of the full funds, warped sharing mechanism among potential beneficiaries and gross inadequacy of the quantum of funds to tackle the challenge of the sub-sector. Rather than periodic token handouts by government, it will make intuitive sense and ensure sustainability if a regime of government-guaranteed loan is made available to support the purchase of modern equipment for filming, editing and packaging of Nollywood films.
Overcoming the challenge of marketing to a global audience will have funding as key. Hollywood films attract global attention, burst box office intakes and are candidates for global awards on account of investment in publicity. Such investment is huge and far beyond the capacity of the struggling Nollywood producer who will rather settle for a few jingles on local radio and television to ensure that the film is available in Ebinpejo lane, Idumota in Lagos! Even if the producer can muster more funds to scale up publicity to national network channels, the fear of loss of revenue to pirates becomes restraining. A way out is for a public-private partnership arrangement to be struck for the publicity of Nollywood films. The Federal Ministry of Culture, Tourism and National Orientation to which Nollywood actors sought to be affiliated when President Jonathan had a session with them in Lagos early March should take the initiative of catalysing such partnership. If the partnership can muster funds for marketing Nollywood films on international news channels such as CNN, BBC, Sky News and Al Jazeera, a lot of mileage will be realised in the promotion of the films to a global audience with the anticipated dividend of increased patronage and revenue.
On the issue of preponderance of diabolical themes, there is a heightened effort to tone down such themes and elevate genres that promote sound African values, traditions and mores within the context of emerging global culture. Nigerian films on African Magic channels are increasingly more entertaining and less dreadful. This trend should continue, indeed accelerated to a direction which will be more globally appreciated and will improve the image of the Black person as a cultural stalwart in a globalised world. We need storylines in Nollywood films that will foster religious harmony and ethnic tolerance. We are living in a world where religious extremism is taking firmer root and we need a tool for uprooting such tendencies. Just as the social media is increasingly used to ensnare young persons to join extremist groups, the messages of Nollywood should offer counter ideological messages to reverse the trend.
The music industry is next for mention in terms of how it can be tweaked to boost national income. Relative to the 1960s and 1970s, the Nigerian music industry would appear to have waned in terms of its global popularity. Fela Anikulapo Kuti, Ebenezer Obey, Sunny Ade, Rex Jim Lawson, Victor Uwaifo and Ayinde Barrister carried the banner of good music from Nigeria all over the world and earned impressive revenue for self and country. While Nigerian musicians still make impressive outings in entertaining the local audience especially the youth, preference is for foreign artistes. One of the key drivers of Nigerian youth to foreign artistes is the huge presence of such artistes on music channels in cable TV such as DSTV. Channel O, Hip TV, MTV Base and Trace are DSTV channels which most Nigerian youth crave and will let their hair down, dance vigorously to the rhythm and lyrics and may even go without food when their favourite artistes and musicians are entertaining on such channels. To further raise the profile of Nigerian musicians beyond current level on such channels and move towards increased revenue, we need to step up local publicity and provide incentives for up-and-coming artistes. The Nigerian Idol programme is one of such pathways which should be encouraged.
Nigerian comedians are another huge revenue source. Taxes from their service can add to national revenue. In the last five years, there is a remarkable surge in the ranks of comedians and marked improvement in the laughter-invoking power of their jokes. Some like Ali Baba are multi-millionaires. We were hoping that he will take over from Jim Stewart of the Daily Show in the US but Trevor Noah of South Africa stole the show. The success story of the South African in being selected among many to entertain a largely-American audience through the Daily Show is attributable in large part to international exposure and practice. Most Nigerian comedians are local in their jokes and hardly able to rapidly adjust to international audiences. They can only crack jokes about Warri girls and Igbo traders which though suit local ears, may be bland for non-Nigerians. There is therefore the need to build capacity of Nigerian comedians through training and international exposure to be able to expand their horizon of marketability and hence potential to earn revenue for self and for Nigeria.
More Tax Income
Tax escapees in Nigeria are among the highest in the world. If we close the leaking basket of taxation, the annual national intake may double current revenue. The corruption in taxation process leads to the nation suffering 30% loss through under valuation and weak collection process both fuelled by bribery of officials who benefit while the common pot is depleted. It is often claimed that tax laws are differentially implemented in favour of the rich. A good number of multi-billion naira private ventures evade full taxation with collusion of corrupt officials. The Federal Inland Revenue Service (FIRS) and its state counterparts have been vigorous in the last ten years to clean up the stable of tax implementation. The success story is reflected in the annual increase in venue. It is estimated that in 2015, FIRS will rake in over N6 trillion into the federation account. With just about 75% of tax implementation at the federal and state level, we will be able to put about N9 trillion into the national and state purses. As the graph of intake from oil sources dips, the graph of intake from taxation among non-oil sources should rise.
Table 1: FIRS Annual Summary of Collection From (2000-2012)
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Source: FIRS: Planning, Reporting and Statistics Department
There is the despicable view of taxation by those who should pay. To many, more tax means more money for people to “chop”. We should however not lose sight of the use of tax for development. A few examples are noteworthy. In the US and UK equivalents of our local government, tax income from various sources are used for maintaining roads and building new ones, keeping the environment spotlessly clean and maintaining and equipping law enforcement agents. The cost of education is also subsidised with taxes. So also is social security and healthcare. The tax form completion season is a culture in these places. When it is time to file your tax returns, you are obligated by law to file your tax. If you do not, the sin of tax dodging will catch up sooner than imagined especially at points of seeking benefits from government or when seeking political office. In Nigeria, huge tax evaders are not captured in the tax-sinners net but the captive audience of civil servants are hammered to cough out monthly taxes. If oil revenue dries up today, revenue from tax, if implemented with a high degree of fidelity, will plug gaping hole in some form in the national budget.
More Income from the Telecommunications Industry
The telecommunications industry which is largely private sector led is reaping bountiful harvest with staggering profit, huge chunks being repatriated to foreign parent companies. No doubt the companies within the industry are making efforts to invest some of the profit in development projects in Nigeria, in the view of many Nigerians, these companies can be taxed more to increase the revenue of government. I am sure the chairman of this lecture, Mr. Hakeem Belo-Osagie who chairs the Nigerian arm of UAE telecom provider Etisalat (my favourite provider!) may not be too favourably disposed to this recommendation on account of the already stiff tax regime slapped on the telecoms operators. However, in the circumstance of the slippery slope to which the Nigerian economy is sliding, all shocks and props will need to be installed including demanding more tax from members of the telecoms industry.
Investment in Human Capital Development
We now move to the heart of this lecture- how we invest the diminishing resources to attain maximum socio-economic, developmental gains. On the short and long run, the best sector to channel investment is on human capital development. Even from slim resources in the coming years, Nigeria should invest more in human capital development. It is discomforting that in the time of plenty, such investment was not up to the mark. If the investment had matched the huge revenue especially from oil over the past three decades, the dividends in terms of high-level human resources in the right number to drive the economy would have been sufficient to keep the country socio-economically afloat in a season of revenue scarcity.
In common parlance, human capital development is simply education and training. Over the last 20 years, the level of investment in education has observed a sinusoidal wavy pattern – up one year and down the next. Unfortunately, when up, the level is hardly significant to make significant impact on socio-economic development.
During the industrial revolution of the 19th century, machines were seen to be at the heart of production. It was the huge locomotive engine that took pride of place over the petite driver perched in front of a control in the lead unit. The combined harvester was of greater importance in agricultural productivity than its operator. It was not too long before a reversal in esteem from human to machine crept in. One of the major catalysts was the abolition of slave trade which provided cheap labour to fuel the industrial revolution. Brain power was seen as the propeller of industrial growth. Even the harnessing of natural resources for development was dependent on the volume of available brain power. So it was with the story of Japan and a number of countries high on the economic league table with relatively scant natural resources. By the turn of the 20th century and with much gusto in the early years of the 21st, the concept of knowledge economy, speedily driven by human resource development, gained ascendancy.
A common-place view is that human capital is any stock of knowledge or characteristics the worker has (either innate or acquired) that contributes to his or her productivity. A more technical view is that it is the collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals, their employers, or their community. Narrowing down further to the economist’s view, it is the abilities and skills of any individual, especially those acquired through investment in education and training, that enhance potential income earning. It is human capital because a person cannot be separated from his or her knowledge, skills, health, or values in the way they can be separated from their physical and financial assets.
Five perspectives to human capital have been canvassed. The Becker view sees human capital as been directly useful in the production process. More explicitly, human capital increases a worker’s productivity in all tasks, though possibly differentially in different tasks, organizations, and situations. In Gardener’s perspective, we should not think of human capital as unidimensional, since there are many dimensions or types of skills. A simple version of this approach would emphasize mental vs. physical abilities as different skills. In Schultz/Nelson-Phelps view human capital is capacity to adapt. According to this approach, human capital is especially useful in dealing with “disequilibrium” situations, or more generally, with situations in which there is a changing environment to which persons have to adapt. The Bowles-Gintis view is that human capital is the capacity to work in organizations, obey orders and adapt to life in a hierarchical/capitalist society. Lastly, the Spence view regards observable measures of human capital as more a signal of ability than characteristics independently useful in the production process.
Education, training and health have been found to be important investments in human capital. Many studies have shown that secondary and university education greatly raise a person’s income, even after netting out direct and indirect costs of schooling, and even after adjusting for the fact that people with more education tend to have higher IQs and better-educated, richer parents. Similar evidence covering many years is now available from more than a hundred countries with different cultures and economic systems. The earnings of more-educated people are almost always well above average, although the gains are generally larger in less-developed countries.
The growth in per capita income of many countries during the 19th and 20th centuries is partly due to the expansion of scientific and technical knowledge that raised the productivity of labour and other inputs in production (Becker, 2014). As Becker (2014)-a pioneer in the study of human capital and the 1992 Nobel laureate in Economic Sciences further observed, new technological advances clearly are of little value to countries that have very few skilled workers who know how to use them. Economic growth closely depends on the synergies between new knowledge and human capital, which is why large increases in education and training have accompanied major advances in technological knowledge in all countries that have achieved significant economic growth.
In The Wealth of Nations Adam Smith formulated the basis of what was later to become the science of human capital. Over the next two centuries, two schools of thought can be distinguished. The first school of thought distinguished between the acquired capacities that were classified as capital and the human beings themselves, who were not. A second school of thought claimed that human beings themselves were capital. In modern Human Capital Theory all human behaviour is based on the economic self-interest of individuals operating within freely competitive markets. Other forms of behaviour are excluded or treated as distortions of the model (Fitzsimons, 2014).
Human capital theory has been criticised on a number of counts. Economic sociologists challenge with the argument that the society and culture cannot be arbitrarily split from the economy. Human capital theory, then, is an impoverished notion of capital. It is unable to understand human activity other than as the exchange of commodities and the notion of capital employed is purely a quantitative one. The means of production are not only physical but also appear in social relations. Human capital is taken as an abstract form of labour — a commodity — and not capital. Commodities such as human capital are therefore part of the life cycle of capitalism as a form of labour and not able to be exchanged independently of it.
In modern human capital theory, all human behaviour is based on the economic self-interest of individuals operating within freely-competitive markets. Other forms of behaviour are excluded or treated as merely distortions of the model. For example, all the benefits of vocational and professional education are limited to the individual who is educated. The maximisation of rational self-interest separate from the social group that the individual belongs, is a central article of faith in human capital theory (Fitzsimons, 2014).
Also, human-capital theory has attracted much criticism from sociologists of education and training. Marshall (2014) reports that “in the Marxist renaissance of the 1960s, it was attacked for legitimating so-called bourgeois individualism, especially in the United States where the theory originated and flourished. It was also accused of blaming individuals for the defects of the system, making pseudo-capitalists out of workers, and fudging the real conflict of interest between the two.” However, even discounting these essentially political criticisms, human-capital theory can be regarded as a species of rational-exchange theory and open to a standard critique, by sociologists, of individualist explanations of economic phenomena.
Three measures of human capital serve the purpose of this lecture (Lisbon Council, 2006). These are:
Human capital endowment: This measures the cost of all types of education and training in a particular country per person active in the labour force (i.e. employed person). Specifically, it looks at five different types of learning for each active person: learning on the job, adult education, university, primary and secondary schooling and parental education. It is subsequently depreciated to account for obsolescence in the existing knowledge base and some level of forgetting.
Human capital utilisation: This looks at how much of a country’s human capital stock is actually deployed. It differs from traditional employment ratios in that it measures human capital as a proportion of the overall population.
Human capital productivity: This measures the productivity of human capital. It is derived by dividing gross domestic product by all of the human capital employed in a country. This diverges from traditional productivity measures, in that it takes account of how well educated employed labour is, instead of just how many hours are being worked. The three measures will be basis for narrating the findings of the situation analysis of human capital development in Africa later in the paper.
We turn next to innovation. Conceptually, it is a process and a product. As a process, it depicts a new way of doing things, a process of translating an idea or invention into a good or service that creates value. It can also be the product of such a process resulting in a novel device or service. To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need. The predominant theory identifies two traditional approaches to innovation; “technology push” and “demand pull”. In the former approach, innovation is seen as exogenous and driven solely by scientific advances. The latter approach refers to innovation as a response to demands for new products and processes.
Human Capital, Innovation and Socio-Economic Development
The findings of several studies have converged to show direct and indirect links between and among human capital development, innovation and socio-economic development. Scholars agree that human capital is one of the decisive factors that explain why some countries are rich and others remain poor (see Marshall, 2014). However, there is still dissent with regard to the channels through which human capital fosters economic growth. On the one hand, human capital is seen as a substitute for technology: better educated managers and workers are able to increase production even when the technology they use is constant. On the other hand, human capital is interpreted as an input in the R&D process and therefore rather a complement to technology. According to this view, an increase in human capital will lead to a more efficient adaption of superior technologies thereby shifting the frontier of the production possibility set outwards.
The model hypothesises that education and training as well as the culture and value system of the community are the key variables in human capital development. Education and training have long been established as the major variable impacting on human capital development since the mind and body are developed through education and training. Studies reviewed have attributed an average of 86% to education in the factors accounting for the variance in human capital scores. Put simply, human capital is developed mainly through quality education. The culture and value system of the community where the individual is located play complementary roles.
Human capital is expressed as knowledge, skills and values. These in turn directly impact on innovation. Innovation is engendered when education and supportive cultural milieu foster the development of knowledge and skills. Innovation is shown in the model to directly impact on socio-economic development. When translated into practical applications, the society benefits from innovations which serve as catalysts of production. The history of the world is replete with examples of how innovations have galvanised socio-economic growth and development. Innovations in irrigation systems in agriculture in Israel and in metallurgy in building light bodies for aircraft provide some examples.
The relationship between human capital and innovation at the country level is grounded in what is termed ‘conversions’, that is different forms of capital can be converted into resources and other forms of economic payoff. At the individual level, this conversion process has been studied and validated by a number of researchers (see Becker, 2014). In general, the argument is that those who are better educated, have more extensive work experience, and invest more time, energy, and resources in honing their skills and are better able to secure higher benefits for themselves, and at the same time are better able to contribute to the overall well-being of the society (Dakhli & Clercq 2004). Further, innovation, as a knowledge-intensive activity, is expected to be related to human capital in multiple ways. Marshall (2014) proposed that investment in human capital through on-the-job training and education are the driving force behind increases in productivity and competitiveness at the organizational level. Along the same lines, Fitzsimons (1999) argued that human capital raises overall productivity at the societal level as the human input to economic activity in terms of physical and intellectual effort increases. The overall growth in economic activity generates, then, higher needs for new processes and innovations to further support this growth (Dakhli & Clercq 2004).
The African Story of Human Capital Development and Innovation
It is a commonly-held and popular view that Africa’s investment in human capital development is paltry. However, when data on such investment over the last fifty years are examined, empirical justification can only be obtained up to about 2005. Since then, African countries have been increasing funding to the education sector and in capacity building for innovation. The World Bank report of 2009 indicates that between 2005 and 2007, African countries at an aggregate level, increased funding commitment to education more than most regions of the world. There is no basis for complacency since a huge gap still exists between level of funding required to make significant impact on battered education systems and what is served to the systems by way of funding.
Beyond the matter of funding, the African education system which propels human capital development is weak in quality and suffers acutely on quantity indicators. In a landmark Presidential Address at Valparaiso University in the US in January 2014, former President Obasanjo narrated the good, the bad and the ugly sides of the African education system as it affects human capital development in the region. In the speech, Obasanjo (2014) noted that African countries have made noteworthy gains on a number of educational indicators. Enrolment in tertiary education has grown faster in sub-Saharan Africa than any other region over the last four decades. While there were fewer than 200,000 tertiary students enrolled in the region in 1970, this number rose to over 5.1 million in 2011 – a more than 25-fold increase.
In effect, and as reported by UNESCO Institute for Statistics, the gross enrolment ratio (GER) for tertiary education grew at an average rate of 8.6% for each year between 1970 and 2008 – compared to a global average of 4.6% over the same period. This rate exceeded the population growth of the relevant age group across the region. Also, over the past ten years, real expenditure on education has risen by 6% annually across sub-Saharan Africa. Out of 26 countries reported on by the UNESCO Institute for Statistics in 2010, only one country – the Central African Republic – reduced spending on education. As a result of these investments, remarkable progress has been made in educational development in sub-Saharan Africa. The number of children in primary schooling increased by 48% – from 87 million to 129 million – between 2000 and 2008. Enrolment in pre-primary, secondary and tertiary education also grew by more than 60% during the same period.
Beyond these gains, Africa is carrying the burden of poor performance on a number educational indicators. For instance, the region is home to 43% of the world’s out of school children. Nearly 29 million children of primary-school age were not in school in sub-Saharan Africa in 2011 – 54% of them were girls. In sub-Saharan Africa, about 10 million children drop out of primary school every year. An estimate of 38% of the region’s adults – 167 million people – still lack basic literacy skills. More than six out of ten are women. It is projected that about 1.9 million teachers will be needed in classrooms by 2015 to achieve Universal Primary Education; 1.1 million of them will be needed in sub-Saharan Africa alone (Obasanjo, 2014).
UNESCO’s 2014 Global Education Monitoring Report brandishes some interesting statistics on the performance of African countries relative to others in the world on a number of educational indicators. Africa did well on access but floundered on quality. On funding of basic education as percentage GDP, Africa did not present the global worst-case scenario. Sub-Saharan Africa accounts for 58% of the world’s need for additional primary teachers, amounting to approximately 225,000 new teachers to be recruited per year between 2011 and 2015 to meet the goal of universal primary education. However, over the past decade the average annual increase in the region has been only 102,000. On aggregate, the education report card was thumbs down with red marks beaming on poor quality of secondary school leavers and inadequacy of teachers (UNESCO, 2014).
Moving to higher education, the 37th General Conference of UNESCO held in October 2013, patted Africa on the back for increased access but spanked it for depressed quality of graduates. A recent UNESCO survey on the major impediments to quality higher education in Africa came up with the top five stumbling blocks. These are depreciating quality of teachers; research capacity deficit; inadequacies in facilities for teaching, learning and research; lack of a regional quality assurance framework and accreditation system; and slow adoption of ICT for delivering quality higher education including distance education.
Targets of Investments in Education in Nigeria
The three areas of top priority for investment in education today are teacher quality; provision of learner-friendly facilities and curriculum delivery. The first line of business should be to improve teacher quality at all levels of the education system. Our 15-year study has shown that teacher quality accounts for about 22% of the variance of scores on overall quality of the education system. If General Buhari will want to improve the quality of education in Nigeria, he should dismantle the current model of teacher preparation and install one that will lead to the production of quality teachers who are steeped in content knowledge. There are too many roadside teachers in Nigeria today. Every day they are in the classroom sets the nation back two years. Next is to improve the quality and quantity of facilities for teaching and learning at the basic, post-basic and higher education levels. Over 80% of our public basic schools have facilities that are grossly sub-standard. About 65% of our tertiary institutions are aggrieved with this poor-facilities blight. Having found through our research that facilities account for about 18% of the variance in quality scores, paying attention to this variable should be of great interest to the Buhari administration. Lastly is curriculum delivery, that is the quality of delivery of the curriculum by way of teaching methods, opportunity for practical work and engagement of students. This also embeds values re-orientation and the teaching of 21st century skills.
Some more details of investment in the transformation of teacher education are worthy of stress; especially the production of graduate teachers. There is a yawning gap between the expected profile of graduate teachers from the Nigerian university system and the kind of graduates that our universities spew out from year to year. We cannot hope for a top quality education system if we staff our schools with such second-rate teachers. We need a profession full of inspiring, innovative, creative and knowledgeable teachers. We recall those teachers who demonstrated these attributes and were part of shaping their lives to be giants in academia today. How can we reformat our teacher education programmes in a way that will close the gap between the expected and the observed? Keeping in mind that the quality of teachers is largely dependent on the quality of training (preservice and inservice), we shall now discuss reforms in teacher education in a way that quality can be rapidly bolstered. The following strategic reform investment options are proposed:
Reduction in the load of Education courses: Education courses for those wishing to be subject teachers should be maximum 15% of the total course load. For instance if the total number of units (TNU) for a 4-year degree programme is 120, all Education courses from 100 to 400 level should not exceed a total of 18 units. Interview data from the 2004-2006 national survey showed preference for the spread of the 18 units as shown below.
- Foundation courses (Psychology, History, Curriculum, Philosophy) = 4
- Methodology courses = 8
- Teaching practice = 4
- Project = 2
- Total = 18
Increase in the TNU for Graduation for Education Students: There is a worry among staff in the Faculty of Education and hence members of ASUU regarding reducing the number of Education courses as this may cause job loss. While this on the long run will not necessarily be the case but on the short and long run be advantageous for the country and since ASUU will not want its members to be discomforted in any way, another option will be to request NUC to raise the Total Number of Units for Graduation (TNU) in the Education BMAS to 140 for a 4-year degree programme. This will give Education students ample room to register and take courses in their teaching subjects enough to prepare them as better-quality teachers. Courses that relate to senior school certificate topics that students find difficult to learn (see earlier listing for biology, chemistry and physics) should be made compulsory for the teacher trainees. The alternative which we proposed while I was at NUC is to make Education a 5-year programme for the first degree. The first four years are spent largely in the cognate faculties while the fifth year is where we layer the training with Education courses. Upon graduation, teachers of the 5-year course will be placed a grade level above the 4-year degree holders and in addition receive other incentives. The incentives offered teachers in Finland have made teaching one of the most attractive and as a collateral, made the Finnish Education system one of the best in the world.
More time for teaching practice: A minimum of 12 weeks of full contact teaching practice should be implemented for effective preparation of graduate teachers. One-year teaching practice is ideal. In most colleges of education and universities, in spite of the provision for a 12-week Teaching Practice, actual practice lasts barely three weeks. Supervision is also poor leading to shallow field experience for the teacher trainees.
Avoid early specialisation: Specialisations at the undergraduate level such as Educational Management/Educational Administration and Planning and Guidance and Counselling should be discontinued in favour of specialisation at the Postgraduate Diploma level.
Limiting the number of Sandwich/Part-time Students: It has been found that over 60% of the poor quality teachers in the secondary school system are trained through Sandwich/Part-time programmes. In order to improve quality, the number of such candidates admitted into Faculties of Education should be drastically reduced.
Periodic training in modern methods of teaching: Staff of the Faculty of Education in universities and colleges of education, should be exemplary teachers, yet many are regarded as the worst teachers on campus. They are thus, poor role models for the teacher trainees. All teachers in the Faculty/College of Education should undergo periodic training on modern methods of teaching.
Teacher Quantity: There is an urgent need to double the current rate of teacher production at the basic and higher education levels. This is obviously a tall order given the aversion of candidates for certificates, diplomas and degrees in education. However, through a battery of incentives, enrolment into teacher training institutions at all levels can be bolstered. These incentives include (a) reducing by half the current tuition for training in education in colleges of education, polytechnics and universities; (b) automatic bursary awards for all education students; and (c) enhanced post-graduation salary package for teachers.
Teacher licensing and revalidation of licence: A licensure system should be established for teachers by the Teachers Registration Council of Nigeria (TRCN). The teacher licence should have a maximum life of life years. Renewal should be based on successful completion of a re-certification examination or evidence of in-service training within the 5-year period.
Investment in the Power Sector
Since 1999, a key campaign promise of all political parties is improvement in the power sector. The promise is based on the importance of the sector to boosting the economy. In addition to its macroeconomic importance, the sector has major roles to play in improving productivity and enhancing the general quality of lives of the people. The sector is linked to other sectors, contributes to a stable growth of the economy and the realisation of social objectives.
The investment in the power sector since the Obasanjo administration to date is huge. Unbundling and privatisation of the sector has been the track on which all administrations have walked but which has not translated into the satisfaction of the citizenry with power service. With only a token 5,500 megawatts generated at peak for a few days within the last one year, the need for greater investment becomes urgent.
The investment in the power sector will demand implementation of the power sector reform with greater vigour and creative diversification of the generation and distribution system. The Lagos State example of investment stripped of the muzzling by federal laws should be scaled up nationally.
Investment in Agriculture
In an economy that is bruised, investing some slice of available funds in agriculture has huge potential for accelerating socio-economic development. There are three strands to this outlook. Expansion of the scope of the agriculture sector means more jobs. Job opportunities open up in the food production chain through engagement of more farmers especially in rural areas and particularly women. A two percent increase in investment in agricultural production has been estimated by the FAO to boost employment by a factor of six (FAO, 2013). This implies that if Nigeria desires a hike in employment in spite of a downturned economy, a juicy sector to turn is agriculture.
The second strand of the potential of agriculture is its revenue capabilities. It has been overly quoted that before oil, agriculture was the mainstay of the economy. Beyond this often trite statement is the wisdom that this potential still exists and indeed has found favour in the economies of many Asian and European countries in recent times whose economies surpass that of Nigeria in spite of our oil and of which our food import is dependent. This is exemplified by the Delta without Oil programme mentioned earlier. Increased revenue from increased investment and dutiful attention to agriculture especially from export can be extrapolated from the performance of the sector in the last five years. The Federal Ministry of Agriculture and Rural Development translated marginal increase in the budget to agriculture to huge gains in lowering food import, increase revenues on export and lowered prices of food items. With political will, true transformation can be achieved as Dr. Akinwumi Adesina, the Minister of Agriculture has proved beyond doubt. Some data backing this assertion include the 8% rise in the contribution of agriculture to the revenue profile of the country between 2011 and 2012 and a further 5% rise over 2012 figures in 2013. By 2014, agriculture contributed about 31% to national GDP.
We can draw parallels from the performance of agriculture in other countries in boosting GDP. Let us take two OPEC members like Nigeria. Saudi Arabia, the world’s leading exporter of crude oil with about the largest oil reserve in the world, ascribed 12% increase in its GDP in 2014 to increased activity in the agriculture sector. In Venezuela, the 2014 revenue from agriculture accounted for 22% of GDP and as the President, Nicolás Maduro noted in his speech on March 2, 2015, this was made possible, at least in part by the 2% increase in the allocation to the sector which triggered a multiplier impact on the economy. In the case of countries less endowed as Nigeria in oil resources, the impact is even more dramatic. Between 2010 and 2014 both the Netherlands and Finland enjoyed an average GDP growth rate of 4%, more than half of which was due to agricultural exports, in turn made possible by increased investment.
The third strand of potential is food and nutrition security. Every step towards self-sufficiency in food production moves the citizenry closer to food and nutrition security. In turn, this impacts on the health status of the people and the collateral benefits of healthy workforce for increased productivity, healthy students who are able to go to school and learn optimally and reduced spending on disease burdens. The links of food and nutrition security to lowering infant and maternal mortality rates and elevating life expectancy have also been established (Briggs, 2010). The goal, therefore is to take a straight aim at progressively increasing investment in agriculture even within limited national revenue since the dividends of such investments are huge. In what directions should the investment turn? This is the next question that we should address.
If more funds were made available to agriculture from the limited revenue of government, areas that could benefit with possibilities of quick returns are expansion through mechanisation and promotion of agri-business. Government should actively and sustainably encourage through policies and incentives, medium and large-scale farmers and avoid stifling the activities of small-scale holders to ensure that these farmers continue to produce food that will satisfy our needs and foster human security. Governmental support should also be given to agro-allied industries in the quest for food security. Subsidies for agricultural inputs should be increased especially to private sector farmers in order to step up food production and enhance food security in the country. Also, steps should be taken to enhance mechanised farming. Policies encouraging participation of women in food production and access to agricultural resources should be promoted more effectively.
Other areas are promotion of efficient marketing and value addition to agricultural production (i.e. processing); cautious importation of food needs; promotion of genuine and viable farmers’ cooperatives; promotion of mechanisation and use of irrigation facilities; promotion of participatory (farmer-led) approaches to research and extension; massive investment in agricultural research; infusion of entrepreneurial skills and orientation into the curriculum of agricultural graduates; cautious adaptation to foreign modelled prescriptions juxtaposed with local realities; and a combination of visionary politics and long term strategic planning evidenced by consistent policy formulation and implementation.
Investment in Solid Minerals Development
Before oil showed up in the economic horizon of Nigeria about 35 years ago, solid minerals and agriculture were among the flagship sectors of the economy. Until the 1960s, coal and tin were mined and exported on a large scale and the sector contributed significantly to the nation’s GDP, averaging 12% between 1965 and 1975. A combination of unfavourable government policy, changing country circumstances and poor management of state owned enterprises led to a sharp decline in the sector and a situation in which little new investment in mineral exploration and development, neither foreign nor domestic, could be attracted. The scale of this decline is clearly illustrated in the drastic reduction in sectoral contribution to GDP from 5.62% in 1980 to 0.16% in 2007.
There have been scanty medium or large scale mining operations in Nigeria. Most active mining in the country is carried out by small entrepreneurs and artisans, working deposits of precious, semi-precious, construction and industrial minerals that are not licensed, or operating outside of the parameters of the licenses. Consequently, the mining sector remains in a state of stagnation and although appreciable progress has been made in recent years with regard to legal and regulatory reforms, several limitations to growth through sustainable exploitation of mineral resources still exist.
Over the past 30 years and until recently, investment in the solid minerals sub-sector has suffered stagnation, and even decline. The National Bureau of Statistics lists solid minerals as contributing less than 1% of GDP, despite significant coal and iron ore reserves, and known deposits of gold, uranium, tin and tantalum. But the vast potential of Nigeria’s mineral wealth has not always been so ignored. Before the oil boom of the 1970s the economy was largely sustained by the exploitation of solid minerals. Coal and tin were among the natural resources mined on a massive scale, with the former being used to generate electricity, power the railway network and meet the demands of regional and international markets. Lead and zinc were a significant source of export revenue, and Nigeria was the world’s largest exporter of columbite. Happily, there has been a renewed interest since the Obasanjo regime in hiking investment in exploiting Nigeria’s mineral resources on the basis that over-dependence on oil leaves the economy vulnerable to international oil politics and fluctuations in oil prices as experienced within the last one year.
Government created a Ministry of Solid Minerals and embarked on reform programmes. The Ministry has produced a road map for the development of the minerals and metal sector, a clear indication that government is committed to a vibrant, productive and thriving mining industry. The ministry has produced action plan for mineral commodity in each local government of the federation and had implemented the first phase of the project in each zone. Government has facilitated active operations in 34 small and major scale mining operations, exploiting targeted strategic mineral resources in the country. The ministry secured the support of about two million dollars from donor partners, to key institutions to developed educational curriculum and meet the challenges of the industry. The mining sector has recorded great success including increase in the production of cement, chemicals, prints as well as increase in job creation all contributing to GDP.
In the metals sub-sector, the National Metals Policy is predicated on the need to develop a vibrant metals sub-sector where government will primarily play the role of administrator-regulator with the private sector as owner-operator. The new policy aims to achieve the following:
- Create a conducive business climate in which the federal government will act as a motivator/moderator by providing the enabling environment that will stimulate private sector investment;
- Ensure that the private sector-led metals industries operate optimally, producing competitive high quality products for both local and international markets;
- Have a robust and functional integrated steel industry that will guarantee the creation of employment, poverty reduction and wealth creation; and
- Ensure that private sector-led metals industries function effectively thereby achieving increased industrial capacity utilisation and generating revenue for the country.
Conclusion
In this lecture, we reviewed the state of the Nigerian economy and suggested how the declining fortune can be put to advantage in investing in areas that will spur growth and socio-economic development.
We can liken the Nigerian scenario of seeming lack of full preparedness for the harsh effects of low oil prices to the case of an unprepared pensioner who received his last pay cheque a few months ago and now swinging ruefully in a world of diminishing monthly income from his retirement benefits. When in service, analogous to when Nigeria was literally awash with money as oil prices hit the roof a few years ago, the pensioner enjoyed his life to the full. Except for the statutory 7.5% contribution induced by the Pensions Act, the pensioner squandered his monthly income and lived as if there will never be a tomorrow. When he had a huge salary raise analogous to when oil prices spiked favourably for Nigeria, he expanded his framework of expenditure rather than stashing the excess for a rainy day. For Nigeria, the Honourable Minister of Finance wisely pushed for the establishment of an excess crude account whose policy framework originated from the Obasanjo regime where she also served as Finance Minister. Politicians ran over her to draw from the account, resulting in a paltry balance.
The pensioner has school fees of children to pay yet income mismatches quantum of funds needed. He has his car to maintain, house rent to pay and needs money to attend to other family needs which, sadly, income from his pension and gratuity cannot service. The analogue in the case of Nigeria is that allocation to states from the federation account has dwindled that about twelve states, and growing, are unable to pay salaries. Federal and state governments are having difficulty with funding education, health, infrastructure and other critical sectors.
Let us take the case of the wise pensioner to give us the analogue to what Nigeria should have done better. Ten years before retirement, he started a small farm rearing poultry and cultivating yam and cassava. His income from his employer was prudentially managed- no frivolous spending, no owambe parties, no flamboyant car and was able to purchase a modest 2-bedroom apartment. He kept his needs few. Income from his farm was ploughed back as further investment and the farm grew. At retirement, his total income from non-salary sources tripled his salary. He invested in some property and set up an events centre with tent/chair rental. Retirement was pleasant for him as he now had more time to devote to his growing private business. Before drawing a parallel with what Nigeria should have done, let us take the case of the foolish and wise virgins.
The parable of the twelve virgins was told by Jesus in Matthew 6, 1-12. The virgins were expecting the coming of the groom and were excited and in a heightened state of preparedness. After a while, six of the virgins fell asleep and burnt out the oil in their lamps. The other six were wise as they kept their lamps properly oiled, trimmed and bright. On arrival of the groom, the foolish virgins requested a loan of oil from their wise colleagues, just as the federal government and the states, being not prepared are scampering for loans to fuel their economic lamps. The parable ends with the happiness of the groom with the wise virgins just as Nigerians would have been happy with government if we saved enough for the rainy day, cut the huge profligate spending by a few corrupt officials who have been squandering our collective wealth.
The moral of the two analogies is that Nigeria should not have behaved like the prodigal son (another parable with parallel for the Nigerian case). We should have been more creative and innovative in our financial planning and implementation, diversified the economy beyond paper prescriptions and parade a better investment profile like the wise pensioner. Like the wise virgins, we should not have frittered our oil revenue carelessly resulting in a near-empty lamp (severely-depleted treasury at the federal and state level). Now we are at this crossroad, what are some options we can apply at the practical level to ensure some vibrancy in the economy? This was the central question addressed in this study.
Mr. Chairman, Vice-Chancellor, Distinguished Ladies and Gentlemen, I now have three last lines. The first is, if I had the ear of General Muhammadu Buhari today, I will tell him the following seven things:
- Appreciate the efforts of the Jonathan administration for some of the progress made in key sectors of the economy which built on the gains of the Obasanjo administration. Surely, there are still huge gaps but humans and not God and cannot be perfect.
- Plan for a $45 per barrel oil price for the next two years cutting down on corruption by 80%, reducing cost of running government by 45%, diversify the economy by a factor of 2.5. The resultant will be the same as if we were earning $124 per barrel from oil.
- Within the limited resources available to government, catalyse socio-economic development by increased investment in four priority areas- education, power, agriculture and solid minerals.
- Doubling leakage-free investment in education in the next four years at the federal, state and local government levels will translate to 30% improvement on all socio-economic indicators in the next 10 years.
- Within the education sector, the distribution of investment should adopt a systems approach where all variables in the input, process and output clusters in education are served. Within the systems model, at least 20% of the investment in education should address teacher quality and quantity and 35% on facilities and learner-friendly environment.
- More creative investment in the power sector is needed beyond the present reforms which have been tardy in yielding positive returns.
- The seventh thing is to wish him every success in the onerous task of putting Nigeria back on the part of socio-economic righteousness.
Now to the second of my three last lines. If I had the ear of Senate of the University of Lagos, I will tell the chairman and members of Senate five things:
- Request the Faculty of Business Administration, Faculty of Social Sciences and Faculty of Science (Computer Science programme) working under the chairmanship of the Deputy Vice-Chancellor, Academics and Research to develop economic scenarios for the federal government and the 36 states and the FCT using modern modelling techniques/software that will permit rapid response to changes in the economic environment. If capacity is weak to deliver this project, the university should support a two-week training of a critical mass of scholars in a global centre of excellence in economic scenario-building and modelling.
- Request the Faculty of Education to initiate a teacher improvement programme that will remedy the deficiencies in teacher quality and especially content knowledge of teachers. This novel programme should be showcased as a model for national adoption.
- In these season of sharing recommendations with the in-coming administration, Senate and Council should request the Faculty of Engineering and the Faculty of Science to show the relevance of UNILAG through the presentation of viable and sustainable models of tackling the power challenge of the nation. The Geology Department should provide creative and practical ways of developing the solid minerals sector in a way that the economy can be bolstered beyond current range.
Lastly, if I had the ears of the graduating students, I will wish them well as they journey through life and pray for God’s bountiful blessings and protection.
Thanks to all the staff, teaching and non-teaching, who have made it possible for the realisation of the dream of these students to obtain the coveted certificate of University of Lagos.
Once again, I appreciate the honour of the invitation to give this lecture and may God continue to bless your efforts.
Being a convocation lecture delivered at the University of Lagos on April 27, 2015.