DEVELOPING A KNOWLEDGE-DRIVEN NIGERIAN ECONOMY THROUGH PARTNERSHIP  AND ENTREPRENEURSHIP - Date: May 2006

Technological advances and globalization are gathering pace. New African-Asian partnership is being shaped and the West, America and Europe, which dominates the globe, are concerned that China, with its roaring economy and 1.2 billion people, may soon overtake them as a model of economic development for Africa and the rest of the developing world. The West is also concerned that China, along with India, may soon become a more attractive destination for Africa’s raw materials and primary products and, in general, supersede the West as the continent’s biggest trading partner.

Nigerians, in spite of being suffused with abundant human and material resources, enjoy the dubious distinction of being among the poorest people in the Commonwealth of Nations. With a population of 140+ million people, the country is one of the most populous countries in the Commonwealth, third only to India which has a population of 997,515,000 and Bangladesh with 127,669,000. Nigeria’s wealth and power comes from the control of physical assets - land, oil, iron and steel. But in the 21st century, this alone cannot continue to happen. The other main source of value and competitive advantage in the new economy is human and intellectual capital, like in the West and now in Asia. With a market population of 140 million people, Nigeria, in theory has the capacity to make a successful transition into a truly knowledge driven economy through partnership and entrepreneurship.

Knowledge, Innovation and tolerance as well as the Information and Communication Technology (ICT) revolution that allow information to become more easily available, to travel faster, in greater quantities and much more cheaply is the surest way forward. Entirely new products like digital TV, mobile phones and services like e-commerce have been created and more sophisticated production processes have been developed. There is increased global competition facilitated in part by reduced communication costs which have opened up markets that never existed. The costs of international transports have fallen while goods and services can be delivered faster, ordered via a telephone line and the internet. Of course the size of the market available to such businesses has correspondingly increased. It also means that products and services become quickly out-of-date which then means that a business needs to innovate more quickly and make more use of its "knowledge" and creativity in order to survive.

Another driver is the increased speed of scientific and technological advance. Increases in basic scientific research and business R&D have led to an acceleration in the growth of the stock of scientific and technological knowledge. At the same time, the potential scope and productivity of R&D has increased as equipment have improved, and better communication technology has facilitated the widespread results of research findings. The fundamental advances made in the field of medicine engineering and the recent claims of a near-cure for aids and various forms of cancer are manifestations of this. Knowledge is also transforming other sectors, both in their processes and the nature of their final product. Branding and design accounts for an ever higher proportion of the value of the goods and services consumed in both the US and the UK. It is not surprising then that about 70 percent of the production cost of a new car can be attributed to knowledge-based elements such as styling, design and software.  

Growth of Science and Information and Communication Technology (ICT)

In the area of science and communication technology, the competitiveness of the country in today’s information rich world will depend on it’s partnership as well as its ability to access and exchange information both locally and globally. Through appropriate government regulations and private partnership and entrepreneurship, telecommunications networks can be designed and implemented to suit the needs of the country. More important is for the government to ensure that access to a working telephone and fax line for the average individual and business does not remain a privilege but is seen as a necessity. At present, Nigeria is the most expensive place on earth to make an international phone call. There is virtually no local calls in Nigeria as all calls are long distance. Access to communication in a knowledge economy however cannot be a privilege. It is a great necessity.

Which then leads to the next point about the growth and exploitation of Information Technology in Nigeria. All over the world, the growth of the internet is gathering pace. At present, it is estimated that there are about 300 million regular users world-wide, and this figure is expected to double within the next 3 years. How many of these are Nigerians? Not a lot, by the look of things.

There is no point in stressing the importance of  the internet here. Suffice it to say, however, that for the individual, business and government, the sheer scale and potential of it is absolutely phenomenal. It is therefore easy to see what role the further encouragement and exploitation of the internet can play in developing a knowledge economy.

More importantly however is the need to catapult Nigeria from an IT end -user country into a serious producer of high technology. Just like in Bangalore, India and in Barbados in the Caribbean where off-shore information processing is thriving, the building of information industries will in no small way help Nigeria participate in the information economy. With a population of over 140 million people in Nigeria and another 622 million in the rest of Africa, there is a ready-made market and potential workforce for this. Not only that, there are enough Nigerians in the field of computer technology, both outside and within the country, to collaborate and develop a customized system that will open up the use of computers to all Nigerians – both young and old, both educated and illiterate. At present, the biggest Black-owned software company in the UK- Openlink Software - is owned by Nigerian brothers Kingsley and Kevin Idehen. In Scotland Godwin Osigwe and his software company Sigtronics, are also making waves. Efforts should be made to encourage such highly successful Nigerian owned high-technology companies to transfer their skills back to the country to help the growth and development of the industry.

Equally important is the further expansion of other physical and social infrastructure. The provision of constant, non-stop electricity, good transport system, including good network of roads linking the different parts of the country, a functioning, efficient and effective railway system and developed and trustworthy air transport service should be pursued vigorously. This will encourage the easy transportation of goods and services and the movement of labour to and from one part of the country to another.

Knowledge holds the key to modernizing the Nigerian economy. However, to achieve this, the government needs to put in place a proper economic framework to help drive the country forward. Essentially this must involve tapping into the wealth of knowledge embodied in its 140+ million people, encouraging enterprise, private sector involvement, innovation and creativity, putting the necessary business support programmers in place to help the growth of its small businesses and the development of both its physical and social infrastructures. It involves a change of culture and attitude, and in particular in fostering a new spirit of partnership, entrepreneurship, transparency and openness in all aspects of Nigerian life. It also involves collaboration - between the government itself, the private sector, the education sector and the Nigerian populace as a whole, both at home and abroad.

So the building of partnership and the creation of entrepreneurial spirit with enabling environment for small scale industries in areas of Information and Communications Technology (ICT), Biotechnology, Postal Services, Capital Market Development, Harmonization of Standards, Consular Cooperation, Creations of a Free Trade Area and Private Sector Development with significant investment in agriculture, energy production and water, thereby creating jobs and improving social service, only then can Nigeria aim to successfully compete in the fast moving global economy. In this regard, for Nigeria to aim to be successful, it must not follow the Russian footsteps where it opted for the so-called shock therapy of instant privatization and deregulation, we should however follow the Chinese model, which took a gradualist approach in which job creation went hand-in-hand with restructuring and economic reforms.

Unfortunately though, today, the loudest chorus of the present administration machine is that of economic reform, economic reform and more economic reform. The economic reform, it is said, is on its way to transforming Nigeria into an El Dorado. If for nothing else it is argued, that the reforms are reason enough to allow the president to remain in office beyond his second and final term and following the 3rd term failure, we should allow him to pick his own successor so as to guarantee the continuity of those glorious reforms. Malam Abba Kyari, the former managing director of the United Bank for Africa said in a long and well-thought-out article about the president’s economic policies in the Daily Trust of October 13, “Our reforms of the last seven years and their implementation might as well have been dictated by the politburo of a communist state.” What could he have meant?

As Malam Abba implied, the government’s economic reform was like a spitting image of the late President Boris Yeltsin’s economic reform in Russia. That reform, with its very narrow socio-political base, is well-documented in the book, Sale of the Century: The Inside Story of the Second Russian Revolution by Chrystia Freeland, a former correspondent of the London Financial Times. In Russia, as in Nigeria, the authorities tried to build their capitalism not through fostering creativity, partnership  and entrepreneurship but by facilitating the capture of state assets by a well-connected select few. “Russia’s market economy,” Ms Freeland said, “is trapped in a web of red-tape and government intervention which cripples entrepreneurs even as it enriches sleazy apparatchiks. Civil society is weak and the enforcement of law is patchy. Who you know is still more important than what you know or what you can do. No economy built on such weak foundations can flourish, and Russia’s hasn’t.”

Sure, the proper Nigerian economic reforms are necessary for future development but given the characteristics of President Obasanjo’s economic reforms – the chronic cronyism of its privatization of public assets, its widespread disregard of its own laws and of court injunctions, the mass retrenchment in the public sector, the weakness of the country’s civil society and its infrastructure, etc - Ms Freeland might as well have been talking about Nigeria’s economic reform.

So enamored of business is this administration that it even contemplated privatizing education as arguably the most social of all goods. “Mr President,” the new Minister of Education, Dr Obiageli Ezekwesili, said in a leaked memo dated September 1 and published in ThisDay of October 21, “we propose the privatization of these schools,” meaning the 102 Federal Government-owned unity schools in the country. “The ministry will work with the Bureau of Public Enterprises to allow competent private sector-driven education organizations to manage the schools.” Ezekwesili has since denied that she had any intentions of privatizing the schools. What she had planned to do, she said rather disingenuously, was to create a public/private partnership (PPP) for running the schools. She defined this PPP “as a wide range of arrangements where an entity outside government enters into ownership/management or purely management of a public own entity.” A classic case of gobbledygook, if ever there was one, for, what is the simple meaning of all this tape-worm English if not privatization?

A Case Study - Russia and China

Given the collapse of Soviet communism in the late eighties and given also the liberalization of the Chinese economy as the rival communist model, a strong case can be made for the supremacy of capitalism as a mode of production. Even then, the kind of capitalism we have seen in Nigeria in the last seven years, just like that of Russia, is one that lacks not just a human face. Worse, it is one that wears the face of a hideous agenda. It is a capitalism that is pro-business- and pro- just a few select businessmen for that matter – rather than pro-market. And as The Economist, that bastion of free market, said on the cover of its edition of June 28, 2003 titled Radical Thoughts on our 160th birthday: A survey of capitalism and democracy, “Too Close a tie between business and government are detrimental to democracy and to public trust in democratic government”. Such ties may be inevitable but governments, the magazine said quite rightly, must be wary of doing the biddings of Big Business for the simple reason that what is good for business is not necessarily always good for society. Whereas Chinese concentrated first on the provision of basic infrastructure like stable electricity, water, road networks and security in hand with job creation, then gradually approached its economic reforms and policies to attract investment and privatization of only selected few industries, the Russians opted for political and economic reforms without addressing the basic infrastructure first. Nigeria, unfortunately has chosen to go the Soviet route.

This is precisely why a re-think of Obasanjo’s economy reform is a must for any government that succeeds his administration next year if it wants to bring about the greatest good for the greatest number of Nigerians. It seems the way the Chinese have pursued their own economic reform presents a far better alternative to Obasanjo’s which, resembles that of the Russians. One undisputable evidence of the superiority of the Chinese model over Russia’s is that whereas the Chinese economy has had an average annual growth of 10% in the last decade, the Russian economy has shrunk, in spite of its huge oil and gas revenue.

Whereas Russia, like Nigeria, opted for the so-called shock therapy of instant privatization and deregulation, the Chinese took a gradualist approach in which job creation went hand-in-hand with restructuring and the creation of partnership and entrepreneurial spirit. As Professor Joseph Stiglitz, former Chief Economist of the World Bank and the 2001 Economics Nobel laureate, pointed out in his book Globalization and Its Discontents, the Chinese thought it was necessary to create the institutional infrastructure (stable water, power and roads) for a market economy first before plunging into market reform. China, he said, “thought it was more important, not only politically but also economically, to maintain social stability, which could be undermined by high unemployment.” As a result, China, he said, put creating competition, new enterprises and jobs before privatization and restructuring existing enterprises.

Nigerian approach, thanks to the so-called economic reform, the country has suffered an unspeakable rise in unemployment which in turn has bred a frightening level of insecurity and instability in the country. Our headlong plunge into market reform has also led to the kind of corner-cutting in, for example, our air industry with the very tragic consequences of the air disasters we have witnessed in the last few years. Whatever may be said, the fact is that Nigerian reforms have brought Nigerians more grief than joy. It is therefore absurd for anyone to talk about consolidating, let alone extending, something which has inflicted the greatest pain on the greatest number of Nigerians since the country became independent forty-six years ago.