As Nigeria left it too late!

On May 31, 2017, the news broke that the Federal Government of Nigeria had established an Industrial Policy and Competitiveness Advisory Council. This is a welcome development but it begs the question of whether or not the move came too late game of creating the millions of jobs Nigeria needs. On the one hand, it is almost impossible to ascertain the utility of the decision but it is very possible, even imperative, to examine the development and forecast its possible impact on the expected outcomes, especially job creation.

The economic model that Japan, China, South Korea and later India followed, was low cost manufacturing of clothes, shoes, bags and the like that were exported to the Walmart’s of the developed world. Low cost manufacturing created millions of jobs providing mass industrial employment in these countries. As costs rose, these early movers, shifted into the more sophisticated manufacturing of electronics and other poorer countries, took their place in the manufacture for export of inexpensive textile. Later on Japan, South Korea and China moved into even more sophisticated industries and today all there are global economic powers.

In essence, the process of achieving industrial greatness followed a definite and well-defined industrial policy that followed a path from cheap labour and low-tech products, to manufacturing electronic components, and on to manufacturing high tech products and being competitive in high skilled service industries. Given the push to develop an industrial policy, it is important to evaluate if this pattern is open for Nigeria; if Nigeria ready to become a global source of low cost tech products; and if Nigeria has to develop and execute a different economic model.

Today, countries like Bangladesh, Myanmar, Vietnam are beginning to navigate that path at the same time that automation, robotics and technology, is enabling China to begin building world scale textile manufacturing complexes that require very little labour input. This development means that Chinese textile manufacturers are not as exposed to the cost implications of rising wages that was a major factor propelling entrepreneurs and businesses into higher value added industries and sectors. This trend could have a devastating effect not only on countries that are just beginning to become global textile, shoes and bag manufacturers, but also on countries investing in becoming the next global centres.

According to the International Labour Organisation, the mass replacement of less-skilled workers by robots could be just two years away. Furthermore, the estimate is that up to 80 per cent of workers in these industries in Southeast Asia could potentially lose their jobs to automation, as robots that can overcome the difficulty of machines picking up flexible fabrics, cutting and stitching in precise locations are fully functional. The threat is the rapid progress in developing such robots, especially in the U.S. where they can help reshore textile jobs. The promise of these advances is such that the Chinese Jinsheng Group is already investing $2.4 billion, to build factories designed to use them and protect its business model.

The meaning of the threat of robots, artificial intelligence, automation and software to Nigeria is unclear. What is certain is that the country needs to create millions of new jobs quickly. If forecasts hold, Nigeria will be the third most populous country in the world by 2060, after India and China. With a land area that is approximately the size of the state of Texas, this is a huge political and economic threat and the decision to create an Industrial Policy and Competitiveness Advisory Council is critical.

Ordinary Nigerians expect the council to analyze closely the pathways countries like Japan, South Korea, China, Brazil and India took in creating the tens of millions of jobs that for the first time in each country, gave citizens an alternative to back breaking farm work. Nigerians expect the council to analyze the implications of advances in technology, robotics, artificial intelligence, and software on the ability to navigate that path. Already, officials in upcoming Southeastern Asian countries expect that if the window to global low cost manufacturing closes dramatically, there could be civil unrest. Nigerians also expect the council to explore other pathways carefully. Can Nigeria bypass the traditional route of labor intensive, low-tech manufacturing and quickly develop global scale advanced manufacturing capability in industries like crude oil refining and petrochemicals? Can the country become the financial services hub for Africa attracting talent from all over the continent? How quickly can it develop the capacity to be a capable fast follower in a range of industry and service activities?

It is unexpected that robots will dominate industrial activity and create massive labor dislocations soon, just like the end of the crude oil and natural gas era while imminent, will not be soon, regardless of when Nigeria’s oil and gas field become unproductive. However, these are examples of fundamental structural shifts the world will see and countries are already exploring scenarios for leading and managing their effects. Nigeria is not Belgium and it is clear that with its population growth, global competitiveness in several areas is necessary for creating the millions of needed jobs.

A determination of the required factors (intangibles such as instilling supportive values in the citizenry and tangibles such as aggressive capital formation of enabling transportation and supply chain links) is required. An assessment of the current stocks, flows, trends and rates of creation of resources and capabilities is critical. Likewise the development and execution of a road map for acquiring missing resources and capabilities (some will be needed urgently and may have to be acquired some may be prone to organic development without significant loss of momentum and competitiveness and some in-between). If the formulated plan is sound and then proficiently executed millions of jobs will definitely be created in short order.

It is hard to say anything is too late in the life of a nation, especially one as naturally endowed and strategically located as Nigeria, despite the complex set of challenges the country is facing but as in anything, the collateral damage of objective slowness and apparent lack of commitment can be profound.
Ijose is a policy analyst based in the United States of America.