As detailed and elegant as the plan is, as published, it has a deep
flaw, in that it does not place sufficient emphasis on an evaluation of
the knowledge and skills base of the Nigerian workforce, the capacity of
the educational system to deliver the plan, and objectives and targets
for knowledge, skills and capability development. Specifically,
stabilising the macro environment requires lowering inflation and
interest rates to single digits, cutting the unemployment rate
significantly and becoming a net exporter of a range of diversified
goods and services. Furthermore, stabilising the macro environment is
contingent on the delivery of the other objectives.
The key challenge facing the plan is the capacity to build out the
enabling infrastructure, especially transportation, power and the
required labour market. The questions for evaluating the challenge are
obvious: is there already significant inflow of investment into Nigeria
(especially domestic, foreign direct, Public-Private Partnerships)
relative to plan objectives? Can Nigeria borrow enough from the
international financial system at attractive interest rates to help fund
the necessary investments? How attractive are the countries bond yields
and how ready is it to issue enough bonds to also help fund the
required investments? Is a critical mass of Nigerian engineers, managers
and skilled workers available to do the work of designing, planning and
executing to deliver the required projects? In essence, a medium term
plan must be ‘shovel ready’ for it to succeed.
Clearly, investment flows into Nigeria, are minimal relative to the huge
need and no one knows for sure how ready the labour market is, as a
nationwide and industry based data of skills and capabilities have never
been made available and may not exist. In addition, it is arguable,
that institutions of higher education are producing enough well trained
engineers and managers, or that apprenticeship, technical training and
professional development programmes are doing the same. In essence,
there is doubt that the foundation required for rapid real growth has
been developed in the necessary mass.
It is clear that Nigeria does not have the ability to buy the
enabling infrastructure by importing companies, skills and capabilities,
intermediate inputs and other resources required to build power plants,
transmission lines, railway and other transportation systems. It is
also clear that in an era that threatens nationalism on the global
stage, Nigeria may not find it easy to attract foreign investments
(though there is a deep pool of investible capital in global credit
markets), and the Nigeria banking system and business community, is yet
to demonstrate the capacity to make the required financial investment.
In addition, it is far from clear that the educational system can
quickly and sufficiently deliver the required knowledge, skills and
capabilities.
The bottom line, is that there is really no short cut to fast growth
and macroeconomic stability. The engine of growth is education and until
Nigeria prioritises the creation of a labour market with machinists,
lathe workers, pipe fitters, engineers, project managers, and business
managers and develops the ability to manufacture (and/or assemble) huge
volumes of intermediate inputs and finished products, it will struggle
to generate fast growth. But therein lies the conundrum! Developing
skills and capabilities is a medium to long term process, while the
country is a democracy, with politicians that naturallyprefer to deliver
fast growth immediately. However, the past is an accurate proxy for the
future and real economic growth is tied to the types, quality and
quantity of the factors of production that are available in an economy.
The huge and growing population of young people and growing population
of elderly people, further pressures politicians and makes it harder to
focus on medium to longer education and skill creation.
China is an excellent example of the process that will be required to
grow the Nigerian economy fast enough to create a condition where
economic growth is sustainably higher than population growth. China had
to undergo a period of cultural change and skill development in the
1950s and 1960s to develop the capacity to make things, that has since
propelled it into the second largest economy in the world. Nigeria has
an advantage here, because it already has a labour market that contains
some of the required skills and knowledge, an awareness of their need,
institutions that can be scaled up to deliver them and enough financial
capacity, if that is made a priority.
But in the meantime, there is nothing stopping the country from
following the example of China when it sought to develop the capacity to
manufacture power plants. The Chinese bought a disused power generating
plan in the UK and sent a team of engineers and technicians to
disassemble and ship it back to China, where the parts were studied and
assembled back over and over, until the capacity to manufacture a
similar power plant was created. In essence, there is little reason –
but will and execution – why Nigeria cannot build a gas fired power
generating plant that includes a significant proportion of locally
fabricated components, in the next three years.
While the ERGP is laudable, more emphasis needs to be placed on
deepening the underlying factors of sustainable growth, especially
basic, intermediate and advanced skills and capabilities and an enabling
system of values and attitudes. Certainly, if global crude oil prices
sustainably cross the $100 per barrel mark within the next few months
and if crude oil exports are sustainable over the two million barrels
per day rate in that scenario, the country will be in a position to
import significant numbers of foreign contractors, intermediate inputs
and workers required to build out infrastructure. However, that is an
unlikely scenario, so the reality is that Nigeria has to dig deeply into
a consideration of the internal resources and capabilities it will need
to dramatically improve the infrastructure stock and generate fast
economic growth and then execute an aggressive strategy for putting them
in place.
This will require an industry-by-industry analysis of the country’s
potential for competitive advantage, an understanding of the value chain
of these areas – clear to the finished product or service – a mapping
of the required resources and capabilities on a sectoral and activity
basis, and practical decisions on what to focus on along with workable
timelines.
This is a politically challenging problem but one that must be faced
and delivered aggressively while also implementing policies that improve
the business environment, changes the dominant value system, and
creates current economic growth that is far from tepid. Until the
country develops an internal capacity to transform and make competitive
goods and services in huge volumes, growth will continue to be overly
dependent on crude oil prices that are externally determined,
constraining the ability of serious and focused plans like the ERGP to
deliver their objectives within expected time frames. Tweaking the plan
to prioritise the generation of these underlying (but powerful)
facilitators of rapid and enduring economic growth will be great.
source: guardian.ng
