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PUTTING A HUMAN FACE IN THE NIGERIA VISION 2020 CONCEPT. by Cletus E. Olebunne
Countries around the world are jockeying more fiercely than ever for the market, technology, skills, foreign investment, and distribution channels needed to grow their economies and their citizens’ standard of living. In a globalized world, the specific strategies of these national governments will either make—or break—their efforts to drive and sustain growth, reduce poverty, accommodate urbanization and create jobs.
As countries rush to compete in an increasingly globalized arena, government strategy matters more than ever, hence the importance of NV2020 strategy.
I have written about the concept of vision 2020 and 24-hour economy in 2005 in my monthly newsletter distributed through the Nigerian Entrepreneurial Leadership newsletter (www.nel-m.org). I am also a very interested observer in the government’s vision 2020 and still cannot find a human face to the concept. The question then is: what does NV2020 mean to average Nigerians?
In my own simple business and entrepreneurial mind, I see the NV2020 concept and its various committees and support groups as building blocks for common sense solutions to Nigeria’s economic growth problems—a development strategy and structure.
Vision 2020?
We want to be among the first 20 economies in the year 2020. But what does that mean to an average Nigerian? To answer this question we need to put a human face to vision 2020 concept, and by that I mean, developing a theme or tagline that goes with the vision 2020 strategy. And I have suggestions for a theme/tagline.
Anything that we do in terms of policy development and implementation that does not contribute in achieving either of these suggested themes would not help us reach vision 2020. Therefore, the first question for any policy development is to ask, how does this policy help raise our standard of living, or make us competitive for a better Nigeria future generations.
We can raise standard of living or position the next generation for continued global competitiveness if we can truly accomplish those goals outline in the 7-point agenda of the current administration.
Preparing Nigeria to compete is a goal that all of us can share and the 7-point agenda goals can be simply summarized in (1) education, (2) technological advances in transportation, healthcare, energy, and water, and (3) government setting the direction and creation of climate for a national economic development and profitable private enterprise. In today’s hyper-competitive environment, government invariably provides many of the distinctive advantages that firms/businesses need to go head to head with rivals. These advantages include high savings and low interest rates for investment, sound property rights and good governance, a technologically motivated and committed workforce, a low rate of inflation, and a rapidly expanding domestic market.
Development strategy and structure
Countries have strategies for economic development and growth. The strategy may be explicit—a carefully formatted and discussed strategy, as is the case with the NV2020. Or it may be implicit—a loose collection of goals and policies that merely appears as strategy after the fact, as is the case with the 7-point agenda. Strategy alone is not enough without an organizational structure that can effectively implement a strategy. A bad fit between strategy and structure in failing institutions leads to slow, or no growth at all.
The strategy and structure must fit with our context—our national and international conditions in which we operate as a country. Our culture, level of corruption, natural resources, education, income distribution and international security are key among these contextual factors.
Strategy
Our national goals of loose generalities of economic growth and political stability as listed in the seven objectives of the 7-point agenda (1) power and energy, (2) food security, (3) wealth creation, (4) transportation, (5) land reforms, (6) security, and (7) education, are very critical if we are to achieve our NV2020. To implement each and such goals, the government needs to adopt certain policies, which must at the very least include macroeconomic choices such as fiscal policy—budgetary stance; monetary policy—flow of money; trade policy—tariffs, quotas, and various restrictive agreements.
Structure
Strategy is useless without an organizational structure capable of implementing it. This is where public-private partnership relationship is very important and the need for entrepreneurship. It is far easier to devise a sound strategy (such as NV2020) than it is to create an organization that can effectively conduct strategy over time, especially if the organization does not have a common purpose, leading to changing structures with every leadership change. Elements of structure that include (1) political structure—Nigeria has chosen democracy; (2) economic structure—vital to the conduct of business—at macro-level—consumptions, investment, government, and trade; (3) institutional structure—vital to economic development—banking system, court systems, police and military, rule of law—particularly property rights are crucial. Other institutional arrangements include labor management, saving systems, nature of bureaucracies, the separation of power between legislative and executive branches, and differential powers of the federal government and states.
Developing resources
To grow we must make choices about the use of scarce resources. These resources include natural resources, human resources, technology, and capital resources. Our country, Nigeria is blessed with both natural resources (arable land, energy fuels, and vital minerals) and human resources (in numbers but not quality).
The question then is: how do we use the resources we have to acquire and improve those resources that we do not have, such as technology and capital resources as we compete to raise citizen’s standard of living? What we don’t want is to allow the natural and human resources that we have to become bottlenecks for our economic development and growth. And to a greater extent these two resources that we have, may actually be the bottlenecks to vision 2020 and our global competitiveness. We cannot continue to become overly dependent on raw materials exports that we again suffer from the “Dutch Disease” we experienced in the 1970s oil boom that forced Naira to appreciate. The overvalued currency undermined our competitiveness, as we were more interested in importation of goods and services instead of making goods locally so as to develop the manufacturing sector that would have created lasting job creation.
Development of human resources is absolutely critical to our economic progress and global competitiveness. Both the quantity and quality can be important. We pretty much don’t have problems with the quantity aspect of the human resources; it is the quality that we have problems with. In a population of 150 million people, presenting mostly unskilled workforce, improving quality can only be done through the proper right of education that has a mix of college education and training in various industries that will increase labor quality. Countries with good educational systems have generally benefited from high economic growth. We are in a knowledge economy where competitors with the proper educational systems are doing very well. A look at competing countries shows how some countries have used education as a competitive advantage to grow their economy.
Japan, where the primary and secondary school systems are excellent, has long enjoyed a literate and skilled workforce. In France, the United Kingdom, and the United States, where higher education is well developed, great advances in sciences have sparked whole new industries. In Italy and Germany, where skill development has been facilitated by technical schools and system of apprenticeship, high quality engineering has contributed substantially to economic success. India, of late, is perhaps the best example of an economy aided by educationally led human resources. With its natural universities and hundreds of colleges, India produces more than 5 million college graduates annually. Skills in computer programming have underpinned India’s booming revolution in information technology. Other educated Indians contributed to the country’s huge market for outsourced services—call centers, tax accounting, credit card processing and the likes.
Improving quality of human resources can be augmented by informal education as well. In China, foreign direct investment by thousands of western forms has transferred technology, know-how, and managerial skills to thousands of Chinese worker who might otherwise not have had those opportunities for learning.
The two resources (technology and capital) that Nigeria does not have are vital to economic development as we strive to improve citizens’ standard of living and build a competitive Nigeria economy. Technological resources are very vital in the 21st century global economic competition. Educational institutions are an important source of technology, so also are corporate research laboratories. Competing countries such as France and United States have basically developed their own technology through strong institutions, including their patent offices. Other countries, such as Japan, initially chose a strategy of buying technology and then improving it. With the successful growth of Japanese firms, Japan too has become a leading technological innovator. Absorbing technological know-how through foreign direct investment has been another path, most notably followed by China in recent years.
Even with these various resources, no countries have successfully accelerated their economic growth without capital. If consumption and imports absorb all available resources, countries have too little surplus capital to invest in growth. Capital can be accumulated through any of the following five pathways.
i. Debt from domestic banks—Nigerian banking industry has enjoyed tremendous growth in quality due to the consolidation policy. This is very good but banks can play a major role in our entrepreneurial growth by developing and improving their lending services to firms and industries targeted for success. They should develop and increase their investment services in equity and loans. ii. Domestic equity investment—there is a need for well-developed equity markets with widespread success through investment banking, discount brokerages, and a healthy venture capital market, allowing entrepreneurs to raise funds through equity. iii. Foreign direct investment—most FDI comes from and goes to developed countries with stable political institutions and thriving markets. However, FDI has increasingly flowed from developed to developing countries—especially those developing countries that have stable political structure, and have opened domestic ownership to foreigners and have privatized. Nigeria will benefit from a combination of investment strategy funded both by domestic bank debts and by foreign direct investment. iv. International foreign debt financing—public and private debt can be sold to foreigners—this is how the United States financed its railroads and canals—by selling bonds to affluent British savers. Unlike the United States’ efficient usage of its foreign debts, most developing countries that chose this pathway for capital accumulation found themselves paying more to finance debts—a major debt crisis. Nigeria accumulated foreign debts that stagnated economic growth until those debts were forgiven. v. Unintentional foreign borrowing—used as a means to finance balance of payments deficits. The end result is more likely as bad as any foreign debts—debt crisis.
The public-private partnership relationship—the business support group of the NV2020 is a good second tier strategy for the development and management of resources of the overall structure. The difficult will be in proper coordination and implementations of various project concepts.
Efficient usage of resources
As essential to accumulating or improving lacked resource, especially human skills and capital, it is also very important to utilize them efficiently. Productivity is vital to economic growth. Labor must be used efficiently, resources (including technology) must be used efficiently, and capital certainly, cannot be wasted. Foreign competition is one channel for forcing domestic efficiency—countries that expose themselves to international competition experiences one of two results: either efficient use of resources or failure. Domestic competition provides another sources of efficiency as consumers demand for quality and government enforcement can put constant pressure on firms to innovate, minimize costs, reinvest, and pursue competitive advantages. Another source of efficiency is competition for foreign direct investment. Countries and domestic firms that seek foreign capitals compete in a world market for FDI.
Role of government
The role of government is very crucial to economic development. Unfortunately, there are certainly more unsuccessful governments that have damaged growth than successful governments that have helped. Governmental power is too often misconceived and misused; and yet, economic growth requires good government. Government can help economic development and growth by:
i. Provide security—both domestic and international security—so that markets can work. Crimes interfere with market transactions. Individual crime makes streets unsafe, and organized crime controls and distorts whole sectors of commerce. Worse than crime is domestic violence caused by cultural and religious clashes—in Nigeria, this is a major bottleneck for the NV2020. ii. Government is responsible for creating contracts, protecting property rights and enforcing laws. Every country needs a legal system that is trusted by people and institutions, and that works to settle commercial disputes between them. Where property rights are uncertain, property markets do not function, and investment is damaged. Countries need a system of tax collection that works, a court system that works, securities laws that facilitate investment, banking regulations that secure deposits and legitimate relations between federal, states, and local governments are necessary for a country to function and to grow economically. iii. Government should back risk—risks of all sorts. While markets can handle ordinary risks primarily through insurance system, government is needed to absorb extraordinary risk such as industry regulations and their enforcements. iv. Government must manage macroeconomy, using fiscal and monetary policy. Nigeria has been successful here, with its foreign reserve, and more needs to be done. v. Government must implement industrial policy as an explicit or implicit result of its microeconomic choices through the use of tariffs to manage trade and regulate foreign investment, externalities, and competition; and may use subsidies to aid particular firms and industries. When effective, they amount to good industrial policy, but on the other hand may produce conflicts internally, weaken productivity, and maldistribute income.
The amount of government influence is very amazing. Little growth or development could happen without property rights, contracts, sound financial systems, a stable monetary supply, security, infrastructural services, and equitable regulation of monopolies, healthcare, pension, and externalities.
So, Where is the Human Face in NV2020? The Human Face is in Increasing Citizens’ Standard of Living.
By: Cletus E. N. Olebunne Executive Director, nel-m.org |