Developing ‘Made in Nigeria’: Maximising Nigeria’s Resource Capacities II

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In the last edition, we examined Nigeria’s natural resource capacities of oil, gas, and minerals as well as local product manufacturing capacities from these resources. Although Nigeria is endowed with an abundance of oil and gas resources, which can generate more than double their current contribution to GDP and total export revenue, if fully maximised; the country cannot attain this if human resources are not adequately developed.

The 445.0 barrels per calendar day refinery capacity has not afforded the country the opportunity to fully enjoy maximum revenues from its 37,062million barrels of proven crude oil reserves or its 5,284.3billion cubic metres proven natural gas reserves (2015, OPEC Nigeria Facts and Figures). Similarly, the forty-four (44) solid mineral resources in the country still require scores of human hands to facilitate their exploration, refining, and conversion to usable products. A country’s human resource capacity determines both its local production capacity and economic gains. Hence, a country does not only need to develop its natural resource capacities for local product production, it must also develop its human and technological resource.

With a population of 182.2million people (World Bank, 2015), Nigeria ranks as the most populous country in Africa and the eight most populous country in the world. Of these figure, about 80.67million belong to the labour force, which comprises of people of ages fifteen (15) and above who meet the International Labour Organization’s (ILO) definition of the economically active population (Q3, 2016 Figures, NBS).  Of the about 69.5million employed labour force, the Agricultural sector has the highest employment rate, followed by the Service sector while the Industry/Manufacturing sector employs least amongst the three highest employing sectors.

Although the Agricultural sector employs over 70% of the work force, it contributes just about 22.55% to the nation’s GDP (GDP Q2 2016, NBS), while it yields less than 10% of total export revenue for the nation. On the flip side, even though the Manufacturing sector which employs a minimal percentage of the labour force expectedly contributes only about 9.42% to GDP (GDP Q2, 2016, NBS) and very minimally to total export revenue, the sector is composed of high export revenue/GDP products. The country possesses huge natural capacity to produce in large quantities the several products in the thirteen major manufacturing activities which include oil refining, food, textile, wood, paper, chemical, plastic, non-metallic, electronic, metal iron and steel and motor products.

Unfortunately, it is evident that Nigeria has over the years underutilised both its agricultural and manufacturing potential, human resource capacity, and completely depended on revenue from raw oil and gas. Nevertheless, the ongoing crisis in the oil sector directs attention to the hitherto neglected necessity to maximise human resource capacities to meet natural resource capacities.

More than half of the employees/players who make up the agricultural sector are simply small-holder farmers who either lack sufficient knowledge in the sector or lack adequate/world class resources to boost and standardise production, this partly accounts for the grossly inadequate GDP contribution of Agriculture to Nigeria’s revenue. Besides, one of the reasons why some of the few products manufactured in Nigeria have failed to live up to the market potential, is their disparity in standards to compete in international markets due to quality constraints.

It is therefore cogent to boost Nigeria’s human resource capacities in order to match natural resource capacities by:

Improving the Education Sector: Education is unarguably the key driver for knowledge and innovation, which are needed to develop any nation’s local production capacities. China, one of the world’s leading countries in local products production recognizes this opportunity. China’s economic growth is hinged on the rapid development of its manufacturing industry and trade, which accounts for the huge investments in education. The republic is not only the most populous country in the world, it also boasts of the largest education system in the world with over 260million students and over 15million teachers yet, the standard of Chinese education ranks high with a conscious effort on boosting technological innovation. Nevertheless, the first nine (9) years of education are not just made compulsory but government appropriation forms the major source of funding. China’s National Bureau of Statistics reports that government’s funding made up 80.54% of education funding in 2014. Then, teaching remains a respectable profession in the country, informing proper transfer of knowledge to students, whilst the curriculum upholds practical activities that collectively account for the country’s leadership in the manufacturing sector.

For Nigeria to maximise its human resource capacity and increase its local production capacity, the country might take a cue from an emerging and highly populated country as China; invest hugely in the education and research sector, ensure more children gain primary education, especially in the North where natural resources abound. The need to elevate teaching from theoretical oratory to practical experiences cannot be overemphasized just as the alignment of education curricula with the demands of 21st century market needs is fundamental.

Bridging Skills Gap: Low employment rates in the manufacturing sector reveal the huge skills gap. Research also reveals that there are many vacancies and opportunities for innovation in the manufacturing sectors that are yet to be filled due to skills mismatch yet, there are many Nigerians with innovative capacities. For instance, in the mining sector, mostly, local miners in Nigeria carry out mining howbeit, with limited skills and support. Moreover, there are thousands of documented industrial research works in the country of which most remain stack in school and national libraries. Furthermore, producers of local products can be empowered with the right skills to improve their standards to internationally acceptable requirements.

Creating Favourable Policies and Support: Harvard Business Review reveals that China rose from being a global ‘bit’ player and net exporter to the world’s largest manufacturer and exporter in capital intensive industries, through government subsidies. Subsidies in form of free/low-cost loans, artificial cheap raw materials, components, energy, land, and support for Research and Development/technological acquisitions, were deployed to encourage the production of advanced products. Since 2001, industrial subsidies, notably for solar, steel, glass, paper, and auto-parts industries, have annually financed over 20% of the expansion of the country’s manufacturing capacity and have led to massive excess global capacity, and increased exports.

Borrowing from China’s example, the Nigerian government should enforce and implement friendly policies for local production and provide adequate support – finance, free/low interest loans, and grants, to support Nigerian Human Resource capacities to yield huge benefits from the country’s natural resource capacities.  Furthermore, there is need for more collaboration with development finance institutions as well as local commercial and micro-finance banks, to support local production capacity in order that budding companies and the talented can have access to the financing needed to produce quality and internationally acceptable products. Already, there have been some progress made towards this, notably by the Bank of Industry, as well as through the objectives of the new Development Bank of Nigeria.

Another step towards developing Nigeria’s human resource capacity is by removing policy barriers to local production, especially in the form of daunting taxation policies and unnecessary bureaucracy, which strain the ease of doing business in the country.

Aba, a commercial City in Nigeria is famous for the production of scores of ‘Made in Nigeria’ products ranging from textiles, footwear, electrical appliances, metal/steel products, cosmetics, Aluminum, and diverse machineries, to mention a few. This hub will be a huge revenue asset to Nigeria after comprehensive development.

Other ways to maximise Nigeria’s human resource capacity to meet the dream of ‘Made in Nigeria’ are Government’s promotion of quality locally made products and services in the marketplace, Government/citizens’ acceptance of locally made products, creating adequate employments in the manufacturing sector, improving the quality of lives of the people to strengthen productions, and maintaining political stability.

According to the New African Magazine, ‘Nigeria’s economy has been forecast as capable of attaining a value of $1trn by 2025 (according to reports by Renaissance Capital and Frontier Advisory Ltd), from its present level of $560bn. To achieve this will definitely require a robust manufacturing sector and a detailed programme for industrialization’. Finally, at the top of the present administration’s agenda is to replace concentration on oil and gas with Manufacturing and Agribusiness. If this is ever going to be achieved, it is high time the nation paid attention to human resource development for the real growth of our economy.

References:

National Bureau of Statistics (2015), Nigerian Formal Education Sector: Summary Report: 2010-2012: February 2015

National Bureau of Statistics (2016), Nigerian Gross Domestic Product Report, Quarter Three 2016: Issue 10, Quarter 2, 2016

OECD (2016), Education in China: A Snapshot: OECD

http://www.opec.org/opec_web/en/about_us/167.htm

http://www.tradingeconomics.com/nigeria/unemployment-rate

http://newafricanmagazine.com/future-nigerias-manufacturing-2/

https://hbr.org/2013/04/how-chinese-subsidies-changed

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