The economic story of football jerseys
It was when Henry Ford visited a meat packing (abattoir) factory in Chicago that the solution to his long running headache came to him. He saw meat come along on an overhead conveyor belt and one guy would cut one part and let it move to another guy who cut another part. The idea of how to organise his car factory using the assembly line system came to him – one guy would put the doors, another would screw the tyres as the car moved along the chain etc. This allowed him to produce far more cars than the previous system where a group of people would assemble a car from start to finish. But what exactly was the problem he was trying to solve?
Like many other Nigerians, I tried to get my hands on the new Nigeria football jersey designed by Matthew Wolff and produced by Nike. I wasn’t successful with the jersey but I managed to get the jacket. I went to a Nike store in London and saw something I have never seen before – every country’s jersey was available except Nigeria’s. The idea that a country’s football jersey can sell out – as Nigeria’s did in just 3 hours – is surely one of those ‘only in Nigeria’ moments. Some day we will know what really happened and I suspect the story will not flatter The NFF.
When I got my jacket, I checked out the label and saw that it was Made In Indonesia. I then checked the Nike website and found some stats – there are 39 Nike factories in Indonesia. 17 of them produce apparel, 17 produce footwear while the remaining 5 produce equipment. It employs a total of 197, 397 workers there with 77% of them being women. The average age of its workers is 28.
Across the world, Nike manufactures its products in 42 countries (including Egypt and South Africa) and 554 factories employing a total of 1,017,345 workers. I guess you don’t need me to tell you that there is no Nike factory in Nigeria. What we have seen instead is ironic stories of Nigerians ordering container loads of counterfeit jerseys to sell for cheap in Nigeria and take advantage of the late release and supply issues with the original version.
The great economist, Thomas Sowell, likes to say that if there are 10 ingredients required for a country to be economically successful and it has only 9, it will remain poor until the final ingredient is acquired. We can all agree that creating 200,000 jobs in manufacturing in Nigeria today will go a very long way for the country. Nigeria and Indonesia were quite similar in terms of economic development levels around independence until both countries made different choices and reaped different rewards accordingly. What is the missing ingredient for Nigeria? One might be tempted to say it is skilled labour but this is a misunderstanding of the problem – factories are a solution to the problem of unskilled labour. This is the problem Henry Ford was trying to solve – he couldn’t find skilled workers to hire anywhere so he designed a system where he could make the best use of unskilled workers and achieve his goal of producing better cars. In the end, it was in the factory that the workers acquired skills not before. It is hard to teach a worker how to make a jersey in a school – they learn by doing it in a factory and that skill then becomes useful such that it can be used elsewhere in other environments. This is a summary of how manufacturing boosts a country’s workforce and increases productivity.
Nigerians have been making jokes and boasting on social media about shipping in containers from Thailand. But why not Nigeria? The missing ingredient is not labour – Nigeria has plenty lying idle. It is not weather – Thailand gets very hot too. It is not system of government – Indonesia is also a democracy. Recently I was in a factory in China and saw some workers playing with their phones and being relaxed as they produced items for export. If you swap all the Chinese workers in that factory with Nigerians, I’m 100% confident that production will continue as normal with adequate supervision.
My conclusion is that the missing ingredient is the environment. Nigeria is an incredibly difficult place to do business and there are some crazy things that happen as ‘normal’ in Nigeria that really don’t happen elsewhere. Businesses need a measure of reliability before they can commit to setting up a manufacturing plant in Nigeria. The ports are congested and full of bribe takers, the roads are bad and also full of checkpoints. Perhaps Special Economic Zones makes sense where all the usual Nigerian problems can be locked out but eventually they seem to creep in there.
Whoever can deliver a political consensus that changes the economic environment in Nigeria and mobilises various instruments of government to achieve it will add that final ingredient to Nigeria and form the Voltron of economic development. Who will that be?
No Comments yet