It is a well-known fact that Nigeria has the largest economy in Africa in terms of Gross Domestic Product (GDP) after we recently overtook South Africa. This should not be much of a surprise to anybody because we have the largest population in Africa, which is almost three times that of South Africa.
Consequently, our aggregate volume of production should normally correspond to our population. However, there is no direct relationship between GDP and the standard of living of the citizens of a country neither is there any correlation between it and the average wealth of individuals. To drive home my point, I will compare the economic indicators of Nigeria to that of S.A. , the country next to Nigeria in terms of GDP.
1. PER CAPITAL INCOME: Nigeria’s per capital income is $ 2,300 while that of S.A. is $6,800. That is, an average South African is three (3) times richer than an average Nigerian.
2. POWER GENERATION: Nigeria generates 4,000 MW of electricity into the distribution grid while South Africa generates 45,000 MW, ie 10 times more. In fact, South African is constructing a nuclear power station that will generate 9,000 MW, more than twice the entire power Nigeria generates into her grid.
3 ACCESS TO ELECTRIC POWER GRID: Only 40% of Nigerians have access to electricity grid while 96% of South Africans have access to their grid.
4. DEFENSE: South Africa can manufacture basic armaments to defend itself, while Nigeria cannot manufacture ordinary AK47 rifle.
5 UNIVERSITY GRADING: Some S. A. universities are among the best 1000 universities in the world, however not a single Nigerian university qualifies for inclusion the list.
6 South Africa has an efficient emergency response service similar to the American 911 system,. Nigeria does not have a functional emergency response system.
7. Industrial Production Technology: S. Africa can produce over 60% of car components for its car assembly plants but Nigeria can only produce 5% of required components and that is even limited to low tech components. S. Africa produces railway locomotive engines with over 50% local content but Nigeria cannot produce ordinary bicycle locally. There are many more examples, but I will stop here for now.
The above are just examples of essential needs which are required to keep our economies in motion and to sustain our present standard of living. From the above it can be clearly seen that Nigeria’s industrial base is very weak. In terms of real economy, sustainable development and economic independence, South Africa is 20 years ahead of Nigeria. At our present pace of development, it will take us another 20 years to get to where S. Africa is today. Let’s take a scenario to illustrate this statement. If for any reasons there is total trade embargo on Nigeria and S. Africa in the transport sector and no vehicle spare parts are allowed to be imported into the two countries, including ‘tokunbo ‘ parts for dealers in Apo village, Abuja or Idumota in Lagos.
Within six months, 70% of Nigerian cars will be grounded, but S. Africa will still be able to sustain their own cars for the next 3 to 4 years. The fact is that we don’t have the technical skills, the industrial capacity and the commercial acumen to produce the essential materials and gadgets that we need to keep our economy afloat and sustain our standard of life. We are suffering from economic ‘AIDS’ ie Acquired Import Dependency Syndrome. We have strong appetite and insatiable craving for exotic imported goods which we cannot produce locally or which we have refused to produce locally. Infact the present acute shortage of foreign exchange we have in the country is a blessing in disguise, I hope it will force us to begin to look inwards.
WAY OUT: The way out of the economic trap is to engage in massive applied research activities that will help us acquire the technology we need to enable us manufacture the basic products we need to sustain a reasonably comfortable life and a standard of living comparable to other developing countries at the same level with us. Assembling of components imported from Europe or China is not sustainable on the long run unless we acquire the necessary technology to implement backward integration and begin to make component parts locally.
It is virtually impossible to acquire technology without massive and targeted applied research activities. Research spending in developed and developing economies is about 3 to 5 per cent of GDP. Nigeria’s research spending which is presently less than 0.5% of GDP must be ramped up to 2 to 3 % in the next 5 years if we are to make significant progress towards real economic independence.
Nigeria presently has a lot of research institutions in areas of agriculture and health. Where we are lagging very much behind in is the areas of machines and equipment that can be used to produce consumer items. Examples include machines like rotary kiln for producing cement, calendaring machines used in paper mills, heat exchangers and high pressure vessels used in chemical factories, spot welding machines, electroplating baths, stamping machines used in mass production of metallic parts, high temperature (3000ËšC) furnaces used in casting car engine crank shafts, 2000 tons hydraulic press used in producing car chassis from flat steel sheets, injection moulding machines used in plastic production e.tc To enable us produce capital goods needed in the production line of our secondary industries we should channel these extra research funds to the suggested underlisted research institutions or bodies.
This should be actualised through setting up a special private public partnership vehicle under the Presidency, in order to avoid their being bugged down by the usual public service bureaucracy and unnecessary political interference. The present PMB government should set the necessary machinery in motion to actualise Nigeria’s economic independence hence the following research activities should be initiated in the next 2 to 3 years as a matter of urgency.
1. Machine tools and tooling development center ( including CNC, rapid prototyping)
2. Metallurgical research laboratory
3 Institute of foundry and forage technology
4. Ferrous alloys research and development group
5. Plastic & petrochemical process technology center
6. Microelectronics research center
7. Passive electronics components research group
8 Applied microwave and radar institute
9 Institute of sensor and transducer technology
10 Mechatronics and robotics research laboratory
11 Control and automation development group
12. National Supercomputing center
13 National center for software technology
14. Institute of Artificial intelligence
15 Institute of System studies and analysis
16. Institute of cloud computing and internet of things
17. National Center for Smart Technologies
18 Defense related research laboratory 1
19 Defense related research Institute 1
20. Defens related development group
21 National center for power system analysis
22 Institute of renewable energy
23 Grid-scale electric power storage research group
24. Biomedical Instrumentation Laboratory
25. Center for genetic engineering and molecular biology
26 National Malaria Institute
27. Advanced numerical research and analysis group
28 Institute of Applied Mathematics
IMPLEMENTATION: It has been said and it is true that Nigerians are very innovative in bringing up good public policy initiatives and ideas, but the problem always is implementation. The reasons for this recurrent problem of poor implementation include the following: Lack of continuity emanating from frequent changes in government which makes politicians to abandon projects started by their predecessors and starting their own, weak institutional framework for implementation, poor funding , unreliable or unsustainable funding sources, lack of private sector inputs and finally, corruption. This type of targeted research initiative being proposed here had been stated by two previous governments, but both failed. In 1977, Obasanjo’s military government initiated such research projects under a special fund.
Over 30 different research grants were given to various universities and individual professors and industry experts but due to lack of sustainability and follow up by Shagari’s government nothing was achieved. Instead of sustaining what Obasanjo started, Shagari created a Ministry of Science and Technology; as usual, due to government’s bureaucratic red tape, the initiative died a natural death. Shagari should have retained those special research projects under a special fund while the newly created ministry provides oversight functions. Again Babangida’s government launched a National Science Fund in 1987, but the momentum was not sustained and it also failed. I happen to be working as a chief technologist at the University of Ilorin at that time.
The department of Electrical Engineering, under Prof. I. E. Owolabi (the HOD) at that time assembled a team of experts to develop a practical Stored Programme controlled digital telephone exchange (PABX) for NITEL. We applied to this fund for a 300,000 Naira grant, however to our surprise, nobody even acknowledge our application, not to talk of giving us the money we needed. Whereas in 1977, the government of India, through the Center for the Development of Telematics (C-DoT) assembled a group of engineers under the leadership of Engr. Pitroda, a US-Based telecom engineer. Within two years they were able to develop a made-in-India telephone switch which was adapted to local conditions, it did not require air conditioning. Today, India does not need to import telephone exchanges for its rural areas. This is the type of initiative we need in Nigeria.
To succeed this time around we must avoid the mistakes of the previous governments. Measures must be put in place to ensure sustainability, accountability and professionalism. The following implementation strategies are suggested.
1. EMPHASIS ON APPLIED RESEARCH: The research activities should be focused on specific product or process technologies that will be of immediate commercial benefit, in order to be able to attract private sector participation. Such technologies will help generate new industries and also create immediate jobs. The research centers or groups should be given a time frame during which quantifiable results will be achieved. The deliverables should include the development of necessary manufacturing know-how and the mass production techniques that will ensure competitive product pricing. The private sector partners must be given opportunity to suggest research projects that they believe will be of commercial benefit and that will have positive impact on Nigeria’s economy.
2. INSTITUTIONAL FRAMEWORK:
(a) An independent public-private-partnership vehicle should be established to supervise and co-ordinate the research activities. By this arrangement, changes in government will not result in the type of discontinuity that stalled such initiatives that were started by past governments.
(b) The research activities should be funded by a combination of public and private sector funds in the ratio 30% and 70% or 40% to 60% respectively or whatever ratio is mutually agreed.
(b) The private sector sponsors should be given 10-year patent rights on the technology or product developed so as to compensate them and encourage their participation.
(c) As a matter of policy, all private and public sector manufacturing industries in Nigeria employing 50 or more workers or with a turnover of 100 million Naira and above should be obliged to set up an in-house research & development center. They should be encouraged to allocate at least 2 to 3 percent of turnover on research. Money spent on research activities will be tax deductible subject to certain conditions. Patents to be granted to protect inventions and developed technologies.
(d) Each research project group under the PPP will be governed by a 5-member board consisting of technocrats and experts (not politicians ) since it is a PPP. This should consist of 3 private sector representatives and two government nominees. The remuneration of the board members should be pegged at a fixed amount per sitting and not more than 3 sittings per annum.
3. FUNDING MECHANISM:
(a) There will be no need to establish new independent research organization for each of the above research activities. This is in order to eliminate capital and recurrent costs. Many of them can be attached to Universities, the scope or mandate of existing research centers can be expanded to accommodate the new research activities. Some can be sponsored by self-financing parastatals such as the Central Bank, TETFUND, NNPC, PTDF, NCC, CAC, NIMASA etc. Also, blue-chip private companies can be asked to sponsor some of the centers; these include companies such as Glo, Dangote Industries, Shell, Mobil, PZ, Nestle, Zenith bank, GTB etc.
For Example, the National Center for Software Technology can be attached to NITDA, which is a parastatal under the Ministry of Communications. Also the defense-related research centers can be attached to NDIC or Navy School / research center, Oron both under Ministry of Defense.
(b) The Private-Public-Partnership arrangement earlier suggested will help source and channel private funds to research. If Nigerians can sponsor football leagues, NGO’s, foundations and other social activities, government should be able to convince them to sponsor industrial research. Statistics from United States shows the distribution of sources of research funding in the country.
Total research expenditure in USA was $123 Billion per annum as at 1987. The sources are as follows:
The above research fund was utilized as follows:
Federal government 12%
(c) As a policy, Federal Government should aim at a progressive increase in total research spending from 1% of GDP in 2018 to 2% in 2020 and so on until we achieve about 4% by 2025.
(d) Development Partners such as UNIDO, CIDA, USAID and international foundations have huge sums budgeted for research grants. Nigeria should position itself to enable it qualify for and benefit from these funds.
The present near collapse of the oil market and acute shortage of foreign exchange should be viewed from a positive angle and regarded as a divine intervention to open our eyes to the fact that our economy is built on a sandy ground. Since the seventies, oil money has gradually eroded our culture of hard work and brought us into a world of fantasy making us believe that our problem is not money but how to spend it.
From Udoji ward, Umaru Diko’s presidential rice, Governor’s 6 Billion Naira security vote, Babangida’s generous pension conditions, UPN’s free everything program all gave us the false impression that our wealth is inexhaustible and all we have to do is to relax, eat, drink and enjoy like the biblical rich man in Luke chapter 12 verse 16. This type of sudden drop in oil prices had happened at least twice in the past, during Obasanjo’s military government in 1978 and Shagari’s reign in 1982, but we never learnt anything from the events.
I hope Nigeria will seize the opportunity to restructure her economy this time around. Egypt, Kenya, Botswana who don’t have a drop of oil hardly experience what we are now going through. This shows that our oil wealth has negatively affecting our orientation, our value system, our appetite and our attitude to corruption. Our present economic structure is not sustainable on the long run, we must make sweeping changes. There is need for massive technology acquisition, aggressive industrialization, substantial increase in productive capacity and drastic adjustment of our consumption pattern and mellowing down of our ostentatious life styles.
Developing and strengthening Nigeria’s industrial base cannot be left to chance or private effort or even foreign investment. There has to be a deliberate, sustained and co-ordinated action by government to arouse stakeholders interests, overcome inertia, generate traction and maintain developmental momentum that will bring us to the promise land of economic independence.
Bello, a former Ag. Executive Vice Chairman, NCC and Principal Partner, Kayafas Konsult Ltd, wrote from Abuja.