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Halting Nigeria’s descent into industrial backwardness – Part 3

By Banji Oyelaran-Oyeyinka
03 August 2022   |   2:08 am
One of them is Pfizer. Pfizer reported a 92% operational growth in revenue to $81.3 billion for the full year 2021, compared with $41.7bn for the full year 2020 mainly from Comirnaty which is a COVID-19 vaccine...

(FILES) This file illustration photo taken on November 17, 2020 in London shows vials with Covid-19 Vaccine stickers attached and syringes with the logo of US pharmaceutical company Pfizer. – Pfizer and BioNTech said on February 1, 2022 that they began submitting a formal request to US health regulators for emergency use of their Covid vaccine for children aged over six months and under five years. (Photo by JUSTIN TALLIS / AFP)

One of them is Pfizer. Pfizer reported a 92% operational growth in revenue to $81.3 billion for the full year 2021, compared with $41.7bn for the full year 2020 mainly from Comirnaty which is a COVID-19 vaccine jointly developed by Pfizer and BioNTech while Paxlovid is Pfizer’s oral antiviral treatment. While the crisis ravaged the world, one company with technological dominance in its sector reported a revenue almost three times the revenue from crude petroleum of Africa’s largest exporter, Nigeria.

The history of the company’s agile response to the pandemic runs far deeper and goes farther back in history, 174 years ago. It was the development of deep-tank fermentation by Pfizer, which enabled the mass production of penicillin for use in World War II. It laid the basis for much of what the company is today: a pharmaceutical juggernaut. This story applies to all technologies from textiles, iron and steel, synthetic rubber to agriculture. The acquisition of knowledge, formation of skills, and the evolution of large organization from aircrafts to shipbuilding is a marathon race, not a sprint. Successive forms build upon previous forms.

As Isaac Newton, the famous English scientist, once said, “If I have seen further, it is by standing on the shoulders of giants.” Of course, Newton was not literally standing on the shoulders of giants. Newton was explaining that his ideas did not come from him alone. Earlier works underpinned Newton’s success in the discovery of the universe more than others did, and discoveries made by fellow scientists, either in his own time or earlier. Knowledge growth is cumulative; it has been growing exponentially over centuries.

Nigeria is backward because it did not achieve Economic Diversification
Vietnam exported an estimated $348 billion worth of goods around the globe in 2020, a ten-fold increase when compared with Nigeria’s exports in the same year. In macroeconomic terms, Vietnam’s total exported goods represent 30.3% of its overall Gross Domestic Product for 2020 ($1.148 trillion valued in Purchasing Power Parity (PPP). Given Vietnam’s population of 97.4 million people, its total $348 billion in 2020 exports translates to roughly $3,600 for every resident of Vietnam.

In contrast, Nigeria’s total exports of around $34 billion represents less than 8% of its GDP of $432.3 billion. Nigeria’s revenue basket remains constrained due to its export revenue concentration (dependence on oil and few primary commodities); trade concentration (dependence on a few trading partners – China and Europe); high food imports (with most processed foods coming from outside the continent) necessitating the need and urgency for both economic and trade diversification as well as food self-sufficiency.

Contrasting the two, what is important is that although Vietnam’s export revenue came largely from non-oil products such as phones, electronics goods. It also remains a major exporter of agribusiness. Vietnam exported agribusiness products such as footwear and textiles totaling over $30 billion.

This not only equals Nigeria’s total annual oil revenue, but also far exceeds the less than $3 billion revenue that Nigeria received from shipping out raw leather, cocoa powder, sesame, cashew and mainly raw agricultural commodities, which would be converted into finished products and re-exported to Nigeria.

Indonesia and Malaysia dominate global oil palm. The two countries drew from the same gene plasm; Nigeria relied on wild groves, Malaysia developed a strategic industrial masterplan in 1956. The sector in Malaysia enjoyed systematic investment including R&D spending, aggressive breeding and tissue culture developments investment in science and technology. Currently Malaysia has six million hectares of plantation while Nigeria has 10% of that at 600,000 hectares. It is a contrasting story of industrial transformation for them and stagnation and bad governance for Nigeria.

In 1990, Malaysia’s export was 32.8 billion. Nigeria is at where Malaysia export capability was 30 years ago. We are like 50 years behind South Korea. That country with a population of 33 million people, exported goods worth $234 billion in 2020, which translates to roughly $7,100 for every resident. In other words, Malaysia progressed; it did so through a strong Vertical Diversification from its modest agricultural base (rubber and oil palm) by investing explicitly in high tech sectors capabilities, especially electronics. It did not neglect its agriculture but rather through horizontal diversification, industrialized its agricultural sector. Malaysia’s biggest export products by value in 2020 were electronic integrated circuits, refined petroleum oils, palm oil, vulcanized rubber clothing or accessories, and solar power diodes or semi-conductors. Petroleum oil contribution to Malaysia’s export declined over time.

Today, with the rapid expansion of cultivation in South-East Asia, Malaysia and Indonesia are the leading producers of palm oil supplying more than 80% of the global production and continue to dominate the international trade. Malaysia earned RMB 67 billion (US$ 16 billion) from oil palm in 2018.

Indonesia is currently the largest producer of palm oil in the world; it supplies half of global demand. The country’s oil palm plantations that have expanded over the years leveraged substantial economic growth and created notable downstream industries. At the beginning of the 21st century, the total area planted by palm oil was only four million hectares, but it expanded to more than 14 million hectares by 2020. The total planted area has grown more than 300% in the last 10 years. Along with the oil palm plantation expansion, crude palm oil (CPO), cooking oil, and biofuel industries have continued to grow and are targeted not only at meeting the domestic market but at also fulfilling export needs.
To be continued tomorrow

Professor Oyelaran-Oyeyinka, professorial fellow, United Nations University and Fellow, Nigerian Academy of Engineers is Senior Special Adviser to the President on Industrialisation and African Development Bank. He presented this paper recently.