SUSTAINABLE INDUSTRIALIZATION OF NIGER DELTA REGION:
THE ROLE OF NDDC
Engr. Samuel, Ajenakevwe Adjogbe, FNSE, FNIMechE, MASME, MNSBE
Executive Director Projects, Niger Delta Development Commission
Let me begin by introducing the topic of this paper which is: “Sustainable Industrialization of Niger Delta: The Role of Niger Delta development Commission, NDDC”. This topic was chosen in order to bring into focus the short, medium and longer-term challenges that the Niger-Delta region will be exposed to, and what effort needs to be undertaken now, especially the role to be played by NDDC, to engender a sustainable regional economy and development that benefit the people of the region and result in peaceful coexistence and social harmony in the future.
In addressing this topic, I will review the Niger Delta region situation within the context of our national economic space, because national industrialization and technology policies have a direct influence on the industrialization of the Niger Delta region. It is also important that I highlight two key words of this discussion as it relates to the Niger Delta region. The first is “Sustainable” and the second is “Industrialization”. I will define the word “Sustainable” as it relates to our discussion today as: “to last or continue to exist for a long time”, while the word “Industrialization” is: “any deliberate and sustained application and combination of suitable technology, management techniques and other resources to move an economy from a traditional low level of production to a more efficient and improved system of production”.
If we localize this to the Niger Delta region, we can define industrialization as a process by which the Niger Delta region economy can be transformed from an extraction-based economy into a manufacturing-based economy”; and by extraction-based, I mean an economy that relies on the extraction and export of primary products or raw materials such as oil and gas, farming, fishing and mining products.
The quest for Nigeria to be an industrialized economy with high sustainable growth rates has been the pre-occupation of many administrations since after independence. Regrettably, the Nigerian economy has performed relatively poorly, resulting in stagnation and increasing poverty levels. Despite our effort since 1960, the level of industrialization has remained low, even with the oil boom that came intermittently. I can safely and comfortably say therefore that our national reaction to the oil-boom was economically irrational.
To buttress my position, I think it’s important to set the context of this discussion by laying a foundation for it. This means that, I will be taking you through an overview of the effort that Nigeria has been making towards industrialization since independence.
I will please request that you pardon the length of this speech; as nothing is more important in the Niger Delta region today than an effort at industrialization.
It is obvious to all of us that the structure of the Nigerian economy is typical of an underdeveloped country, with over half of our Gross Domestic Product (GDP) accounted for by the primary sector and agriculture still playing an important role; however, the oil and gas sector continues to be the major driver of the economy, accounting for over 95 per cent of export earnings and a huge chunk of government revenues. In contrast, the industrial sector in Nigeria (comprising of the manufacturing, and utilities) accounts for just a tiny proportion of economic activity while the manufacturing sector contributes an even lesser amount to our GDP.
Our nation is today at a point where it is being compelled not only by economic and technical imperatives, but also by social considerations to seek alternative development paradigms. The combination of a significantly low price of crude oil and an increasing population, plus current threats to peace and stability in the region implies that a new path must be pursued towards self-sustainability. I am gladdened by the fact that the current administration realizes these imperatives and is already taking steps to addressing this situation.
Nigeria, and indeed the Niger Delta region, can no longer rely on the actions of yester years that have caused us to remain overly dependent on external nations for our quality of life. This is even more important now that over 90% of value-added goods that we consume in this country are imported. Our over-dependence on importation must be challenged with purpose and vigor.
Of particular note is the Niger Delta region which is unique in many areas. It is unique by its ecology, its overdependence on her major natural resources which are oil and gas, and its spread of socio-culturally divergent groups with a fast-growing population. It is the combination of these factors and the attendant restiveness that has plagued the region for a long time that makes the need for diversification from a mono-product economy a lot more imperative.
It is said that if you do not know where you are coming from, it is more likely you may miss your way going forward. Nigeria has since independence been involved in several attempts to industrialize the nation; and it is therefore important that we explore the evolution of our industrial sector over many decades, and to see what actions were taken, as well as appreciate some of the impediments that may have limited our migration into that unique class of industrialized nations.
Historically, the performance of the Nigerian economy has been unimpressive in terms of growth and other macro-economic performance indicators.
The trend in the macro-economic performance of the Nigerian economy is divided into five or more distinct periods characterized by significant shifts in economic policy management. These periods are as enunciated below:
(1) Immediate post-independence period starting from independence in 1960 to the advent of the first military regime in 1966
(2) Post-civil war oil economy starting from the end of the civil war in 1970 to the handover of government by the military to civilians in 1979
(3) Transition to an austere economy that emerged in the second republic and the subsequent adoption of the World Bank/IMF-led Structural Adjustment Program in 1986
(4) The era of SAP and guided economic liberalization starting from 1986 to the advent of the new democratic dispensation in 1999.
(5) The regime of further economic liberalization starting from 1999 and resulting in emergent macroeconomic stability in recent years.
(6) The present regime of diversification, a situation that has been compelled upon us by the recent depression in crude oil prices; a policy that is now being aggressively pursued by President Muhammadu Buhari, as a vehicle to move Nigeria away from a mono-product economy in order to stabilize and grow the economy of the country.
The period from 1960 to 1979 was characterized by rapid industrial growth largely due to the inefficient import-substituting industrialization (ISI) policy and aided by the oil economy. However, the decade of the 1980s was a period of industrial decline that was widespread in sub-Saharan Africa. There were indications that the decline might have been halted in the 1990s, but improvements appeared to be only marginal and not even noticeable.
At independence in 1960 and for much of that decade, agriculture was the mainstay of the Nigerian economy providing food and employment for the populace, raw materials for the nascent industrial sector and generating the bulk of government revenue and foreign exchange earnings. The first National Development Plan from 1962 to 68, was Nigeria’s first attempt at a comprehensive and integrated planning and the economy of this period was characterized by obvious deterioration in terms of trade and the sudden rise of the oil economy following the discovery of oil and its exploration, exploitation and exportation in commercial quantities in the Niger Delta region. It was within this period that the first major energy projects such as Kanji Dam and Ughelli Thermal Power Plants were built and commissioned, and they provided a vital infrastructural backbone and catalyst for the nascent industrial sector at the time. Other important industrial and commercial infrastructures developed during this period, which were considered crucial for catalyzing industrial take-off in Nigeria included an oil refinery, a development bank, a mint and a security company.
It must be said, however, that this period was characterized by a high degree of technological dependence on foreign know-how to the extent that it seemed to have neglected many of the factors required for managing a truly emergent industrial sector and in particular, the management of technologies transferred or acquired. As a result of this, many domestic endowments of the country were grossly neglected.
Our Second National Development Plan (1970-74), attempted to address the limitations of the ISI strategy, and placed emphasis on ‘the upgrading of local production of intermediate and capital goods for sale to other industries’. This was the first systematic effort to create an industrial structure linked to agriculture, transport, mining, and quarrying. This Second Plan period coincided with Nigeria’s newly acquired status as a major petroleum producing countries and it enabled expansion in infrastructure and public sector investment in large-scale manufacturing. With the benefit of enormous foreign exchange inflows, the government invested in ambitious and costly industrial projects in sectors such as iron and steel, cement, salt, sugar, fertilizer, pulp and paper, among others. It was also expected that these developments would spin off other firms leading to a generation of enterprises in response to the ISI strategy.
Unfortunately, the shallow nature of Nigeria’s technological capacity prevented the economy from moving beyond the elementary phases of these projects and indeed, virtually all of these projects have today either been shut down or operate at very low capacity. This period also witnessed a dramatic shift in policy from private to public sector-led industrialization and industrial planning took place in the public sector which also executed most of the industrial projects as the government invested directly in productive activities. It was clear at this time that Nigerian entrepreneurs did not have the money or the techno-managerial capacity to establish and manage such enterprises and so the government had to lead the way. On balance, the scarcity of human capital including techno-managerial capabilities and skills required for initiating, implementing and managing industrial projects was a major aspect of the industrial development challenge of the 1970s.
The 1972 Act on Indigenization of Enterprises Operating in Nigeria resulted in a policy that facilitated the transfer of ownership and control to Nigerians of enterprises formerly owned (wholly or partly) and controlled by foreigners.
The Third National Development Plan (1975-80) was launched at the height of the oil boom and the emphasis remained on public sector investment in industry, especially heavy industries. Therefore, with easy access to foreign exchange, many private firms opted for investments in light, low technology consumer industries, but they were also heavily dependent on imported machinery and raw materials. It was apparent that the country entered into industrial project agreements with very little concern for the country’s capabilities for technology acquisition, and not much focus was given to ameliorating this situation.
Again and unfortunately, this period coincided with a time that the nation’s oil sector had become more vibrant and prosperous and the gates of the economy was opened up to all sorts of imports which had a devastating effect on real industrial growth. It can thus be said that the period of the Third National Development Plan woefully failed to advance the course of industrial development in Nigeria in any significant or positive way.
The Fourth National Development Plan (1981-85) sadly corresponded with the beginning of a global economic recession that caused a serious decline in foreign exchange earnings, instability in our balance of payment and resulted in an unemployment. Our hugely import-based manufacturing sector was severely hit. This was a period of reducing world oil prices, resulting in dwindling foreign exchange earnings that left industries in need of foreign exchange to import new materials and parts. This recession exposed the weaknesses in Nigeria’s industrial structure and planning; and it was evident that existing industrial development strategies could neither solve the problem of economic under-development nor the social ones created by mass poverty, unemployment and insecurity of life and property.
It was in an attempt to address these weaknesses and the ineffectiveness of previous development planning efforts, that the structural adjustment program (SAP) was adopted in 1986 as an alternative framework. SAP was intended to promote investment, encourage utilization of domestic technology by motivating the use of local raw materials and intermediate inputs instead of imported ones, stimulate non-oil exports and provide a base for private sector-led development to promote efficiency of Nigeria’s industrial sector. It was also during this period that a national Science and Technology policy (which henceforth I will refer to as S&T) was formulated and launched for the first time in 1986.
This S&T policy marked the beginning of the recognition of Science and Technology as a vehicle for successful industrial development in Nigeria. It was to facilitate the aspiration of this ‘self-reliance’ policy that a Raw Materials Research and Development Council (RMRDC) was established by Decree No. 39 in 1987, while the Standards Organization of Nigeria (SON) was also established for the purpose of ensuring standardization and adequate quality control in industrial production and manufacture.
The S&T policy emphasized the transfer of foreign technology to local firms, via licensing and registration of patents, trademarks, technical assistance arrangements, research and development, training and operations. Sadly, this whole exercise appeared to be more theoretical than realistic, as there is little evidence that this policy was successful. It could be argued that innovation was clearly absent during this era of industrial development and its deeper implications were not fully grasped nor appreciated. A very important aspect that the era of the S&T policy missed was the need to transit from just Science & Technology (S&T) to Science, Technology and Innovation (STI).
Innovation can be described as the application of knowledge acquired through S&T investment to achieve production. In fact, until applied in the production of goods or services and translated to development, it cannot be considered as innovation. The fields of new technologies at the time, especially ICTs and biotechnologies presented new windows of opportunities for technological and economic development, but this was at a time that our country was still grappling with basic industrialization efforts.
At this same time, there was need to stimulate competition among domestic firms and between domestic import-competing firms and foreign firms with the objective of promoting efficiency. This culminated in a trade and financial liberalization policy that was enacted in 1989. It was also on the strength of this that the National Economic Reconstruction Fund (NERFUND) was set up in the same year to complement the industrial policy. The objective of the industrial policy that was operational at the time was to reverse some of the provisions of the Nigerian indigenization policy and open up the economy for foreign investors and investment.
It was not until 1990 that the need to fit Science, Engineering and Technology (SET) sectors within our industrial and economic development endeavors became a key issue among the S&T community. As would be expected, the undue pampering of the manufacturing sector during the import substitution era had led to the sector’s inability to chart an independent growth trajectory in a way that could rival the industrialization rate of some other developing countries, especially the Asian Tigers (Taiwan, South Korea, Hong Kong and Singapore).
Following the failure of the S&T policy, it was again revised in 1992 and targeted at accelerating the emergence of our indigenous industrialization capacity. The need to translate S&T to include ‘innovation’ as an engine of development featured in our National Economic Empowerment and Development Strategy (NEEDS). This framework identified Science-Technology-Innovation (STI) as an issue that should be promoted in order to achieve economic development objectives and it was complemented by the Seven-Point Agenda (SPA) that was introduced in 2007.
The SPA enumerated seven specific sectoral targets that were key development areas envisaged to make Nigeria one of the 20 largest economies by year 2020.
From the above review, it is evident that improved indigenous Science, Engineering and Technology (SET) capacity has a crucial role to play in industrial development. It would therefore be out of place not to properly engage and involve the formalized bodies that represent Science, Engineering and Technology vocations in the development of any industrial development policy or strategy.
We are therefore, in a position to say that since independence, the industrial sector has occupied a prominent position in Nigeria’s economic development programs and policies. These programs took into consideration the resource endowment of our country in terms of raw materials, land, labor, capital, entrepreneurship, international goodwill, etc. with the aim of attaining industrialization. However, decades after, and with the Nigerian government having embarked on numerous economic and industrialization policies starting from the First to the Fourth National Development Plans and with the same aspirations having led to Vision 20:2020, etc., it is sad that our dreams for industrialization may not yet be realized as soon as we expect. It is worrisome to note that while the Asian Tigers have moved on to become industrialized economies, Nigeria (which is now considered as part of a group of African Lions) has appeared tamed and growling without significant success.
Going forward, a significant question can then be posed: “Why can’t the Niger Delta region take up its own initiative to jump-start its industrial development?” Clearly, the Federal government has already laid some foundations to support it.
My opinion is that the Niger Delta region, being a peculiar one with its own unique challenges, must establish and pursue its own industrial development priorities collectively, while seeking out those opportunities it can latch on to ensure the sustainability and stability of the region. It is with this in mind that NDDC has begun to contemplate the role it can play to drive the industrialization of the region.
I will like to state that every nation, region or society takes different routes towards industrialization because of their differential socio-economic, cultural and political settings; and what is now universally accepted is that some form of strategic economic planning is necessary for industrialization to take place, and that different degrees of planning are recognized and appropriate, depending on prevailing conditions.
We all agreed that the Niger Delta region is peculiar in many ways. Today, it is faced with a lot of environmental and developmental challenges that include but not limited to a decline in agricultural productivity, increasing level of poverty, low level of industrial activities, low job opportunities, environmental degradation and social conflicts. Traditionally, it is an area that was predominantly involved in farming and fishing activities; but over the years the natural environment has been negatively impacted, with many areas polluted by the proliferation of oil and gas activities. The economy on the other hand, has broadened to include commercial and oil-related activities.
We also know that recent technological advancements in oil production operations, especially the production of shale oil and the many new entrants that have come into the global oil market, have increased the availability of crude oil all over the world. This increase in the supply side of the market has caused a sustained depression in the price of crude oil, with a resultant blow to our national economy, leading to a recent economy recession in our country.
There is no sign that the global capacity to sustain high availability of crude oil stocks will recede in the foreseeable future; therefore, the consequence of price depression has already triggered a cutback to critical investments in oil and gas infrastructure. And knowing also that, oil and gas production and related activities have remained the mainstay of the economy of the Niger Delta region in particular and Nigeria at large, it behooves us to imagine how a prolonged era of lower oil prices will impact this region and the Nigerian nation.
We have to also consider the fact that, within the last two decades, the unceasing social tension in the region has resulted in the migration of many oil operators away from it. We are all witnesses to the recent disruptions to oil and gas production operations as a result of the destruction of production infrastructures, which were mainly pipelines. This situation has already foisted a severe decline in the income of the various state governments and development agencies within the region, as the income is linked to the operational 13% derivation principle and 3% of oil companies’ annual budgets equivalent, as the case may be. This is also the basis upon which many development agencies at the state level were created in order to support sustainable growth of oil-producing communities.
Looking forward, the risks associated with any prolonged reduction in the income of this region requires that, all regional and state apparatus of government begin to seriously re-assess how this will affect the economy and lives of the peoples of the region. It should compel all parties to start taking specific remedial actions, especially the vigorous pursuit of alternative sources of income, to mitigate the negative consequences that such a situation would foist upon the region. It is in consideration of these latent risks that NDDC is concerned enough to bring into focus the need for collective action towards the industrial development of the region as one of the principal means for peaceful and sustainable existence.
There is no doubt that the industrialization of the Niger Delta region will offer immeasurable gains that will affect almost every facet of life in the society. It will increase agricultural and manufacturing outputs, allowing people to take jobs in many other sectors, while increasing the amount of food, consumer goods and services available to the populace. While increasing economic output, industrialization will also result in population migration and the associated positive and negative consequences within affected areas. It will spur technological and scientific advances that can change the economic, social and political landscape of the entire region.
As a matter of perspective, we can correlate life in Niger Delta region to what obtained in Europe before the industrial revolution. It was a time when most Europeans were farmers and most of the economic activities were centered in and around small towns and villages. Work and waking hours were dictated by the rising and setting of the sun. However, the advent of industrialization in the 19th century impacted lifestyles and livelihoods and resulted in a concentration of population in cities, which soon became dependent on rural communities for food. The rural communities, in turn, became dependent on the cities for manufactured goods and tools to make their lives better. In this context, industrialization is usually able to tie divergent communities together and create a more cohesive existence.
In addressing the question of industrialization of the Niger Delta region, we can also ask ourselves and be challenged by the speedy growth and industrialization of the four "little dragons" - Taiwan, South Korea, Hong Kong and Singapore - which all together constitute less than four percent of the world's population, but has become one of the pillars of the modern industrial world order. How did those "little dots on the eastern periphery" of the globe achieve such a transformational industrialization? A most concise and penetrating explanation of the factors that gave rise to this was given by one of the leading scholars on East Asian affairs, Prof. Ezra F. Vogel, who sees several "situational factors": U.S. aid, the destruction of an old order, an eager and plentiful labor supply, a sense of political urgency and familiarity with the Japanese model of success as one cluster of factors that led to the speedy industrialization of those four nations mentioned above. Vogel also admitted that, this success came from a complex of institutional and cultural practices that included a meritocratic bureaucracy, importance of group consciousness and a focused goal of self-improvement. In other words, it is important to recognize that, apart from economic and political considerations, culture and institutional practices also play a role in the overall development pattern of a people, a region or a nation.
I am thus convinced that, a re-direction of focus and effort will be required for industrial development to take place within the Niger Delta region. I do not doubt that, there will be huge challenges that will call upon the best faculties, the resourcefulness and overall commitment of the people; however, the outcome will be worth much more if the Niger Delta region can put its thinking cap together and begin to take the necessary action to move in the direction of industrialization, by all means, practically possible.
There have always been discussions about the need for industrialization of the Niger Delta region and a number of issues have been identified that will be critical to the success or failure of any strategies to be adopted. I also acknowledge that the attainment of our industrialization objectives will depend to a large extent, on the development of critical infrastructures for industrial clusters and leveraging private sector collaboration. This in turn, will require the development of efficient, accountable, transparent and participatory governance, the creation of strong, efficient and effective public service institutions and establishment of a competitive private sector-led business environment characterized by sustained macro-economic stability. It will also require the enhancement of regional security and improvements in the administration of justice at all times.
Among these issues, there are three elements in particular, that continue to top current debates and these are; the development of the critical infrastructures, tackling corruption and ensuring regional peace and security.
Indeed, there are many other obvious impediments to industrialization of the Niger Delta region and this forms a basis for appreciating the broader challenges that lie ahead. The main impediments include but may not be limited to the following:
The Niger Delta Development Commission, NDDC is basically an interventionist agency of government with a broad mandate and I will like to state its founding mission here, which is ““to facilitate the rapid, even and sustainable development of the Niger Delta into a region that is economically prosperous, socially stable, ecologically regenerative and politically peaceful” It therefore, means that NDDC can and should take an interest in the industrialization of the region, as this is within its core mandate.
However, being only an interventionist agency, there are limitations to what NDDC can do or not do in pursuit of the lofty objective of industrializing the Niger Delta region. Having identified some of the main problems and factors that hinder the industrialization of the region, the next plausible step will be to review and proffer solutions to these problems and to see what role the NDDC has been playing and will continue to play, or the new roles that it can undertake to support the industrialization of the region. Considering the problems that I have enumerated above, the potential solutions and NNDC role would include but may not be limited to the following:
It is the role of government to provide adequate infrastructures like electricity, good road network, rail and water transportation facilities, improved communication infrastructures and so on, to support industrial and manufacturing activities. This would facilitate the production and movement of goods (raw and finished products) within and outside the region. The ongoing plans for a railway link between Calabar and Lagos to be undertaken by the federal government (under the ministry of transport) is a very welcome development and this will hopefully boost the capacity of the region to evacuate both raw and finished goods from manufacturing and industrial clusters and special economic zones.
On its part, NDDC has been intervening since inception in the provision of roads, power supply facilities, water supply, dredging, shore protection projects, canalization and a host of others to improve the physical infrastructures in the region and will continue to do so in the foreseeable future.
The internal security of the Niger Delta region has become a very big challenge in recent times. Internal conflicts, including ethnic and economic, have had debilitating effects on the economy, most notably by scaring investors away from the region. In fact, the recent upsurge of violence in the region heightens the need to comprehensively address the persistent causes of social tension as a risk factor to the Niger Delta region as an investment destination. It has always been the role of government to minimize the somersault of policies that impact on the socio-political stability of the region. Appropriate measures combined with a significant commitment of both federal and state governments are necessary to tackle the insecurity problems in the region, especially the impact of militancy and social disturbances.
To this end, NDDC can and will continue to play a role in the enthronement of peace by engaging the people (especially the youths) in various training, skills acquisition, vocational and sport activities that it is involved with. On another flank, NDDC will continue to support and actively participate in propagating the message of peaceful coexistence, as well as creating more awareness about the negative impact of militancy and disruptions to oil and gas operational facilities in the region.
The place of skilled manpower in supporting the institution and sustenance of industrial development cannot be over-emphasized. It is the role of government to ensure that our educational systems are improved to meet the needs of our society.
To facilitate industrial growth, technical courses should be introduced into the secondary and university curricula; and more emphasis has to be placed on practical skills rather than theories. It is advisable for the various state governments to adopt the Chinese strategy of sponsoring eligible students to go to more technologically advanced countries to acquire requisite technical know-how that would be invaluable to the region in its quest for industrialization. Hitherto, priority was given to oil and gas related training.
NDDC has already been involved in this area of activity through its annual Overseas University Scholarship programs. However, there may be need for it, as well as the various state governments of the region, to re-prioritize and bring more into focus, the acquisition of technical and industry-related knowledge and skills.
Technical schools should begin to receive more attention, both in availability and funding. Where necessary, NDDC shall be willing to partner and collaborate with the various state governments and other development agencies to ensure improvement in facilities, enrolment and the creation of opportunities for the graduands of these institutions. Besides, scholarship programs can also be instituted to support bright indigent students that may require assistance to partake in these learning institutions.
The Federal Government has established a wide array of policies that will impact on the region’s quest for industrialization. In this regard, there is a plethora of Trade and Export Promotion Policies that are already in place that can be tapped into by potential industrialists in the region. Presently, there are numerous incentives for export promotion that are relevant and applicable to the region, but it must be noted that the Federal Government still uses import prohibition to protect its manufacturing and agricultural sectors. This is understandable because the production base is relatively weak, import-dependent and highly limited in technological capability. The import prohibition list includes a wide range of manufactured consumer goods that were often dumped in Nigeria’s relatively large market. A few agricultural products (e.g., fresh fruits, frozen poultry, etc.) that are produced locally in large quantities are also included in the import prohibition list to protect the local industry and encourage job creation. On the export prohibition list are either staple foods or crops that are important for food security and also commodities that could serve as raw materials to local industries. Such commodities include rice, maize, timber, raw hides and skin, scrap metals, unprocessed rubber latex and a host of them.
As indicated by the Nigerian Investment Promotion Commission (NIPC), the Nigerian trade policy currently has elaborate export incentives aimed at encouraging and assisting exporters to increase and diversify the total value and volume of non-oil exports from Nigeria. These incentives are designed to address the major problems of supply, demand and price competitiveness of Nigeria’s exports. Some of these incentives include but may not be limited to the following:
It is also relevant that many existing institutions have been considerably strengthened to support industrialization and this includes the following:
• The Central Bank of Nigeria (CBN), now relatively autonomous and empowered
• The Nigerian Customs Service (NCS) - Customs and Excise Department
• The Bureau of Public Enterprises (BPE)
• The National Communication Commission (NCC)
• The National Agency for Food, Drug Administration and Control (NAFDAC)
• The Standards Organization of Nigeria (SON)
• The Nigerian Export Promotion Council (NEPC)
• The Bank of Industry (BOI)
• Nigerian Agricultural, Co-operatives and Rural Development Bank (NACRDB)
• Small and Medium Enterprises Development Agency of Nigeria (SMEDAN);
• National Information Technology Development Agency (NITDA)
• Economic and Financial Crimes Commission (EFCC)
• Independent Corrupt Practices and other related offences Commission (ICPC)
Most of the institutions involved in product development and marketing of industrial products are mainly regulatory agencies and professional associations. Two major regulatory agencies that have had a profound impact on industrial policy implementation are the National Agency for Food and Drug Administration and Control (NAFDAC) and the Standards Organization of Nigeria (SON). NAFDAC has been quite successful in reducing the incidence of fake pharmaceutical and chemical products; while SON has the responsibility for standardization and regulation of the quality of all industrial products.
Other regulatory institutions that relate to industrial policy implementation include the following:
• Nigerian Investment Promotion Commission (NIPC)
• National Office for Technology Acquisition and Promotion (NOTAP)
• Nigerian Export Promotion Council (NEPC)
• Nigeria Export Processing Zone Authority (NEPZA)
• The Consumer Association of Nigeria (CAN)
Besides the above, the NIPC provides insights on specific sectoral policies aimed at stimulating investment in those areas considered to have strong potential for growth and wealth creation. These policies are in the form of incentives and they cover the following key areas:
• Agriculture and agro-industry
• Solid minerals
• Oil and gas industry
From the above, it is evident that the Federal Government has made serious effort at creating an enabling environment for industrialization to flourish. What remains is what the citizens, the entrepreneurs, operators and private investors (whether local or foreign) in the Niger Delta region can do with it. Surely, the lack of internal peace and security continue to weigh negatively and heavily on the region’s drive for industrial growth. The impact of corruption is prevalent and severe and it is for these reasons that the Federal Government has placed emphasis on securing the peace within the region, so as to boost social stability and economic progress.
In addition to the above, it will be helpful if the state governments of the region consider the enactment of relevant laws and regulations and improve on existing institutions to minimize potential disruptions to industrial operations in the region.
Within this general framework, the Niger Delta Development Commission (NDDC) can, in conjunction with the State governments of the region set up a policy-making architecture that comprises a Secretariat with Policy Management and Coordination capacity for the industrial development of the region. This body shall have the governors of the nine states in the region as members with a view to fostering regional integration and proper policy co-ordination. It will formulate and support implementation of an industrial strategy and associated policies for the region, with an operational mandate to promote increased production of non-oil and gas products for domestic consumption and export, foster industrialization, attract investment and encourage the development of related enterprises.
The proposed industrialization strategy will aim at achieving greater competitiveness in the production of specific processed and manufactured goods by effectively linking industrial activity with primary sector activity, domestic and foreign trade and service activities. In this regard, the strategy will include the following objectives:
• Stimulate primary production to enhance competitiveness of the real sector
• Significantly increase production of processed or manufactured goods for export
• Stimulate domestic and foreign trade in value added goods and services
• Strengthen linkages among key sectors of the economy
In undertaking this role, the coordinating body will interface with relevant agencies that play important roles in the trade and industrial sectors in the country, such as BOI, SMEDAN, SMIEIS, NEPZA, NEPC and NIPC. It will also interface with the Raw Materials Research and Development Council (RMRDC) and the Nigerian Customs Service (NCS).
It will also be relevant for private sector groups such as Manufacturers Association of Nigeria (MAN), the National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), the National Association of Small-scale Industrialists (NASI), as well as the Council for the Regulation of Engineering in Nigeria (COREN) and the Nigerian Society of Engineers (NSE); to be invited to stakeholders parleys on draft industrial and trade policies to make their input and on occasion, have representations in committees set up to craft the policies, implement, monitor and evaluate them.
I am also aware of the existence of a development body called BRACED Commission, which is an initiative of the South-South states comprising Bayelsa, Rivers, Akwa Ibom, Cross River, Edo and Delta states. This body can coordinate the interests of the South-South states for the industrial development of the zone, while Ondo, Imo and Abia states that are also involved with oil production activities are represented within a broader coordinating organ in order to facilitate the industrialization of the entire region. This will not remove from the collaboration that these states may already have within the South-West and South-East zones.
An emerging sector in Nigeria is the setting up of sector or industry clusters. These can be represented by Special economic or Export Processing Zones (EPZ). The Niger Delta region seemed to have focused more on special Oil and Gas Free Zones to the detriment of the General-purpose Trade/Export type. It is now very important that more of the General-Purpose Trade/Export type be established in the region to take advantage of the limited capacity to provide infrastructure to support industrial growth. Four areas are discussed below:
Working through the proposed industrial development coordinating body, NDDC can collaborate with the Federal and State governments and other development partners to promote a comprehensive policy on cluster development for manufacturing and processing industries. This strategy will promote efficient and intensive mechanisms for the processing and manufacturing of selected export materials through private-public partnerships (PPP).
It will include the development of industrial parks, industrial clusters, enterprise zones and incubator facilities. Such parks can be created in different zones or states to focus on the development of resources in which each has comparative and competitive advantages.
Some activities that can be readily identified for the Niger Delta region are: Oil and Gas services, Petrochemicals, Manufacturing (Fertilizers, Plastics, Fabrications, etc.), Agriculture, Fisheries and canning, Biomass, Ethanol, Biodiesel, Fruit processing, Quarries, Furniture, Particle boards, Plastic processing, Garments, Palm oil refining, Palm tree processing into biomass particle boards, Distributive trade (e.g. Tinapa), to mention but a few of them. Baseline survey could be conducted to determine which locations these clusters are best suited and developed.
Industrial clusters can be established to create areas of industrial activities and commerce that will cover between 100 and 1,000 hectares. Again, they will have to be exclusively devoted to the organized private sector (OPS) and take into cognizance access to roads, railways, sea ports, cargo airports and proximity to a city. Meanwhile, private investors or property developers, should be encouraged by policy to establish and run industrial clusters in each state. Industrial incentives similar to those in industrial parks will also be provided while each cluster can have a skill acquisition and training centre with different modules for SMEs.
These will be platforms of 5-30 hectares, targeted at incorporating the informal sector into the organized private sector. It will be designed to empower farmers and SMEs and enable them to efficiently and conveniently feed their products into the value-chain of large-scale industries. These centres will accommodate mechanics, block makers, small-scale furniture manufacturers, timber merchants, welders and metal fabricators, garment makers and other categories of artisans and vocational workers who constitute over 70 per cent of the private sector. Existing skills acquisition and training centres within these enterprise zones can be utilized for skills upgrading and improving overall efficiency.
Incubators can be established to serve as start-up centres for both new and inexperienced entrepreneurs, graduates of tertiary institutions, investors and vocational persons wishing to set up their own businesses. In these centres, prospective start-up persons and companies can be equipped with entrepreneurial skills and enterprise resources to help nurture them from the early formative stage to maturity.
The state of the agricultural sector in the region requires urgent intervention, if at the least, to support food security and job creation. As a result, the amount of raw materials produced by this sector is highly inadequate to support a manufacturing or industrial base. Manufacturers in the region may have to depend largely on raw materials from other regions for production activities and this can hinder the overall effort at industrializing the region. It is thus recommended that the state governments should pursue policies geared towards improving the agricultural sector to guarantee enough raw materials for industrial production. This could be achieved through agricultural mechanization and other means.
On the fiscal front, the processing of agricultural produce is considered a pioneer industry; and consequently, there is a 100 per cent tax-free period for five years. Also, all agricultural and agro-industrial machines and equipment are subject to insignificant duty. Furthermore, the agricultural credit guarantees scheme (ACGS) fund administered by the Central Bank of Nigeria allows up to 75 per cent guarantee for all loans granted by commercial banks for agricultural production and processing.
The development of the agricultural sector has been of interest to NDDC, but it requires more collaboration with the various state governments to ensure availability of land for farming purposes, delineation of property and approval of Certificates of Occupancy (where required) to enable farmlands to be used as economic instruments. Also, subject to the particular needs of an area, NDDC can support the agricultural sector by providing farm tools and equipment which can be available for hire as at when needed. Besides, by improving collaboration with agricultural institutes around the country, NDDC can facilitate the development of disease-resistant and high-yield seeds for onward distribution to farmers. It can also engage agricultural extension officers with the requisite skills and knowledge to support the agricultural sector. This is in line with the Federal government agenda of diversification of the economy.
The Federal government has tried to put in place a number of measures that will ensure that local industrialists and manufacturers have easier access to credit at lower interest rates. This is intended to encourage them to borrow, however stiff requirements for access to this credit and high interest rate on loans from commercial institutions discourage industrialists from borrowing.
It must also be understood that this problem is caused by government and financial institutions, as well as potential industrialists themselves. Most industrialists in Nigeria however are unwillingly to share the ownership and control of their establishments with other investors so as to accumulate enough finance to run such businesses and this leaves most companies with limited capital that restricts their growth.
NDDC has no direct role to play in access to credit, except that it continues to encourage small-scale operators to form cooperatives as a means of pulling resources together with a common objective in mind. Government can therefore achieve its objective of making funds available to this sector by continuing to empower development banks such as Bank of Industry (BOI) financially; as well as encouraging private financial institutions to consider a reduction in interest rates as a means of supporting the real sector of the economy.
Many locally-produced goods are still sub-standard and cannot compete with foreign products. It is therefore important that effort is made to support the improvement in quality of both the contents and packaging of these products. The on-going campaign for Nigerians to use “Made-in-Nigeria” goods is geared towards encouraging local consumption and it is a step in the right direction. NDDC can help to support this campaign through various communication channels and collaborative efforts.
NDDC will continue to encourage the governments of the region to actively support local engineering and fabrication companies to venture into the manufacturing of some heavy industrial machines that are currently imported from abroad. This will support backward integration and ensure speedy availability of spares and replacement parts. It can start by copying what India and China had done by encouraging public-private partnerships that will venture into this area. The rejuvenation of Ajaokuta and Aladja steel plants will go a long way to provide stock for this industry; however, it must also be supported by adequate power supply.
In its bid to industrialize the country as a whole, our governments have to continue to pursue macroeconomic policies that are favorable to industrial development in Nigeria and by implication, the Niger Delta region. It can adopt tax holidays, excise duty reduction and tariff protection as some of the means to achieving this. It can also grant special loans to encourage export of locally made goods.
Where there are lapses or negative impact of well-intended government policies, the organized private sector (OPS) is well-positioned to draw government’s attention to it; while it is government’s responsibility to give ear to such complaints speedily with a view to swift resolution of the complaints.
There is evidence of sufficient business co-ordination efforts in Nigeria that have been largely successful although the fortunes of the manufacturing sector remain abysmal given its low share of GDP and recent spate of closure of firms. This has more to do with a difficult foreign exchange regime occasioned by the low price of crude oil in the international market and challenges to continuous power supply. However, there have been periodic exchanges between the government and the private sector that have inspired a number of initiatives and interventions directed at improving the performance of the manufacturing and industrial sector. This includes the establishment of BOI, SMEDAN, SMIEIS, etc. Similarly, Nigeria’s electricity problems are now being tackled vigorously and with more commitment by the government of the day, realizing the centrality of power to industrial performance and job creation. More recently, the government has also provided special intervention funds to critical sectors of the economy.
We also have to talk about Corruption in Nigeria which still ranks highly in the Corruption Perception Index (CPI). Corruption has negative implications for investment and Foreign Direct Investment (FDI) flows into the country and previous anti-corruption policies implemented in Nigeria were more targeted at enforcement measures rather than addressing the root causes. The present government has determined that it will do all within its powers to rout corruption from our business environment. There are suitable laws and viable institutions to fight corruption in Nigeria today, however the greatest challenge is in formulating strategic plans of action to deal with the root causes which have been identified to include social insecurity, job insecurity and the exposure that comes from over-centralization of resources at the centre.
NDDC will continue to encourage investors to take advantage of the favorable business climate that is evolving in the region and will ensure the institutionalization of best practices in its own operations.
Industrialization comes with numerous benefits to any country or region that attains such a status. It is one of the best training grounds for skills development; it increases the flexibility of the economy and reduces dependency on external sources while providing employment, domestic earnings and where applicable, forms additional source of foreign exchange.
Some of the benefits that Niger Delta region would enjoy from industrialization include but not limited to the following:
Industrialization encourages mass production of goods, with attendant proliferation of support services which create an increase in employment opportunities. The production processes in factories will require a lot of labor resulting in the employment of capable hands in the production sector. Furthermore, as industries grow, more people would then be required to keep up with the enhanced rate of production. Although, I recognize existence of automated production systems but that does not eliminate human involvement, thus employment opportunity will always come with industrialization.
Industrialization can improve people’s lives in the region. As employment is generated, it goes to reduce poverty. Also, an increase in industrial output means that the populace would have a variety of goods and services to choose from at a relatively affordable competitive price. The impact is an overall improvement in the living standards of the people in nutrition, health care and education.
As industrialization leads to massive production of goods, some of these goods may not be needed for local consumption and would be exported. This will generate foreign exchange for our country, which will improve our balance of payments (BOP) and ultimately a stimulation of economic growth. Also, since many goods are made locally, it would lead to a conservation of foreign exchange, as funds that would have been used to purchase foreign goods are reserved.
The growth of the industrial sector would stimulate the growth of other sectors. For instance, the growth of the industrial sector would create a ready market for agricultural producers who supply raw materials and support operations in logistics. As the population around industrial clusters grows, there will be demand for ancillary services such as pharmacies, hotels, schools, restaurants, to mention but a few of them and this will further amplify job opportunities.
As the Niger Delta industrializes and factories become more prolific, managers and employees will be needed to operate them and this has a flow-on effect that enables the emergence of new and innovative products. Increased innovation also leads to higher levels of motivation and education, resulting in further ground-breaking inventions. This situation eventually improves the general knowledge base of the region.
A very important potential impact of the growth of the industrial sector will be a reduction in poverty levels. The present singular focus on oil and gas related activities will reduce and the correlation between an improvement in living standards and benefits arising from oil and gas production activities would be seen as complimentary. This would stimulate and sustain peaceful coexistence within the Niger Delta region, which is one of the primary mandates of the NDDC.
I will conclude this paper by emphasizing that the industrial sector in the Niger Delta region comprising manufacturing, utilities and mining (excluding oil and gas operations) has been mostly comatose for many years, as attention had been focused particularly on oil and gas production and related activities. However, the loss of income by many state governments in the region and agencies like NDDC that depend on the 13% derivation principle for its operating income has brought into sharp focus the need to develop alternative sources of income for the region and expand the base of its internally-generated revenue (IGR).
In the face of a rapidly changing global economic landscape and increasing inequalities, sustained growth of any region must include industrialization that first of all, makes opportunities accessible to all its peoples, and secondly, is supported by innovation and resilient infrastructures. I have discussed the many factors, with the prominent ones being inadequate infrastructures, electricity outages, transportation bottlenecks, crime and corruption that continue to constitute impediments to sustainable growth of the industrial sector of the region. Indeed, we already know that many manufacturing firms suffer from an acute shortage of good roads, potable water, but in particular, power supply. Electricity outages and power fluctuations have become so commonplace and chronic that most firms and citizens rely on self-supply of electricity from generators, which in turn escalates their production or living costs, and erodes the competitiveness of localized industries relative to foreign manufacturers.
There is today an urgent need for an industrial policy for the region knowing that oil and gas, which is the mainstay of its economy, is getting more exposed to technical, economic, environmental and social risks. In this regard, I took the privilege to review and highlight the role that NDDC has been playing, and also other activities that NDDC can undertake in order to accomplish an industrialization agenda for the region. It is hoped that we can collectively bring to bear an industrialization strategy that is intended to achieve future competitiveness for specific processed and manufactured goods by linking industrial activity with primary sector activity, domestic and foreign trade, as well as service activities.
It is interesting to note that our nation is currently pursuing a cluster development strategy for manufacturing and processing industries, with an eye for export at the appropriate time and it is my view that the Niger Delta region cannot be left out. I have therefore, highlighted the many economic transformation issues that need to be addressed, including the development of industrial parks and clusters, as well as enterprise zones and incubator facilities for the region.
It is important that we all recognize that the price of inaction will be steep. Ending poverty in the region would become more difficult. Industrialization can become the core driver of the regional development agenda to eradicate poverty and advance sustainable development. Failing to improve infrastructure or promoting technological innovation would also translate into poor health care, inadequate sanitation and limited access to good education and the potential dangers that such a scenario poses can best be imagined.
It is my hope that as we throw more light on this crucial aspect of our regional growth, we can stimulate further discussions, synergize our efforts and work towards building resilient infrastructures, fostering innovation and promoting the sustainable development of an industrial sector for the entire Niger Delta region.
Thank you and God bless.