ECONOMIC DIVERSIFICATION IS FRUIT OF INDUSTRIALISATION


A few years ago when the barrel of crude petroleum was selling for over $100, Nigerian economists and the global financial institutions – the World Bank and IMF- measuring the change in GDP, claimed that Nigeria was one of the fastest growing nations in the world. Now that crude petroleum has dropped to below $50 dollars per barrel, Nigeria is no more one of the fastest growing nations in the world. Government and the Nigerian experts are again talking of diversification of the economy as they usually do when oil prices are low. What is diversification? The Honourable Finance Minister, Kemi Adeosun, in Dubai, recently, while contributing in a panel discussion on Africa entitled: "Sub-Saharan Africa, Just a Rough Patch," said that Nigeria is adapting to its new realities and it is implementing fiscal policies to steer the country back on its track for stable growth with a diversified economy. Continuing, the Minister said, the real vulnerability of the Nigerian economy is the over-dependence on a single source of revenue, oil. So we are doing a combination of things to diversify our economy, with revenue mobilisation to enable investment in developing the non-oil sectors. Economic diversification is tantamount to investing in the non-oil sectors of the economy especially the power, agriculture, solid minerals, housing and transportation. This was how PDP governments 1999-2015 also conceived diversification.

The PDP governments 1999-2015 and the APC government May 2015 till now, do not understand what economic diversification entails. True economic diversification is a fruit or aftermath of industrialisation. Mere capital investment in many areas of an economy does not lead to true economic diversification.

The region occupied by the modern Western Europe was harnessed into the Roman Empire in 55 B. C. The western portion of the empire broke up in 406 A. D. England and other modern nations of Western Europe were clearly defined in the period between the 10th and 13th century. England, the most progressive 10th nation in Europe then, achieved the first modern Industrial Revolution (IR) in the period 1770-1850 (Gregg, 1971). When England achieved the first modern IR, the roads in the nation were still those left by the Roman Empire, showing that England did not build roads and telecommunications networks and other structures as prerequisites to promoting sustainable growth and industrialisation. But immediately England achieved the modern IR, good roads, railways and tubes, canals and other infrastructure were developed rapidly as aftermath of industrialisation (Gregg, 1971.)

History, therefore, demonstrates that Britain, America, China and other technologically advanced nations of today had to develop the people and the Knowledge, Skills and Competence (KSC)-framework for solving the problems of their nations before building the relevant infrastructure, because that is what nature and wisdom suggest. The hibiscus flowering plant like other flowering plants, has the root and shoot systems. Whereas the root system is buried in the soil, the shoot which bears the beautiful flowers is usually above the ground. The root system is always established before the shoot system. The beautiful bright-red 5-petal flowers are borne by the shoot system. The shoot system expresses and announces the healthy status of the root system. Once the root system is cut off from the shoot system, the beautiful flowers wither. This explains why a nation should not and cannot erect complex infrastructure before developing the necessary knowledge, skills and competences (KSCs) for building and maintaining the structures.

The Nigerian government and Shell Petroleum Development Company assessed 50 years of the Oil and Gas Industry (OGI) in 2006, after investing over $10 billion every year, and concluded that there was nothing to show for it. Nigerians know the state of the Nigerian economy and its infrastructure. Do Nigerians now have the knowledge, skills and competences for exploiting the OGI today after FDIs have flowed into it for over 50 year? Does our experience support the belief that mere capital investment promotes Sustainable Economic Growth and Industrialization (SEGI)? No! If our experience has disproved all our assumptions, why our leaders still campaign for capital investments especially FDIs? Can we build a nation by doing the things we know do not promote SEGI? No! Are Nigerian leaders managing the economy for Nigerians or for foreigners to make profit while Nigerians die in abject poverty? That does not mean well for Nigerians and Nigeria. Our leaders must change immediately to save Nigeria.

The research works of Charles Cobb (a mathematician) and Paul Douglas (economist) in 1928, Douglas (1948), Abramowitz (1956) and Solow (1957) showed that capital contributes very little to achieving SEGI. Gerschenkron (1966) examined the Western industrialisation experience and concluded that capital investment was not a prerequisite to it. Our scientific research in Obafemi Awolowo University, using equations and graphs also showed that mere capital investment does not promote SEGI. Nigeria has been stagnating because Nigeria's planning is premised on the faulty premise that mere capital investments especially FDIs promote growth. President Buhari can and should reverse the downward trend and save Nigeria.

SOURCE: THE GUARDIAN