Towards inclusive and sustainable change (II)

It is planned diligently, carefully executed and continuously monitored. Central to it is an active industrial policy, and not just passively setting the stage right, and waiting for the private sector to perform miracles. In this piece, we shall focus on the All Progressives Congress (APC) Manifesto and ask whether it has an inclusive, coherent […]

It is planned diligently, carefully executed and continuously monitored. Central to it is an active industrial policy, and not just passively setting the stage right, and waiting for the private sector to perform miracles. In this piece, we shall focus on the All Progressives Congress (APC) Manifesto and ask whether it has an inclusive, coherent and well articulated industrial policy at all.
First, let us define what an industrial policy is, and what it is not. Industrialisation 101 would define an industrial policy as “concerted, focused, conscious effort on the part of government to encourage and promote a SPECIFIC industry or sector with an array of policy tools”. The World Bank sees it as “government efforts to alter industrial structure to promote productivity-based growth”. Industrial policy therefore means any type of selective intervention or government policy that attempts to alter the structure of production toward sectors that are expected to offer better prospects for economic growth than would otherwise occur in the absence of such intervention. It goes beyond merely assisting the private sector but actually planning, guiding, and, where necessary, investing so as to restructure economic activity, and move actors and resources away from low-productivity to modern, higher value-addition, greater self-reliance and even national security and sustainability.
The APC puts the problem this way: Nigeria needs to diversify its economy away from our heavy reliance on oil. Therefore it intends to embark on a process of rapid industrialization to achieve a level of growth in the productive sectors of our economy that will help us progressively reach and then sustain the creation of 3 million new jobs a year through, among others, “a massive public works programme especially the building of a national railway system, of interstate roads, and ports”  “agricultural expansion” and “a national industrial policy and innovative private-sector incentives that will move us … into value-added production, especially manufacturing”. It specifically mentions the need to “revive textile and other industries, reinvigorate the solid minerals sector and develop a new generation of domestic oil refineries”.
Its industrialization plan can be summarised in eight points: 1) create a national policy as part of the NDP that will identify and promote the growth of industries strategic to our overall economic growth and security, and rooted in our natural resource endowment; 2) create six regional development agencies covering the country with representatives from the federal government, states and the private sector to manage a new N300 billion growth fund; 3) work with the banking sector to increase the funds available to businesses and also encourage an expansion in the micro-finance sector; 4) introduce robust local content legislation to ensure creation of domestic capital base in export industries; 5) guarantee robust property rights to encourage investments; 6) support industry by creating industrial hubs with vital infrastructure and technical, business and extension advisory services; 7) protect and respect labourer’s right to organize, guaranteeing the rights to collective bargaining in good faith by law; 8) promote new skills, equip our youths for a modern economy through a network of local technology institutes to provide free training courses to the unemployed.
While this may pass as an industrial policy for the purpose of an election manifesto, especially where other concerns (insecurity and corruption) are more pressing, it is too sketchy and has two major flaws. It will not suffice as an industrial policy for Africa’s largest and most ambitious economy poised to provide for, and to lead, the ECOWAS sub-region in this 21st century. It has also imbibed the ideological baggage of the later part of the last century hook, line and sinker, especially the aversion to public investments and financing. In addition, it seems oblivious of the reality of today’s world.
We are 170 million and still counting. Including our sub-region, we have over 300 million to cater for. We also have an opportunity to penetrate other markets and prosper from such exports. We have the land, the natural resources and the labour force to dream big. We need to think about those things we can produce locally or cheaper, save our hard-earned foreign currencies, add value to what we sell, and safeguard our security and future prosperity. Where the private sectors cannot go into, or will not invest in, we must encourage public investment, participation or incentives. And where our local industries are active, there we must direct all public procurements. We must also help them reduce the cost of doing business. These simple things we can incorporate into existing industrial plans, most of which are quite sound.
Our policies must not only focus on areas where we are presently competitive but we must seek to develop areas where we presently are lagging behind. Fertilizer and other chemicals; new unexploited solid minerals; along with iron and steel, should all be a priority. The current contempt for Ajaokuta Steel Complex smacks of ignorance and fear of public initiatives. No large nation has ever industrialised without an indigenous iron, steel and other metals base and knowhow. It would save us foreign exchange in machinery and spare parts import, and help develop rail lines, automobile and other industries. It will also teach us to make our own machines and spares. The current fixation with taking the blast furnace route may be too expensive but there are other ways. The point is the APC actually has a greater capacity to make the existing National Industrial Development Plan real by re-examining it and implementing it effectively, with some modifications.
We cannot be neutral, and treat all industries equally. In allocating scarce foreign exchange, time, and managerial resources; in providing infrastructure, financial support and training, we must focus on areas we consider priorities for employment generation, self-reliance and national security. China, India and the others are becoming less competitive in some areas due to rising wages or higher input costs. We should identify those areas and focus on them, particularly where we have the resource base, or have transportation advantage. Where our internal markets are large enough we should encourage substitution and quality development. Research and development should focus on those areas where we currently lag behind. All such areas of concern should be looked into, properly articulated and not just be left to the “invisible hand” of market forces. What we see in the Manifesto is not well articulated, not very coherent and lacks real appreciation of the magnitude of the problem. It relies too much on luck.
A real industrial policy will require funding, and this government will take over with very little left, as well as huge legacy liabilities to settle. This is a different matter. But without manufacturing, without extensive value-addition, without enterprises that exploit existing (non-oil) opportunities, the tax base will remain uncertain; the people will not get jobs or decent incomes, and would continue to rely on the state and the dark and shady economic sectors. National planning, especially for real, inclusive and sustainable industrialization, is therefore a priority. Buhari should not only strengthen national planning but also have a strong industrial policy.