Asiwaju Tinubu’s Seven Ways to Fix Nigerian Economy (2)

By Peter Adebiyi Adeniran.

It was established that Nigeria had never consciously put in place industrial policy prescribed by Asiwaju Tinubu. Nigeria moved closer to this in the Third National Development Plan. But Nigeria bungled it.

The question will then be: What kind of industrial policy is envisaged by Asiwaju Tinubu?

I will not assume to know his mind. But permit me to state what I thought he meant by “press forward a national industrial policy that will foster development of strategic industries that create jobs as well as spur further economic growth.”

Japan’s Vice Minister Ojim of the Ministry of International Trade and Industry (MITI) expressed the country’s industrial policy as “The MITI decided to establish in Japan industries that require intensive employment of capital and technology, industries that in consideration of comparative cost of production should be the most inappropriate for Japan, industries such as steel, oil refining, petrochemicals, automobiles, aircraft, industrial machinery of all sorts, and electronics including electronic computers.

From a short-run, static viewpoint, encouragement of such industries would seem to conflict with economic rationalism.But from a long range viewpoint, these are precisely the industries where income elasticity of demand is high, technological progress is rapid and labour productivity rises fast.”

I opine that such focused national industrial policy like Japan’s is what Asiwaju Tinubu has in mind. This is what I guess he is prescribing for the fixing of Nigerian economy.

It is true that Nigeria engaged in steel, oil refining, petrochemicals and automobiles. But did Nigeria consider these industries strategic for growth? While steel industry is still struggling for survival there is nothing to write home about with respect to automobiles industry. ‘Tokunbo’ cars and spare parts are the orders of the day. I leave it to Nigerians to rate oil refining and petrochemicals industries.

Industrial policy by our definition would address ‘increase export market shares and create a comparative advantage where none existed before but where world demand is likely to rise in future’.

The question then is: What can Nigeria manufacture that will increase her export market share in the product and that the world demand of the product is likely to rise in future?

This is not just industrialization. It is not mere import substitution industries. The industry will not be producing just for export but capture sizeable share of world demand of the product.

The industries that will qualify to be classified as strategic to Nigeria today are steel, petrochemicals and plastic industries.Are there no other ones?There are but we need not pursue all of them at the same time. “It is one leg at a time to get out of palm oil extraction pit.” Moreover, it is these industries that will midwife some others. A developed steel industry will lead to the development of a robust automobiles industry.

What a beautiful thing for Nigeria to have conceived Ajaokuta Steel Mill! Nevertheless, Nigeria had not considered this industry as strategic.

China is the largest producer of crude steel accounting for 50.3% of the world production. Most of the steel producing companies such as Hebei Iron and Steel Group, Anyang steel Company and Wuhan Iron and Steel Corporation are State owned.

Japan is the second largest producer of crude steel. The country imports raw materials for steel production. Nippon Steel and Sumitomo Metal Ltd which is one of the top ten steel companies in the world was founded on October 1, 2012.

India comes third in global steel production ranking. The industry grows because of abundance of large deposit of iron and coal in India. It is the same opportunity that Nigeria has. We could recall that many Nigerians were sent to India for training in the 80s.

The steel industry in India contributes 2% to total GDP and employs more than 600,000 people. The top steel producing company in India is Rashtriya Ispat Nigam Ltd owned by government.

Let us come to Ajaokuta Steel Mill in Nigeria, which is described as “bedrock of Nigeria’s industrialization”. Whatever steel industry has done for China, Japan and India in terms of growth contribution and employment is what Nigeria economy stands to gain if steel industry is sincerely considered strategic.

One will be interested in the magic that makes Nippon Steel and Sumitomo Metal Ltd established in 2012 to have ranked as one of the top ten in the world why the one established in 1979 is celebrating second concession.

World steel market demand growth is estimated at 1%. Rising demand and capacity cuts in China had led to increase in steel prices globally. Therefore, aside from increase domestic economic activities, Nigeria will cut her share of future increase demand for steel. The linkage effect is the development of automobiles industry in Nigeria.

Nigeria runs mixed economy. The trend today is that economy must be private sector led. The problem we have as a people is that we enjoy “follow-follow” approach.

Private sector led economy theory works in the country where regulatory framework is superb and regulators are corruption free. It does not work in “greed” society. It will fail in corruption-ridden society. It has never worked in the society where citizenry is selfish, self-centred, lover of money, hater of hard work and highly tribal.

It sounds funny when government thought foreign and private investors will develop economy on its behalf. “It is the owner of the load that first put all effort to lift his load“. “It is usually the owner of the load that carries the heaviest part of the load”. And “Give hoe to a madman; he will hoe to his side.”

Government cannot be a bystander when it comes to development of strategic industries. It does not work that way.

China and India steel industries were developed by government. Why? It is because the governments see the industry as strategic. I challenge anyone to produce the list of privatised companies in Nigeria that had made Nigerian economy better off. Does that mean that government should be involved in running all kinds of business activities? The answer is no. But the involvement of government in strategic industries is critical and desirable.

I suggest that government, if serious about national industrial policy as prescribed by Asiwaju Tinubu and considering paucity of fund, should go in the way of Nigeria Liquefied Natural Gas ownership structure for Ajaokuta Steel Mill. I suspect insincerity in any other approach.

How far did Murtala Muhammed Airport and Lagos-Ibadan Expressway concessions take us in the past?

These thoughts will apply to petrochemicals and plastic products industries.

I suspect, if I read Asiwaju Tinubu’s mind correctly, this is what he means by Prescription (Drug) No l to fix Nigerian economy. It is different from documentation of industrialization process or long essay on industrialization of Nigerian economy and the development of enablers and support structures in terms of infrastructures and the likes.

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