Nigeria’s hasty hitty-missy industrial policies

oil-industryREADING about the remarkable late Singaporean leader, Lee Kuan Yew puts me in mind of a handful of similarly great and selflessly committed political leaders within our own shores. Some of these have since gone to Abraham’s bosom, while others are yet among the living. Few of these great Nigerians have become household names. But it is worth stating that it is as much poignantly painful as it is mind-boggling to reflect that political leaders as gifted as the late founding father of modern Singapore had actually dwelled, and still dwell among us, yet the Nigerian economy remains comatose. Is it the case that Nigerians have made a religion of the saying that “a prophet is never without honour except in his country?”

Reading about the life and times of Lee Kuan Yew also reminds me of another historical great, centuries removed from the twenty-first: the inimitable nineteenth century Emperor Meiji of Japan. The powerful socio-economic revolution, which he inspired in his reign, eventually led to the emergence in the twentieth century of the Asian Tigers phenomenon. H. G. Wells, the immortal historian, had succinctly summarized Emperor Meiji’s leadership in these words: “under the spur of Emperor Meiji, Japan rose from a fantastic caricature of the extremist romantic feudalism in 1868 to the same level with the most advanced European powers in 1899.” Emperor Meiji’s inspirational leadership gave birth to many Lee Kuan Yews, who today drive the Asian Tigers’ economies.

Like other visionary leaders who succeeded in radically transforming the economic fortunes of their countries, both Emperor Meiji and Lee Kuan Yew intuitively recognized that human capital is the most vital component in industrialism. Technology is driven by humans, and not the other way round; irrespective of its perceived sophistication, a technology is only as good as its human minders. A rather common-sense dictum, which seems utterly lost on megalomaniac African leaders. Because of the aforesaid recognition, through-going development of human capital from the grassroots has been the thrust of emerging economies from the East. This is the reason their journey towards industrialism always commenced from the elementary stages; they would acquire large quantities of European second and third generation manufactures; strip them to single parts; exhaustively study their material composition and design; finally, they would attempt to produce the Asian versions of selfsame manufactures.

It would be recalled that the Japanese versions of these “cloned” industrial products were the first to emerge at the international market. And it would also be recalled how the world reacted by deriding “the inferior manufactures from Japan.” But typically, the Japanese legendary unwavering tenacity eventually had the better of the derision. Today, Japan is a world technological leader. What the Japanese and Asian Tigers’ experiences teach is simply this: whilst it is not necessary to learn to reinvent the wheel, it is crucial to master all stages of manufacturing the wheel. Crucial because the very act of mastering those stages would at once de-mystify, and thus remove the tedium of transforming a given quantity of raw materials to fascinating technological components. When a country attains this mastery, its labour-force adapts readily to industrialism: work becomes a pleasure. But when a country falls short of this mastery, its labour- force feels inhibited by the mystery and tedium of industrialism: work becomes a pain. What makes the difference is the particular stage at which a country chooses to enter the industrial trajectory.

Nigeria’s poor state of industrialisation typifies a nation that had chosen the wrong entry-stage on that trajectory. By way of demonstrating this point, let us briefly examine the choices Nigeria had made towards developing her petroleum oil refining capacity. Nigeria’s premier refinery, a British Petroleum (BP) owned 38,000 barrels per day (bpd) refinery was commissioned in Port Harcourt in 1965. Soon after, this basic refinery’s capacity was expanded to 58,000bpd. Two years following, Nigeria had to prosecute a civil war, which disrupted the smooth development of the country’s petroleum refining manpower. The war ended in 1970 with significant changes in both the political and administrative structure of the country. Nigeria had metamorphosed from a four-regional democratic country to a 12-state military-administered nation. Under the new spirit of passionate nationalism, effective control of the premier refinery rapidly slipped from the hands of the British investors.

Meanwhile, the new military leaders, evidently without appropriate guidance, embarked on building a 100,000bpd state-of-the-art petroleum oil refinery in Warri. That refinery was commissioned in 1978 with an enhanced capacity, (125,000bpd). Before Warri refinery was commissioned, Nigeria had taken a decision to build a similar refinery in Kaduna. Kaduna refinery was commissioned in 1980 with a 110,000bpd capacity. Hot on the heels of Kaduna refinery was the decision to build yet another refinery in Port Harcourt; the largest (150,000bpd) and the most complex. Nigeria’s largest refinery was commissioned in 1986. (I should like to observe in passing that had the dispute between Nigeria and BP over the premier refinery been promptly and amicably settled, mega refineries might not have sprouted in Nigeria as early as they did).

As it turned out the khaki boys had their way and mega refineries are upon us; and lacking both the local manpower and industrial base to efficiently operate mega refineries, Nigeria had to invariably outsource these offshore, putting needless pressure on the local currency. In words of a syllable, Nigeria illogically attempted to start climbing the industrial trajectory from the top! Little wonder she has thus far made such a pig’s ear of the endeavour. What one finds most perplexing in all this was the fact that the leadership of the country at this time (1976 to 1986), being fully seized of the huge foreign exchange requirements of operating these three mega refineries, still proceeded to devalue the naira in 1986. Nigerian National Petroleum Corporation (NNPC), since the infamous devaluation, has repeatedly cited insufficiency of foreign exchange as a major reason for the refineries recurrent low capacity utilization. Hard to believe, the ministers of finance and petroleum resources attend the same Federal Executive Council weekly meetings. I dare say these incredible contradicting policies are replicated in the other sectors of Nigeria’s much traumatised economy, inclusive of the iron and steel sector; all of which results in a steeply devalued national currency.

Part of the naira’s prostrate state-of-being is because of Nigeria’s penchant to industrialise at a breathtaking pace, the latest of which is the present obsession for Nigeria to be listed among the 20 most industrialised nations, five short years hence, 2020. Because of these palpable national delusions of grandeur, the political leadership always insists on outsize state-of-the-art technologies in project implementation. Empirical experience, however, has sufficiently demonstrated that such a policy-thrust, more often than not, yields far less-than-optimum dividends; all that glitters isn’t gold. The premium prices on state-of-the-art technologies do not translate into premium performance differentials, juxtaposed with second and third generation technologies. The premium prices are inevitable to defray research and development investments and royalties on novel technologies, while the aggregate performance enhancements are usually marginal.

Second and third generation technologies are not only far cheaper, but they are more compatible with the socio-economics of industrialising countries. This point cannot be over-emphasised; as was demonstrated in my article Koka Commission’s lesson on political administration, published in The Guardian of May 29, 2015.

In summing up I should like to submit that Nigeria’s gravest problem is disjointed industrial architecture. Successive national governments’ attempts at industrialism have been hasty hitty-missy, superficial, barely distilled, and reductionist patchworks. Even the much-vaunted 1989 seven-chapter industrial policy document is mum on the most critical element in industrialism: the specific regime of technologies that could be imported into Nigeria during her embryonic phase of industrialisation. As a result, all manner of technologies, from the most ancient to space age technologies, are dumped on Nigeria.

Poor naira! but the situation is not utterly helpless. The health of the national currency could be restored in one fell swoop, literally. Nigeria should institute a strict regime of industrial and complementary financial policies ideally suited to her socio-economic realities, and place a strictly enforced import-ban on all manufactures with known in-country capacity. That is the most effective way to shore up Nigeria’s economy against the threatening tide of unemployment and inflation. Emperor Meiji did it in Japan back in the nineteenth century; Lee Kuan Yew repeated it in Singapore in the twentieth century; Nigeria should do it in the twenty-first century.

• Afam Nkemdiche is a Consulting Engineer based in Abuja.

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