Tag: production

By Sonni Anyang

Over the last two or so decades, the view seems to have taken root in Nigeria that we can somehow sing, dance, code, post, brand and speculate our way into meaningful development.  This is an illusion; it is not going to happen—certainly not soon enough to make much of a difference in the conditions under which most of us live.

A country of over 200 million people who must eat, clothe themselves, shelter from the elements and carry on with life in the 21st century, has no alternative to making the tangible things that support life in this day and age.  In other words, Nigeria must urgently privilege production over everything else, if it is to make sustainable progress.

It is difficult to locate the exact point in time when the focus of national energy shifted from making things to services.  Since such changes rarely happen overnight, the pivot likely took place without apparent notice over many years.  Looking back however, we can identify some moments in the regression.

One such moment was the introduction of Structural Adjustment Programme (SAP) by the Ibrahim Babangida regime in 1986.  SAP ushered in trade liberalization, market-driven exchange rates, financial deregulation and privatization.  The immediate aftermath was, of course, an explosion in the financial services sector.  Everybody in Nigeria and his uncle went into wheeling and dealing. We all became operators of banks, finance companies of all types and brokerage houses. The best brains and the bulk of available investment capital went into the making of money from money, turning the country into a giant financial bazaar.  Thus did bankers and speculators become the toast of the Nigerian society.

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The next big, identifiable moment, was the arrival of Donald Duke as governor of Cross River State.  The young governor as he then was, got the entire country—from President Olusegun Obasanjo to nominally staid bankers and the general populace—charged up about the prospect of turning his state into a veritable tourist paradise. Programmes and projects like the Obudu Cattle Ranch, the Mountain Race, Tinapa Resort and of course his crowning glory, the Calabar Carnival, initiated by Duke, sold the entire nation on a vision of boundless prosperity that an endless stream of tourists would bring to Cross River State and thence to the rest of the nation. 

Then there was the emergence of Nollywood in the 1990s which held the promise of turning the country into one huge movie production set, with millions earning their living therefrom while enjoying all that comes with the celebrity lifestyle of silver screen idols.  Before we knew it, film producers, directors, script writers, production companies and actors and actresses had sprouted across the length and breadth of the country. Matters have now reached the point where it appears, young Nigerians who are not movie stars or producers, aspire to be either musicians, comedians/ MCs, skit makers, social media influencers or other sorts of yet-to-be invented performance artist. Not for them anymore the unglamorous toil on farms or the anonymous drudgery of factory work.  In this immediate connection, the success of Nigerian musicians on the world stage has served to pour petrol on a raging fire and to confirm entertainment as a sure-fire route to prosperity.

At the level of public policy, the view of entertainment and the performance arts as viable economic activities has received the tacit support and direct endorsement of governments in Nigeria. The rebasing of our GDP computation in 2013 explicitly acknowledged entertainment as an economic activity and by that simple measure, saw Nigeria propelled to the top of the GDP league in Africa. Since then, a number of government intervention measures have been announced to support movie making and related activities. NEXIM, the country’s prime export-import bank, has even established a special lending window for the creative and entertainment ‘industry’. There can be no question that Nigeria is no longer ‘playing’ with entertainment.

Another remarkable juncture in our march to the service economy was the introduction of the GSM technology in the 1990s, powered by the internet infrastructure first laid in the 1960s as a hub for interaction among scientists but mainstreamed over time into a global loop for connection among people across space and demographics.  A truly breath-taking spinoff from the internet-GSM convergence is the so-called social media, which has taken the nation’s infatuation with services as the dominant mode of economic activity to an altogether dizzying level. Today, many Nigerians, particularly the young but also quite a few adults, including policy makers, seem to believe that the solution to mass impoverishment in the land lies not in producing material things like yam, rice, cassava, cotton, electric bulbs, chairs or even the computers and handheld devices that are required to use the internet and social media, but in developing content, posting stuff, speculating on crypto currency, playing in foreign exchange markets or going live on certain apps and generally trying to make money for nothing (apologies, Dire Straits). 

While the pivot from production to services in Nigeria cannot be said to have been deliberately engineered, it is also the case that some people, including economists, have come to believe that the early ascendancy of services in an underdeveloped economy like Nigeria is not necessarily harmful and that services can drive sustainable growth and development.

Observing the trend of the increasing domination of the services sector against declining production sectors (agriculture and manufacturing) in total output in mature developed economies like the US 50/60 years ago, some economists started talking about, or even celebrating, the arrival of a so-called ‘post-industrial age’ (Daniel Bell: The Coming of Post Industrial Age, 1976). It was claimed that the world, or at least, the advanced parts of it, had entered a phase in which prosperity would no longer derive from the production of tangible things but from the provision of services. Much later, perhaps encouraged by the expanding share of services in the GDP and exports of a few underdeveloped countries like India, some people started to push forward the view that such countries could successfully avoid the historical trajectory taken by the West which involved passing through a phase in which production, particularly manufacturing, provided the main impetus for growth and prosperity. Such Third World countries, it has been claimed, could leapfrog to services and thence, to developed status. As the IMF (who else?), one of the key advocates of this view put it, the premature turn to services, “need not hinder economy-wide productivity growth and the prospects for developing economies to gain ground toward advanced-economy income levels” (IMF, World Economic Outlook, 2018). 

The leapfrog advocacy runs counter to the earlier theoretical position that for countries in the global South to stand a chance at attaining high income status, they had to rapidly expand production, especially manufacturing. It also ignores the established fact that virtually every high-income economy known to history today achieved that status on the back of production, especially through manufacturing industry. (A few small countries have attained high income status as a result of special resource endowments, tourism and offshore financial services but they are the exception that proves the rule).

Notwithstanding the enthusiasm in certain quarters for the expansion of services as the prime driver of development or even the unfortunate reality that services are now so dominant in the national output mix, it is highly doubtful that developmental success awaits Nigeria at the end of that particular route. Our experience so far (and even that of India) suggests that an early turn to services is deeply dysfunctional to development.  By early turn here, we mean the emergence of services as the dominant economic sector at relatively low levels of development as measured by GDP per capita.

For a poor country like Nigeria therefore to seek to skip production and to depend on services for its growth and development represents a mistake of monumental proportions. That we have inadvertently arrived at that position given the enthusiasm in Nigeria for service activities and their dominance in total output today, means that from a developmental point of view, we have seriously lost our way. Such a developmental trajectory is highly unlikely to lead us to the promised land.

Course correction is urgently called for.  Conscious, deliberate effort is required to steer our way back to a production-focused economy, thereby generating real development.  Service activities need not be totally abandoned but their pursuit should be undergirded by extensive and intensive domestic production.

•Anyang is a former federal commissioner at the Revenue Mobilisation Allocation and Fiscal Commission, a former banker and journalist.