Nigerian economy stagnating since 1986; mass unemployment cardinal evidence: Way forward (2) | Independent Newspapers Limited
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COLUMNIST, Scientific Analysis

Nigerian economy stagnating since 1986; mass unemployment cardinal evidence: Way forward (2)

Posted: Apr 14, 2015 at 2:38 am   /   by   /   comments (0)

By Francis Ogbimi


While Nigeria has been announcing growth rates higher than 5 per cent for decades, the unemployment, poverty, high crime wave problems have been worsening. Nigerian governments at the federal and state levels like the unusual pupil who claims to have been doing well in school and repeating a class for decades, certainly, have been wasting resources and imposing untold hardship on the ignorant and unsuspecting citizenry. This situation must change to renew the hope for all Nigerians.

To plan, according the Advanced Learner’s Dictionary, is to make preparation for something that is expected to happen. We can also define planning as the act of putting together the thoughts and activities necessary for achieving desired objectives. In planning, a nation ought to adopt a correct planning framework. Also, a nation is expected to adopt an appropriate a planning theory. Proper planning must be devoid of false and inappropriate assumptions. Otherwise, a nation cannot achieve its desired objectives. What has been the development theory guiding Nigeria’s planning? Okigbo (1989), analysed the Nigerian planning process 1900-1992 and noted that the theory that guided the Nigerian First National Plan, 1962-68, was the Harrod (1939)-Domar (1946) Model – the HDM, and the model remains Nigeria’s planning theory. This theory in its simplest form states that the growth in income achievable by a nation over a period is proportional to the rate of savings and the capital invested. In other words, the more the capital invested, the higher would be the growth of income in a society. The HDM assumes that labour (employment) is not needed in the production process or that there is only one input in the production process –  capital (Glahe, 1977). With the HDM as a planning theory, there is only one planning variable – capital. In a society where capital is considered as the most important factor of production, planning is synonymous with efforts aimed at making capital available for spending (Galbraith, 1967). That is all Nigerian social scientists especially economists, accountants, bankers and lawyers have been encouraging Nigeria to do. To federal and state governments in Nigeria, development is all about erecting very expensive power generating plants and distributing systems, building roads and bridges, planting flowers and supplying foreign exchange for the activities of a non-existent and parasitic private sector.

The HDM,  Rostow’s  stage growth theory and some others like them constitute the  set of theories sociologists called the Modernization theories. The evolutionary, neo-evolutionary and modernization theories are mechanistic and ahistorical perception of the human development experience (Hoogvelt, 1976). These theories claim that Western Europe in the sixteenth century achieved the maximum level of development for human societies, believing that Europeans achieved the modern industrialization, uniquely. The theories then classified nations into two categories – simple (primitive) and complex (advanced). African and Latin-American nations were classified as primitive nations while Western nations were classified as advanced nations. The evolutionists and modernists proposed that primitive people and places may be made modern by transferring resources especially technology from the rich West to them. This is the origin of International Technology Transfer (ITT) in its various forms as the main development strategy for African and Latin-American nations. Nigeria has existed over 54 years as a flag-independent nation with Western nations, the World Bank, the IMF and the very few Nigerians in these financial institutions throwing money at every problem. In truth, in terms of planning framework, planning theory and assumptions, Nigeria has not been planning at all. This explains why Nigeria has been stagnating with attendant mass unemployment, prevalent poverty, high crime wave, increasing general hopelessness and high rate of debt accumulation.

Western and Asia nations toiled for 2000-3000 years before transforming their economies from agricultural/artisan status in the modern industrialized. How could Africans including Nigerians agree that technology transfer through Direct Foreign Investments (DFIs) is the quick way to do what Westerners and Asians did in 2000-3000 years?  During the period 1470s-1870s, Europeans, through warfare, trickery, banditry and kidnapping, forcefully shipped over one hundred million Africans to Europe, the Americas and the Atlantic Islands, where they lived and worked as the property of Europeans and Americans (Walter Rodney, 1972). In 1808, Britain made participation in the slave trade illegal for her subjects and shortly afterwards determined that the West African slave trade was stopped (Fage, 1992: 80). In the Berlin Conference of 1884 and 1885, European powers signed an agreement as to how to partition Africa. That was how Africa’s development experience moved from slavery into the colonization phase. The area now occupied by Nigeria was colonized by Britain in the period approximately 1860-1960. Nigeria was declared a nation by Britain in 1914 and granted flag-independence in 1960.  Are African intelligentsia/intellectuals still suffering the trauma of slavery and colonization? They must wake up from their slumber for Africa to survive.

To introduce growth elements into Nigeria’s planning and budgeting processes, Nigeria must adopt appropriate planning framework, planning theory and realistic assumptions.  In terms of planning theory,  Abramovitz (1956), Solow (1957) and Gerschenkron (1966) all demonstrated that mere capital investment does not promote sustainable growth and industrialization.   Abramovitz was disappointed at the lopsided importance which his study attributed to non-capital input in determining production output and advised economists to look away from capital investment in search of the source of sustainable growth and industrialization (Thirlwall, 1972).

Our research in Obafemi Awolowo University  (Ogbimi, 1992; and Ogbimi, 2003), showed that mere capital investment does not promote sustainable economic growth and industrialization. All capital assets depreciate in intrinsic values with time and usage, hence they are Depreciating Assets (DAs). Thus the equation (function) which describes the intrinsic value of a capital asset in terms of time is a decreasing one. A nation emphasizing the erection of structures may be likened to one trying to fill a profusely leaking water tank with water. A nation emphasizing the erection of structures cannot achieve sustainable economic growth; the nation cannot build-up competence rapidly.

Our research also showed that wise nations develop the people through learning – education, training and employment, achieve industrialization and build the relevant infrastructure. Investing heavily on infrastructure in an artisan economy may be likened to pumping water into a profusely leaking water tank. Educating and training citizens on the other hand, create Appreciating Assets (AAs), because the learning people appreciate in intrinsic values and acquire increasing competence for solving problems including production. The intrinsic value of the learning-man or learning-woman may therefore be modeled by any growing function like the compound interest formula. Scaling the equation and determining the critical state of the equation, revealed the variables for planning for industrialization.

The variables that should guide planning for industrialization or  determine  the level of industrialization are: 1) N – the number of people involved in productive work or employment in a nation; 2) M  – the level of education/training of those involved in productive activities in the economy and of the people of the nation; 3) L – the linkages among the knowledge, skills, competences and sectors of  an economy; 4) r – the learning rates or intensity in the economy and especially among the workforce; and 5) n – the experience of the workforce and the learning history of the society. All the variables are related to the learning-man and learning-woman. Moreover, the higher are the values of the variables, the better is the economy.

The difference between African nations on the one hand and European, American and Asian nations on the other hand is that whereas European, American and Asian nations are industrialized, African nations are not industrialized. Industrialized European and Asian nations were also agricultural/craft/artisan nations for about 2000-3000 years. Europe adopted a private sector-led development strategy, learnt very slowly and achieved the modern industrialization in 2000 years.  Productivity increased dramatically at industrialization and they became rich. The United States of America took a much shorter time, 1606- 1900, 300years, to develop the American culture and the American English language to express the culture, and achieved the modern IR. That is because the United States emphasized education and training quite early and the evidence is still there today. Whereas European and Asian nations have universities in hundreds, the United States has universities in thousands. Today, America has over 4000 degree-awarding institutions.

Gen. Ibrahim Babangida (rtd) adopted the Nigerian Structural Adjustment Programme (SAP) in 1986, claiming, that it was a demonstration of boldness to do so. Germany was subjected to the German SAP in 1919 as a punitive measure when it could not pay war reparations to Western Allies at the end of World War I (Glahe, 1977). PDP democracy presidents: Gen. Olusegun Obasanjo (rtd), the late Umaru Yar’ Adua, and Dr. Goodluck  Jonathan, have all been implementing SAP, the market-economy programme without growth elements.  The Nigerian economy has been declining for the twenty-nine years, 1986-2015.It is very dangerous for Nigeria to continue to implement SAP. It is dangerous for a nation to announce mere GDP-growth for 29 years as Nigeria has been doing.

What is the way forward?  The President-Elect, Gen. Buhari, in one of his campaign outings, promised to run a market economy. Nigeria has been implementing market economy programmes since 1986. So Nigeria has tried market economic principles for almost three decades. Gen. Buhari must focus on promoting rapid industrialization through education and training. Education and training promote rapid industrialization, but education without a complementary training system co-exists with mass unemployment, poverty and high crime wave. Training is the missing-link in the Nigerian development endeavour. All graduates of educational institutions in Nigeria, especially science and engineering university graduates should undergo a 4-5 years training to input theory into our theory-starved indigenous service/production activities and study the functioning and production of all the imported products Nigeria consumes, in artisan workshops. The illiterate artisan repairs and services the cars, refrigerators and other machines Nigeria imports. The science and engineering graduates who complete a 4-5-year curriculum-based skill-acquisition training in known high-linkage scientific activities will build machines and promote rapid industrialization in Nigeria.


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