THE CONTRIBUTION OF VARIOUS NIGERIAN ADMINISTRATION TO INDUSTRIALIZATION AND EXPORT DIVERSIFICATION
THE CONTRIBUTION OF
VARIOUS NIGERIAN ADMINISTRATION TO
INDUSTRIALIZATION AND EXPORT DIVERSIFICATION
BY
OBASANMI, OMOKAFE VINCENT
Ahmadu Bello University, Zaria
Kaduna state, Nigeria
INTRODUCTION
Successive
administrations in Nigeria, whether civilian or military, have felt the need to
outdo the previous regime with extravagant plans to industrialize the nation.
Once the hopes of the citizenry are raised to astronomical levels of absurdity,
however, the plans repeatedly go unimplemented, and the administration quickly
returns to business-as-usual of rent collecting. Emma Adoghe 2010.
Industrialization brings about increase in the
volume of production in industrial activities such as construction and
manufacturing that brings about increase in the gross domestic and the national
income of the country. Development comes as a result of industrialization
and is a policy established by the
government to increase production through the use of manpower and machinery in
production, which will yield more output in production.
Here
I will present an overview of the Nigerian followed by her administration
contributions in industrialization and export diversification by listing and
discussing their successes and failures. But first let me outline an overview
of our nation Nigeria.
Nigeria
Nigeria is located in Western Africa,
and borders the Gulf of Guinea, between Benin on the west and Cameroon on the
east. It has a compact area of 923,768 square kilometres (356,376 square
miles). The country's land mass extends from the Gulf of Guinea in the south to
the Sahel (the shore of the Sahara Desert) in the north. Abuja, the capital city
of the Federal Republic of Nigeria, replaced the former capital city, Lagos, in
December 1991, because of its more central location, among other reasons. Lagos
remains Nigeria's commercial capital. Other major Nigerian cities include
Ibadan, Kaduna, Kano, Maid-uquri, Jos, Port Harcourt, Enugu, Calabar, and Aba.
POPULATION
According
to Nigeria statistical office or Census Bureau the total population of the
country was last recorded at 162.5 million people in 2011 from 45.2 million in
1960, changing 260 percent during the last 50 years. Population in Nigeria is
reported by the World Bank. Historically, from 1960 until 2011, Nigeria
Population averaged 92.0 Million reaching an all time high of 162.5 Million in
December of 2011 and a record low of 45.2 Million in December of 1960. The
population of Nigeria represents 2.35 percent of the world´s total population
which arguably means that one person in every 43 people on the planet is a
resident of Nigeria.
Nigerian
has been ruled by military and civilian administrations, and in view of the
reins of the military and civilian governance, they have made successes and
much failures in the administration of the economy growth and development of
the nation.
Here
I will examine some of the contributions of these administration to
industrialization and export diversification. But first: what is the meaning of
the term industrialization and export diversification.
INDUSTRALIZATION AND EXPORT DIVERSIFICATION
What is industrialization?
The most important need of man is food, but
once man is free from the pang of hunger he starts to think of clothe to wear,
house to live in, and a host of other things such as bicycle, cars, radiogram,
aero plane, ships, many to mention but a few.
The
nations encyclopaedia defines Industrialization as the process by which
manufacturing industries develop from within a predominantly agrarian society.
Characteristic features of industrialization include the application of
scientific management methods to solving problems, mechanization and a factory
system, the division of labour, the growth of the money economy, and
the increased mobility of the labour force both geographically and socially.
Industrialization
can also be seen as the effort and ability of a nation to fully utilize it raw
materials of agriculture (cocoa pods, timber, rubber, food crops and fruits)
also natural resources (rocks, limestone, tin, gold, coal, petroleum) Nigeria
among other nation is categorised as a third world country, that mean they are
yet to be fully developed and having more reliance to the control of other
developed nations.
Industrialization
can therefore be defined as the presence of heavy industries and manufacturing
companies of primary, secondary and tertiary category that is responsible for
the creation and development of local and international grade products that can
be obtained for use as consumers goods or services. by the introduction of industries, given
Nigeria in focus,
Contribution of Military and Civilian
Administration
1.
The planning of economic growth and development.
2.
Expansion of Education at all level
3.
Infrastructure of roads, railway and communication networks
4.
Hydroelectric dams were constructed at (Kenji, Shiroro, Jeba, Hadeija)
5.
The development of iron and steel industries ‘Ajakuta
6.
Secondary industries and automobile assembly plants were established. (Kaduna,
kauri
industrial area and lagos).
7.
Textile Industry
8.
The Marketing Board (1960-1977)
1. The planning of economic growth and
development.
From independence in 1960, the state under the
civilian administration took up the direction and planning of economic growth
and development for the purpose of achieving standards that can be found in
other developed nations of the world where there is evidence of more advanced technology and economy of
living. These plans and development programs could not come to a robust
fruition because of instability of the system of governance and the coup and
counter coupe de et.
2. Expansion of Education all level
There
was much emphasis on basic education for the Nigeria citizen especially for the
young child to attain the knowledge to read and write. Universities,
polytechnics, monotechnics and colleges of education was established and the
drive for an educated citizenry was set on course.
Most
of our early scholar today had their education within abundance of support and
opportunities that was offered to student to further their education abroad; in
countries like united kingdom ( Manchester University Uk), University of
Toronto, USA and many others.
Education was progressively expanded at all levels
leading to reduction in the rate of illiteracy and to provide the requisite
skills (entrepreneur) and labour force for industrial and
development.
3. Infrastructure of Roads Railway and
Communication Networks
Communication networks of roads were constructed far beyond what was
inherited from colonial rule. Have a
trunk A and the trunk B roads, that serves as federal and states own roads.
There was also contraction railway tracks that extended from Lagos to Kano,
Maid-uquri, Jos and Kaduna state. This construction was for the purpose of
conveying people and commodities from the southern part of Nigeria to the
North, also to aid the linkage of the southern community traders to enable
inter regional trade accessibility with the southern commercial traders, and
also to transport commuters and goods ranging from foods material (garri,
beans, rice, yams etc), raw materials i.e. rubber, timber coal, columbite etc ,
for industrial use in the industrialized
regions of the nation.
4.
Hydroelectric dams were constructed
Hydroelectric dams were built to generate
electricity, for the existing industries, manufacturing company that saddled with
the responsibility of providing producing products and services need electrical
power to maintain its activities and the machines used for the process of
production are reliant to electric voltage. , as any industry and also to cities for peoples consumption. There
are efforts made by the government to increase the level of the generated power
so as to support the existing dams and met the needs of the increasing
urbanization and population.
The development and construction of there
infrastructure has provided employment and and has increased industrial
development in the country.
.
CONTRIBUSION
OF EXPORT DIVERSIFICATION
1.
Export
incentive regime in Nigeria
As explained above, apart from macroeconomic
policy measures, fiscal compensation arrangements constitute another method
through which government had supported exports. In line with the objectives of
the SAP, government promulgated the Export (Incentives and Miscellaneous
Provisions) Decree No. 18 in 1986. The decree not only abolished import
licensing, but it also introduced comprehensive incentive measures for Nigerian
exporters. Some of these incentives are described hereunder.
2. Currency retention
scheme
As
initially conceived, the currency retention scheme allows exporters to keep 25%
(or
any percentage that government prescribes,
from time to time) of their foreign exchange
proceeds
in their domiciliary accounts in Nigeria. This has since been increased to
100%.
The
foreign exchange so retained enables exporters to pay for some approved export
related
activities
such as overseas travel to conclude export contacts, quality determination/
deterioration
costs, importation of inputs, etc.
3.
Export
development Fund (EDF)
This
is a special fund provided by government to give financial assistance to
exporting companies to cover part of their initial export promotion activities.
Such activities include advertising and publicity campaigns, export market
research studies, products designand consultancy, etc.
4.
Export
expansion grant fund (EEGF)
The
fund is designed to provide cash inducement to exporters who attain a minimum
annual
export turnover of N50,000 worth of semi manufactured and manufactured
products.
The inducement is to enable them to achieve increased volume of the export
and diversify
their export products.
5.
Duty
drawback/suspension scheme
Under the scheme, exporters can import raw
materials free of import duty or other indirect taxes and charges.
6.
Tax
relief on interest income
The
relief exempts from tax the interest income accruing to banks from
export-lending
activities.
The incentive aims to encourage banks to provide credit support to the export
sector.
7.
Export
credit guarantee and insurance scheme
The scheme guarantees loans granted by
Nigerian banks to exporters for the production
of
export goods. It also provides credit facilities to foreign importers of
Nigerian exports
and
insurance cover against default in payment by foreign importers.
8.
Other
incentives
Apart
from the above incentives, the manufacture-in-bond and export processing zone schemes
were introduced in 1991 with the common objective of making non-oil export goods
(especially manufactures) competitive, in price terms, through a waiver of
duties and/or taxes.
It
is important to mention, however, that the implementation of these incentives
has been fraught with problems, among which are institutional inadequacy, avoidable
rivalries among implementing institutions, and administrative/ bureaucratic tardiness.
The abolition of the erstwhile publicity owned Commodity Boards in 1986 seems
to have achieved only minimal results.
The
boards were abolished to enable the private sector to take over the internal
and external marketing of agricultural produce and to minimize the distortion
of international market price signals to farmers. This policy, coupled with
currency depreciation, raised the naira prices that farmers received for their
export produce. However, other internally generated problems such as inadequate
storage facilities and soaring domestic production and transportation costs
remained as stumbling blocks to realizing the objectives of the measures. The
absence of a good quality-control system also led to export of ungraded and
poor quality products.
In
addition to the creation of a conducive environment for export and the adoption
of an appropriate incentive structure, government also established or
re-focused several institutions in the period preceding (as well as after) the
inception of SAP to implement the
incentives put in place to boost exports. The institutions whose functions
impinge on exports directly or indirectly include the Central Bank of Nigeria,
Nigerian Export Promotion Council, Federal Board of Inland Revenue, Customs and
Excise Department, Nigerian Standards Organization, Nigerian Export Processing
Zone Authority, the Nigerian Committee on Trade Procedures (NITPRO), and the Nigerian Export-Import
Bank
(NEXIM).
Nigeria,
especially since the early 80s has been confronted with a magnitude of economic
problems. These economic problems, in brief, include stagnant growth, rising
inflation, unemployment, food shortage and mounting external debt. Nigeria
therefore like most other nations, has been battling with how to achieve its
major economic objectives. These objectives include full employment, price
stability, economic growth and healthy balance of payments. It has not been
easy for Nigeria to realize the above objectives. Some of the factors
responsible for this are
1. Poor Performance of the
preferred sectors (Agriculture and Manufacturing sectors). These sectors are
not doing well because of the following reasons:
2. Unwillingness of investors
to invest in our manufacturing sector due to political instability
3. Over dependence of Nigerian
Economy on a single commodity i.e. oil.
4. Management problems
5. Social problems
6. Inadequate statistical data
for policy formulation
7. Inadequate infrastructural
amenities
8. Gaps in the judicial and law
enforcement agents
9. Lack of effective
implementation policy
10. Lack of enabling environment
11. At the root of all these
problems is Corruption. As Obasanjo (2004) rightly observed,
Nigeria
had practically institutionalized corruption as the foundation of governance.
Hence institutions of society easily decayed to unprecedented proportions as
opportunities were privatized by the powerful. This process was accompanied, as
to be expected, by the intimidation of the judiciary, the subversion of due
process, the manipulation of existing laws and regulations, the suffocation of
civil society, and the containment of democratic values and institutions. Power
became nothing but a means of accumulation and subversion as productive
initiatives were abandoned for purely administrative and transactional
activities. The legitimacy and stability
of the state became compromised as citizens began to devise extra-legal and
informal ways of survival. All this made room for corruption.
Analysis
of trade data obtained from different sources in Nigeria and elsewhere using
techniques
such as export-import similarity measures, revealed comparative advantage
and
other indexes reveals the following:
1. The
market that hold the “best” promise for Nigeria (among the countries considered
by
the study), as far as diversifying her non-oil exports markets, are Mexico,
Morocco,
Japan,
South Africa and to a lesser extent, Algeria, Egypt and Kenya. These countries’
import
structures correspond relatively well with Nigeria’s export structure. They
are
also relatively fast growing and, by and large, seem to have the necessary
liquidity
for
import payment.
2. Between
1985 and 1990 there appears to have been a noticeable change in the products
in
which Nigeria has comparative advantage in exporting. Comparative advantage diminished
(although it was not lost) in the export of cocoa and cocoa butter. For other
cooca products like cocoa powder and cake, comparative advantage was lost over
the period. Comparative advantage was eroded (not lost) in the export of cottonseed
cake, palm kernel cake and palm kernel oil. Gains in cooperative advantage were
made in sesame seed, palm oil, rubber and cottonseed, while promising trends were
observed for beer and manufactured fertilizer.
3. Most
of the products in which Nigeria had comparative advantage in exporting in 1990
were those in which demand had been declining and whose unit values were also
falling. However, a number of products in which comparative advantage is
emerging appear to have bright prospects especially beer, sesame seed and
textile fibers.
These conclusions form the basis of the
policy suggestions made hereunder. However, before proceeding with the
suggestions, it is important to point out some of the limitations of the analysis
from which the suggestions emanate.
For one thing, the degree of similarity
in the commodity composition of exports and
imports
of the product considered is only one of the factors determining the intensity
of
trade
between a pair of potential trade partners. The calculated measures refer to
expected,
rather
than actual, trade intensity and are static, reflecting a situation of the past
(in this
case
1985 and 1990). The values of the measures may change overtime.
The measures were computed using SITC
commodity classification adopted by the
FAO
Trade Year Book. This has two major limitations.
One is that at the level of disaggregation, many commodity classes may still
consist of quite different products.
The
other is that some countries report in terms of “general trade” while others
report in terms of “special trade”. This use of different modes of reporting
may have introduced biases to trade data used.
Furthermore, the countries identified as
the “best” in terms of commodity correspondence may after all not be the
“best”. The sub-set of countries from which the “best” were identified by this
study might possibly exclude some others that could be the actual “best”. This
problem may be accommodated, however, if one conceives of this study as empirically
testing the conventional wisdom that Nigeria should attempt to diversify to certain
countries. All the countries considered in this study are frequently cited in
export policy circles in Nigeria as potential markets.
As for the measures of comparative advantage
adopted, the major limitation is connected with the fact that the values are
sensitive to the level of subsidy in exporting countries, or protection in
importing countries. Since for most of these products, tariff levels are direct
function of processing levels, the measures calculated for some processed commodities
may have been lower than they would have been otherwise. Allowing for these
limitations, a number of policy issues emerge from the study.
Firstly, it must be noted that this
study has been able to identify export potential to selected markets. The next
logical step is the assessment of the identified markets. This will involve
carrying out market studies to identify products to target in each market based
on the demand for the product in that market and Nigeria’s potential to produce
the product at a comparatively cheaper cost. Other issues such as a survey
should determine are the nature of the competitors and their marketing
strategies in such countries including packaging techniques and so on. The
results of the survey should be made available to the organized private sector
who will then be assisted in tailoring their production programmes to
identified niches. The funding of the survey should come from the Export Development
Fund of the government. This fund, which is a financial aid to exportes, covers
the following export promotion activities (Onah, 1983/84):
·
participation in
training courses, symposia, seminars and workshops in all aspects of export
promotion;
·
advertising and publicity
campaigns in foreign markets;
·
export market research
and studies;
·
product design and
consultancy;
·
participation in trade
missions, buyer-oriented activities, trade fairs, exhibitions and store
promotions;
·
costs of collecting
trade information; and
·
organisation of joint
export groups.
The next step may be to initiate trade
missions to these countries, and in the process attempts to identify importers
of selected Nigerian products identified by the market research. Identification
of the importers will create opportunities to listen to them about particular
problems they may face in marketing Nigerian products and hence enable the authorities
to design facilities to ameliorate the problems. While the above are going on, a
strong public enlightenment programme should be started to educate exporters
that selling to non-traditional markets is as good as – if not better – than
targeting traditional markets.
To quicken the pace of market
diversification, a further impetus to product development is needed. This is
because the commodities in which Nigeria has comparative advantage in exporting
appear to be those facing bleak market prospects in terms of the growth rates
of their prices and demand. Diversification into fast-growing commodities is necessary.
Necessary production policies to attaining this objective should be articulated
and followed.
To facilitate diversification, an export
diversification fund (EDF) is suggested.
This fund, which should be financed by the
federal government, Central Bank of Nigeria, Nigeria Export-Import Bank
(NEXIM), the state government and other bodies that may be identified, should
be managed by NEXIM. The purpose of the fund will be to ensured that export
credit for exports going to identified new markets is given at lower rates than
for those going to traditional markets. The rationale is that exports going to
traditional markets are passing through beaten paths while those to
non-traditional markets are still trying to make inroads. The efforts of
selling to such markets should be compensated with lower interest rates. This
EDF may also be used in a discriminatory fashion to encourage the production
for exports of promising non-traditional export commodities.
Conclusion
From the result of this examination, it
can be seen that new markets identified, except for Japan and Saudi Arabia, are
not as liquid as the traditional markets, implying that risks of exporting to
them may be higher. To improve exports to such countries, some kind of credit
facility may need to be extended to the importer. Trading under such deferred payment
terms increases the risks of default. Thus, appropriate risk bearing and
financing facilities such as export credit insurance, guarantees and forfeiting
are needed to support the diversification effort. These facilities should be
provided by NEXIM with active support of the government, which must introduce a
special risk fund to protect NEXIM from the risks inherent in providing these
services. Overall, Nigeria’s export diversification drive should be operated in
the spirit of mutual trade. Deliberate efforts should be made to buy from the
markets Nigeria wishes to
Diversify
into.
REFERENCE
1.
Onah, J. 1983/84. “A
model of Export Promotion for Nigeria” The Quarterly Review of
Marketing,
Winter.
2. Linneman,
H. 1966. An Econometric Study of International Trade Flows. Amsterdam:
North
Holland.
3. Lyakurwa,
W.M. 1991. Trade Policy and Promotion in sub-Saharan Africa. Special
Paper
12 African Economic Research Consortium, Nairobi.
4. Yeats,
A. 1990. “What Do Alternative Measures of Comparative Advantage Reveal About the
Composition of Developing Countries Exports?” PRE Working Papers The
World
Bank.
5. Teal, F. 1983. “The
Supply of Agricultural Output in Nigeria” Journal of Development
Studies, vol. 19 (January).
6. UNCTAD. 1992. UNCTAD
VIII United Nations, New York.
7.
Pinto,
B. 1987. “Nigeria During and After the Oil Boom: A Policy Comparison with Indonesia”
The World Bank Economic Review vol. 1 No. 3.
8. Schafer H. and A.
Valdes. 1990. Demand Side Constraints and Structural Adjustment in
sub-Saharan African Countries. International Food
Policy Research Institute,
Washington, D.C.
posted by Vincent Obasanmi @ 10:06 AM
0 Comments
