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Halting Nigeria’s descent into industrial backwardness

By Banji Oyelaran-Oyeyinka
01 August 2022   |   3:31 am
This is a befuddling time for our country and for Africa. What we choose to make of the challenges and as well, opportunities presented, will be critical for the development of our dear country.

A manufacturing plant. Source: BusinessToday

This is a befuddling time for our country and for Africa. What we choose to make of the challenges and as well, opportunities presented, will be critical for the development of our dear country.

Forty years ago, Nigeria’s income was six times that of China. In 2019, Chinese income became almost 3.45 times to that of Nigeria. The widening disparities are truly shocking to say the least. Around 60% of youth are unemployed; social and physically infrastructures are dysfunctional; and the country is in the throes of an unprecedented increase in crimes, insecurity and conflicts.

In a 16-year period between 1980 and 1996, Nigeria’s poverty level rose from 28 to 66 percent. By 2020, this increased to 83 million Nigerians living in poverty while the projected poverty profile is estimated to increase to 90 million, or 45% of the population, in 2022. Nigeria has clearly experienced a development reversal and largely slipped further into underdevelopment. Stagnation in income means that poverty and inequality worsened over time. Nigeria daily sinks deeper into the mire of penury from pillage of its common property. The population of poor people in Nigeria exceeds the combined population of South Africa, Namibia, Botswana, Lesotho, Mauritius and Eswatini. Nigeria has entered a development Reversal.

This speech focuses on Nigeria’s downward industrial regress; and how it underwent an incomprehensible reversal over the last fifty years.

Nigeria’s reversal of fortune manifests in several dimensions, namely: economic, social, technological and industrial conditions. Consider the wide disparities in development metrics particularly the levels and rates of growth of national incomes and Human Development Index (HDI); the differences are stark between Nigeria and Asian comparators like Korea. The Republic of Korea (ROK) had a high GDP/Capita in 2019 ($ 28,605.73), almost double that of 2000 (15,414.29), two decades earlier. The figure increased 7-fold in 40 years froum 1980 ($3679.11). On the contrary, the GDP/Capita for Nigeria $845 in 1980, declined to $290 twenty years later and then rose to $2097 in 2020. On UN’s Human Development Index, which measures Quality of life, in 2019, it ranked 161st out of 180 on the human development index.

Nigeria regressed because of its Industrial reversal, this is evident in the indicators
Nigeria has suffered massive reversal in industrial capacity: the ability to produce process and add value compared to its comparators. Nigeria ranks 99th on UNIDO’s Competitive Industrial Performance (CIP) index while South Africa, ranked 52nd in 2020. The CIP Index measures industrial capacity on three metrics namely: i) the capacity to produce and export manufactured goods, ii) technological deepening and upgrading, and iii) world impact. On average, industry in Africa generates merely $700 of GDP per capita, less than a third of Latin America’s output ($2,500) and barely a fifth of East Asia’s $3,400. Nigeria’s industry contribution to GDP is $650, while manufacturing contribution is a mere 14.1%, $326.

Not surprisingly, Nigeria ranks equally low on the Global Innovation Index at 118th with South Africa ranking the highest on the continent but only 58th worldwide. The country’ lack of industrial manufacturing dynamism is reflected in UNCTAD’s 2021 production capacity index (PCI); Nigeria ranked 184th worldwide1; comparatively, Mauritius (46th) and South Africa (74th) top in the continent. The countries that left Nigeria behind are manufacturing exporters while our main export products are crude petroleum oils and natural gas.

The progress of countries in structural transformation is revealed in the way they transit from agrarian to industrial economies. The agriculture share in GDP for the comparator countries (China, Indonesia, South Korea and Vietnam) fell in values over the years from 1985 to 2020. Vietnam for example, moved from 40% agriculture share in GDP in 1985 to 15% in 2020. On the other hand, the agriculture share in GDP for Nigeria has consistently been at the same level: 20% to 25% in 1985 to 2020. This implies that Nigeria remains a stagnating Agrarian Country while its ability for value addition is constrained.

For industrial share in GDP, East Asia including China and Indonesia show higher shares over the years. The industrial share in GDP for South Korea has been approximately at the same high level over the years. There is a close connection of wealth and industrial progress. The GDP per capita of South Korea was over US$30,000 in 2020 while the value for Nigeria decreased from US$2,687 to US$2,097 in 2015 to 2020.

And underdevelopment shows up Social Inequality: Health Indicators
Poor and deteriorating health indicators characterize underdevelopment. Consider for example the Global Hunger Index (GHI), health expenditure and the percentage of people undernourished to assess our current conditions. Nigeria’s hunger index scores ranging from 28 to 32.5; this implies that the hunger level in Nigeria is ranked serious. Furthermore, Nigeria is number 103 among countries under hunger indicating serious hunger. On the other hand, Vietnam recorded the highest decline in hunger index with percentage change of -48.3% between 2000 and 2020. Nigeria also shows a reduction in Global Hunger Index with percentage change of -28.4% between 2000 and 2020. However, despite the decline, the country is still experiencing serious hunger. Nigeria also shows increase in the percentage of the population undernourished from 8.8 percent in 2013-2015 to 14.6 percent in 2018 – 2020.

What caused Nigeria’s Economic Reversal?
Nigeria is poor because the country has experienced not only weak industrial growth, but also de-industrialization. I will show here that Nigeria’s descent into the ranks of poor nations resulted from the nexus of technological backwardness and resource-dependence. In other words, the central reason behind the wide and terrifyingly widening wealth gap between developed and developing countries is the gap in knowledge, especially scientific and technological knowledge. If natural resources alone were the basis of wealth, the Democratic Republic of Congo, Angola, and Nigeria among others will not be too far down the prosperity ladder yet they are among the poorest on earth2. Rich nations have a long history of Learning and acquisition of knowledge. They use this knowledge to master nature and to transform natural resources to high value goods.

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 at the 8th Edition of the Nigerian Society of Engineers’ Hr Eng Otis Oliver Tabugbo Anyaeji, FNSE FAEng KtSGG Annual Distinguished Lecture on Tuesday 19th July 2022.