Building a Virile Nation: ...The Private Sector Perspective

By Ausbeth Ajagu

Building a Virile Nation: The Private Sector Perspective presents a blueprint for every nation burdened by debilitating economic conditions and underdevelopment. It charts a course for sustainable economic development of nations as well as for propelling individuals to success in any endeavor. This collection is a major guide for governments and policy makers at all levels as well as budding and practicing business executives. It is expected that the readers shall be challenged, inspired, and empowered by some of the issues raised.

Ausbeth Ajagu is one of the Nations emerging influencers. Author of many thought-provoking books, his latest work, Building a Virile Nation: The Private Sector Perspective, is a comprehensive roadmap for a nation in search of robust economy like Nigeria. I have no doubt in my mind that this book will inspire many people in and outside of government.
Dr. Sunny Obazu-Ojeagbase, FAES, Chairman, Success Attitude Development Centre, Publishers of Success Digest

Dr. Ausbeth Ajagu is a prolific writer whose thoughts have covered all imaginable problems that any country in the process of building is likely to face. Given his wealth of experience, he attempts in Building a Virile Nation a systematic approach to harnessing the resources of a nation and galvanizing such to propel the country to a respectable status among the comity of nations. I commend his efforts and fully recommend this interesting book to the public and private sectors of the economy.
Engr. Godwin Omene, FNSE, FAES, Former Managing Director, NDDC

Gods divine grace brings out that potential gift in us according to His purpose. Dr. Ajagu has written another incisive masterpiece for our generation. It runs in the family gene/blood to the glory of God in Jesus name, amen.
Engr. Cyril Ajagu, FAES (VC/GMD, Universal Insurance Group Plc.)

The authors masterpiece is for all classes of people. It is for all men and women in all tiers of government. Reading the book with a clear mind and intention will definitely improve the quality of delivery of states services. Practitioners in the private sector of our economy and those in the academia will find the book extremely useful.
Prof. Famous Izedonmi, FAES, Head, Department of Accounting, University of Benin

• Language: English
• Publisher: AuthorHouse UK
• Release date: Feb 26, 2013
• ISBN: 9781481780674

Ausbeth Ajagu

Dr. Ausbeth N. Ajagu, MFR, FAES, FIoD, FCCM, is the group executive chairman of Betcy Group of Companies, with interests in diverse business areas. He is an industrialist, entrepreneur, consultant, public policy analyst, and revered motivational and conference speaker. Dr. Ajagu, who is the president of the Academy for Entrepreneurial Studies Nigeria, has acidic training in political science, legal studies, and business administration. His wealth of experience at the Manufacturers Association of Nigeria (MAN) as a national council member and as fellow of the Institute of Directors Nigeria (IoD), as well as past chairman of the Industry Committee of the IoD, coupled with various national assignments as a board member of Federal parastatals, has helped tremendously in his career as an author. He is the author of the best-selling titles The Entrepreneur and Roadmap to True Greatness. Building a Virile Nation is his latest publication.

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© 2013 by Ausbeth Ajagu. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

Published by AuthorHouse 01/25/2013

ISBN: 978-1-4817-8068-1 (sc)

ISBN: 978-1-4817-8067-4 (e)

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Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

Contents

Acknowledgement

Foreword

Preface

Section One

Speeches, Seminar Papers, Keynote Addresses, & Lectures

1. Repositioning The Industrial Sector For National Economic Development In A Fledgling Democracy1

2. State Of Security And The Quest For Direct Foreign Investment Inflow In Nigeria—The Manufacturer’s Assessment2

3. State Of Security And The Quest For Direct Foreign Investment Inflow In Nigeria—The Manufacturer’s Assessment3

4. The Challenge Of National Economic Revival: The Role Of Banks4

5. Factors Militating Against The Nigerian Economy Vis-À-Vis Smi Position5

6. Keynote Address At A Cost Management Skill Development Workshop6

7. Training To Sustain Relevance7

8. Prerequisites For, And The Challenges Of Starting A Business8

9. Investing In Nigeria: The Manufacturers’ Perspective9

10. The Collapse Of Social Structures And The Problems Of Corruption In Nigeria10

11. Manufacturing Quality Products In A Hostile Economy: The Challenge Of The Industrial Sector11

12. How To Grow A Small Business12

13. Pulling Ambrose Alli University From The Brink13

14. Analysis Of 2005 Appropriation Bill/Budget14

15. Smieis Review: Task Before Bankers’ Committee15

16. Enhancing D-8 Intra-Trade16

17. The Role Of The Woman In Marriage17

18. Betcy Group Of Companies: Our Mission Statement18

19. Nigerian Economy In Retrospect19

20. This Is A Call To Duty20

21. On Policy Direction21

22. Nigerian Polity—The Need For True National Reconciliation22

23. On The 2002 National Seminar On Banking And Allied Matters For Judges23

24. Manufacturing: The New Frontier For Igbo & Nigeria 2005-201⁵²⁴

25. Mechanised Agriculture: A Panacea For Economic Empowerment25

26. Industrialization In The 2¹St Century Anambra State: The Way Forward26

27. On The Official Opening Of The Spa Waters Limited27

28. On The Commissioning Of A Police Post Donated By Betcy Group Of Companies To The Amuwo-Odofin Community28

29. On The Occasion Of Books Donation To Lagos State University, Ojo, Lagos By Rotary Club Of Amuwo29

30. Short Address To The Opening Session And Public Lecture Of International Federation Of Women Lawyers, Lagos State Branch Law Week30

31. A Welcome Address At The Monitoring Committee/Presidential Committee Police Equipment Fund (Pcpef) Dinner And Interactive Session31

32. Security: A Sine Qua Non For Effective Entrepreneurship32

33. Keynote Address At The Agm/Inauguration Of Institute Of Strategic Management Nigeria Lagos State Chapter33

34. An Address At The Opening Ceremony Of The First Training And Induction Programme Of The Academy For Entrepreneurial Studies, Nigeria34

35. Building A Virile Nation: The Role Of Alumni Associations36

36. Youth & Gender Network Agenda35

37. Industrialization In The 2¹St Century Anambra State: The Way Forward26

38. On The Official Opening Of The Spa Waters Limited27

39. On The Commissioning Of A Police Post Donated By Betcy Group Of Companies To The Amuwo-Odofin Community28

40. On The Occasion Of Books Donation To Lagos State University, Ojo, Lagos By Rotary Club Of Amuwo29

41. Short Address To The Opening Session And Public Lecture Of International Federation Of Women Lawyers, Lagos State Branch Law Week30

42. A Welcome Address At The Monitoring Committee/Presidential Committee Police Equipment Fund (Pcpef) Dinner And Interactive Session31

43. Security: A Sine Qua Non For Effective Entrepreneurship32

44. Keynote Address At The Agm/Inauguration Of Institute Of Strategic Management Nigeria Lagos State Chapter33

45. An Address At The Opening Ceremony Of The First Training And Induction Programme Of The Academy For Entrepreneurial Studies, Nigeria34

46. Building A Virile Nation: The Role Of Alumni Associations36

47. Every Man Is An Asset37

48. Endnotes

Section Two

Articles Published In The Dailies

1. Towards Private Sector Participation In Water Supply1

2. Crime Rate And Security Problem2

3. Security And Foreign Investment In Nigeria3

4. The Middle East After Arafat: A Roadmap To Peace4

5. Electricity Provision Support By Oil Companies As Social Responsibility5

6. For A Better Police Force6

7. Bill Clinton, Nigeria And Africa7

8. Democracy And External Debt Management In Nigeria8

9. Obasanjo’s Second Term And The Nigerian Economy9

10. Government Spending, The Economy And Democracy10

11. General Elections And National Development Consensus11

12. Nddc’s Giant Strides In Two Years12

13. Reflection On Governor Tinubu’s Independent Power Initiative13

14. Ndigbo And Time For Self-Examination14

15. Implications Of Budget 2000 For The Industrial Sector15

16. Jos Riots: Matters Arising16

17. Understanding Politics In Anambra State17

18. Soludo: Challenges And Expectations18

19. Nddc Bill: A Case For Anambra19

20. How The Economy Can Sustain Democracy20

21. Reflections On Obasanjo’s Visit To Anambra State21

22. Resolving Ebonyi Crisis22

23. Endnotes

24. Interview23

25. Towards Private Sector Participation In Water Supply1

26. Crime Rate And Security Problem2

27. Security And Foreign Investment In Nigeria3

28. The Middle East After Arafat: A Roadmap To Peace4

29. Electricity Provision Support By Oil Companies As Social Responsibility5

30. For A Better Police Force6

31. Bill Clinton, Nigeria And Africa7

32. Democracy And External Debt Management In Nigeria8

33. Obasanjo’s Second Term And The Nigerian Economy9

34. Government Spending, The Economy And Democracy10

35. General Elections And National Development Consensus11

36. Nddc’s Giant Strides In Two Years12

37. Reflection On Governor Tinubu’s Independent Power Initiative13

38. Ndigbo And Time For Self-Examination14

39. Implications Of Budget 2000 For The Industrial Sector15

40. Jos Riots: Matters Arising16

41. Understanding Politics In Anambra State17

42. Soludo: Challenges And Expectations18

43. Nddc Bill: A Case For Anambra19

44. How The Economy Can Sustain Democracy20

45. Reflections On Obasanjo’s Visit To Anambra State21

46. Resolving Ebonyi Crisis22

47. Endnotes

About The Author

Dedicated

To

All men of goodwill who serve their nations conscientiously.

ACKNOWLEDGEMENT

The task of packaging a book is tedious and cumbersome that no individual can singlehandedly tackle it successfully, the production of this book is therefore, a result of the collective efforts of many people.

Hence, I wish to appreciate those who in one way or the other contributed in making this book a reality.

I want to convey my deep appreciation to the Organized Private Sector represented by the Academy for Entrepreneurial Studies, Nigeria (AES), the Manufacturers Association of Nigeria (MAN), Institutes of Directors, Nigeria (IoD) and Chambers of Commerce for giving me the opportunity to represent them as well as present papers on their behalf in various for a spanning many years. These speeches and papers presentations constitute a major part of the book. Without their support, I may not have been bringing the way of readers these time-tested seminal papers presented to various distinguished audience at different times.

My gratitude equally goes to the Nigerian Press for finding my article and other write up worthy of being published in their respective publication. For publishing these write ups and circulating my humble thoughts to far and near, I am grateful.

I equally remain eternally grateful toProf.P.F Izedonmi, the erudite professor and Head of Department of Accounting, University of Benin for finding the time to write the foreword of this book; Dr. Sunny Ojeagbase, Engr. Godwin Omene, Engr. Cyril U. Ajagu and Olorogun O’tega Emerhor for their incisive testimonials.

May I also thank the editors and proof-readers who painstakingly edited and proofread the work. Amongst them are; Rev. (Mrs.) Anuli Ausbeth-Ajagu, Abayomi Awelewa and Augustina Obiakor. The secretariat staff are not left out in this show of appreciation. They include: Folarin-Lawal Folabi, Emem Akpan, and Victoria Ihuweze amongst others.

Again, to my adorable wife Rev. (Mrs.) Anuli Ausbeth-Ajagu and children, Venessa, Nnamdi Jnr, and Oscar, I say a big thank you for providing me the Conducive environment for this work.

No man they say, is an island. To all these people and others I could not mention whose support and contributions made this work a success, I once more, say a very big thank you. You are all wonderful people.

FOREWORD

The writing of every book begins with an idea, which serves as the driving force for the thesis of the subject under discourse. The idea that powers this book Building a Virile Nation: The Private Sector Perspective is the need to provide policymakers and planners across board a working implement with which to combat the various social ills plaguing nations especially the developing ones.

The topics and issues discussed in this book are many and varied. It is packaged with the master touch of a seasoned and accomplished entrepreneur. The author, Dr. Ausbeth Ajagu knows what he is saying here because of his active involvement in the industry which has spanned over two decades.

The author has a very rich academic and professional background having been trained in Political Science, Legal studies and Business Administration. He is also has the Group Executive Chairman of Betcy Group of Companies with interests in Oil and Gas, Construction, Engineering, Manufacturing (Assemblers of farm Power Tractors); and Real Estate. He is equally the Executive Chairman of Oak Hotels, Lagos and Oxford Hotels, Abuja.

He is an accomplished and highly experienced industrialist, entrepreneur, author, public policy analyst and revered motivational and conference speaker who has to his credit over 100 published articles/works. Most of these published articles were reviewed and well packaged in the book.

The book Building a virile Nation: The Private Sector perspective has two sets of write-ups. Both sets are well integrated to make for effective reading and understanding.

The first set deals with speeches, seminar papers, keynote addresses and lectures that the dynamic author presented to esteemed audiences in the course of his highly eventful entrepreneurial career. The write-ups in this segment cover his treatise on the best route for a nation truly in need of an idea in her bid to transform her economy and move forward in the empowerment of her citizens in order to facilitate the growth of country’s industrial revolution and unprecedented economic prosperity.

The second set of write-ups deals with published articles in the dailies spanning almost a decade highlighting the diverse issues of nation-building that a country needs to focus her attention on. These chapters are as fresh as ever too.

In a particular chapter titled: "Repositioning the Industrial Sector for National Economic Development in a Fledgling Democracy" the author gives a blue print on the way forward for the industrial sector in the nation’s democratic experience often described as nascent. This is in view of the fact that Nigeria’s democracy when compared to other established democracies of the world could be said to be backward or rather sluggish as a result of the long military interregnum. There is no gainsaying that the state of a country’s democracy has a direct impact on the industrial sector. With the advantage of a player in the industrial sector, the author has brought his rich experience to bear on the way forward for the nation’s democracy and the industrial sector. This I considered a very serious issue and contribution.

Similarly, the book examined the state of security of a nation is one of the prominent factors that investors consider before deciding on where to invest their resources. Security of lives, properties and unswerving guarantee for repartition of dividends are factors that attract both local and foreign direct investors.

In this piece, the author attempts an informed analysis of our nation’s state of security from the manufacturer’s point of view. This is however at variance with the western media distorted views. It is worthy of note that there is a disconnect between the real state of security in the nation and what is being projected to the outside world especially by foreign media about security in Nigeria. The country is projected as a theatre of war, a place unsafe for investments. That is however far from the truth. Many countries’ state of security is worse than that of our country with terrorist attacks and violence rife.

Another major point highlighted very well in this book is titled the collapse of social structures and the problems of corruption in Nigeria The monster called corruption has no doubt, dealt a deadly blow on the nations’ psyche resulting in the collapse of social structures amongst other woes. There is almost a direct inverse relationship between corruption and economic prosperity of a state. Corruption erodes investors confidence and the entire health of the Nation’s economy.

Dr. Ausbeth Ajagu’s masterpiece is for all classes of people. It is for all men and women in all tiers of government in the country. Reading the book with a clear mind and intention will definitely improve the quality of delivery of state’s services. Practitioners in the private sector of our economy will definitely see this work as a collective expression of their views since the author is part of them. Even those in academia will definitely find the book extremely useful.

May I now invite all to read this book ‘Building a Virile Nation’. The private sector perspective. You will be transformed by the quality of information in the book.

Professor Prince Famous Izedonmi, Ph.D, FCA

Head of Department of Accounting

University of Benin,

Benin City.

Former: Director for Center for Entrepreneurial

Development Studies, CEED

Covenant University

Ota, Nigeria.

PREFACE

As one becomes involved in critical business activities, one finds oneself in a state where one is specifically positioned as a facilitator at various seminars, conferences, annual general meetings, and at social and business gatherings. Invitations pour in honouring one as a guest speaker, a lead discussant, resource person or keynote address deliverer at events and programmes. One is expected as an astute businessman and entrepreneur to teach practical and workable principles to a highly expectant and professional audience from time to time. The responsibility placed on one is so great that one cannot afford to disappoint or fail.

To achieve an unpredictable success, therefore, in this endeavour, the person who has been so saddled must demonstrate a high sense of knowledge in and out the scope of his enterprise. Of course, he should be a man full of experience, and gifted with a lot of infinite business acumen. Such a man or woman has to be inquisitive in nature and ought to have probed into the circumstances that surround the survival or otherwise of the fields where he operates. The years of experience, the longer the better, provide him with the leverage required to handle his topics with utmost sincerity and a sense of purpose and direction. His contributions in the dailies and through magazine programmes on radio and television mark him out as one who is a master in his areas of coverage, and one who understands one’s territory very well, so much so that one is willing to learn more to be able to do more and to assist others.

For no other better reason is this effort worth the while other than the fact that it is a documentation of speeches, lectures, seminar papers as well as articles in the dailies that spanned a period not less than fifteen years. It is no gainsaying that one is motivated by the need to encourage budding and existing entrepreneurs and leaders in their bid to record personal business success, and to suggest viable ways of revivifying the national economy.

Building a Virile Nation is a modest contribution from one who has passed through a lot to become what God has destined him to be. Having learnt the ropes the hard way, this collection is a major guide to those who might just be starting their career in the world of entrepreneurship. It could also serve as a governmental policy formulation manual. If each of the speeches, lectures, seminar papers and articles is isolated and digested within the purview of the issues raised, one is ultimately confident that we would be collective in the retrospect of the shortcomings of yesteryears that brought us to where we are presently, and putting in perspective those things that are meant to be done to guarantee our future success in personal, corporate and national lives.

Building a Virile Nation is divided into two sections. Section One consists of select speeches, seminar papers, and lectures presented at several fora in the last few years; while Section Two consists of a replication of some published works in the print media over the years. It is expected that the readers shall be challenged by some of the issues raised; others might find a reason to disagree with some of the solutions suggested, while some may want a readjustment to these positions. The idea of this publication is to put into permanent form the thoughts of the author in a concise format for public consideration, wider consumption and application for individual and common growth.

The author, thus, welcomes comments, criticisms, as well as suggestions that can help the review of this publication in the nearest future or that may serve as a guide in the event of similar publication in the future.

Thank you.

Ausbeth N. Ajagu

SECTION ONE

SPEECHES, SEMINAR PAPERS, KEYNOTE ADDRESSES, & LECTURES

REPOSITIONING THE INDUSTRIAL SECTOR FOR NATIONAL ECONOMIC DEVELOPMENT IN A FLEDGLING DEMOCRACY1

May I begin this address by thanking the Industrial Group of the Lagos Chamber of Commerce and Industry (LCCI) for this special privilege given to me to share my thoughts with this august gathering on a topic I titled Repositioning the Industrial Sector for National Economic Development in a Fledgling Democracy. What we are doing today is in line with the spirit of democracy, which allows individuals and groups to freely express their minds on issues of national significance. I want to congratulate the leadership of LCCI for being in the forefront in this public policy advocacy.

I have chosen this topic in realization of the fact that no meaningful economic development in the country can be achieved without refocusing on the productive sector. Similarly, for the country to lay the economic foundation that will sustain democracy, the productive sector must be revamped.

It is therefore appropriate for all stakeholders in Nigeria’s development to focus on the imperatives of achieving real industrial take-off in Nigeria through properly structured manufacturing sector activities. This is especially so since the Obasanjo’s administration has decided to initiate a private sector-led economy.

I will attempt in my paper a review of the real sector and make suggestions on how to reposition the industrial sector so as to leapfrog the system to catch up with the rest of the world in terms of its contributions to output, employment, income and welfare of the people.

INTRODUCTION

It is widely accepted that no meaningful economic development can be achieved by any nation without a virile industrial sector. This position is informed by the fact that no country has achieved economic Development without going through the path of industrialization. As a 1997 study by the Harvard Institute for International development eloquently pointed out, South-East Asia relied on industrialization rather than tropical agriculture as the path out of poverty. It is equally true that Small and Medium Enterprise (SME) sub-sector is the cornerstone of any industrial development.

Experience has shown that industrial development in any country provides the brightest hope for sustained growth, employment generation, improved savings and investments and indeed economic development. There is no gainsaying that industrialization determines the dividing line between economically developed and developing nations. Nigeria now ranks very low on welfare scale. We have gradually slid from a position in which Nigerians enjoyed higher standard of living in the 60s, to a position where we now compete at a lower range of the ladder of less developed countries. Available statistics indicate that in terms of per capita income, Nigeria is now the 13th poorest nation in the world. The above situation is rather unfortunate when considered against the huge resource endowment of the country.

CONTRIBUTION OF THE INDUSTRIAL SECTOR TO GDP

The performance of the Nigerian industrial sector in the Gross Domestic Product (GDP) witnessed general deterioration from the early 1980’s. This followed the collapse of crude oil prices in the international market, which led to shortage of foreign exchange that was needed for the procurement of raw materials and other inputs, as most industrial firms were import dependent. In the period 1981 to 1986, immediate Pre-Structural Adjustment Programme era, growth in manufacturing output in GDP remained low, averaging about 8.5 percent.

However, following the introduction of SAP in 1986, manufacturing output grew by an average of 13.6 percent during the 1987-1992 period. Correspondingly, the overall manufacturing capacity utilization rate rose steadily from 38.9 percent in 1986 to 43.2 percent in 1990, before sliding to 29.4 percent in 2000. During this period, domestic resource based manufacturing firms such as beer and stout, cotton textiles and cement performed relatively well, while the import dependent ones suffered production set backs.

Regrettably, the growth momentum in the sub-sector could not be sustained and therefore suffered reversals in the period 1992-1995 as manufacturing production recorded an average decline of about 8.0 percent. Similarly, overall average manufacturing capacity utilization rate declined from 41.8 percent in 1992 to 29.3 percent in 1995. There were however, marginal improvements in 1996 and 1997 as manufacturing production grew at an average of 0.85 percent while average capacity utilization rate edged up to 34.0 percent. Again, output declined by 3.9 percent in 1998 before rising by 3.5 percent in 1999. The capacity utilization rate followed the same pattern.

In terms of export earnings, the manufacturing sub-sector is yet to make any significant contribution. Manufacturing share in total exports, which was 0.3 percent in 1980, rose to 6.2 percent in 1986 and peaked at 13.3 percent in 1988. It averaged a mere 0.3 percent in the period 1988-1999. This falls short of the result of a World Bank study (1989), which showed that manufacturing exports accounted for an average of 30 percent of total exports of developing countries. Available evidence indicates that some fundamental problems have continued to constrain the overall performance of the manufacturing sector.

PROBLEMS CONFRONTING THE INDUSTRIAL SECTOR

The industrial sector is beset with the following problems:

• Poor and deteriorating infrastructure services, which compounded by energy crisis has laid the economy prostrate since 1997

• Deepening weak domestic demand arising from lack of consumer purchasing power

• High cost of doing business that has been worsened by an escalation in bank lending rates, which discourages investments and industrial activities.

• Fluctuation of the exchange rate of naira

• Massive influx and dumping of all manner of imported finished goods, including fake and sub-standard, as well as second-hand products, all in the name of trade liberalization.

• Policy inconsistency and anomalies in customs duty

• Continuous harassment of companies by some state and local governments over unauthorized multiple levies and charges in spite of clear position of the law on the matter.

• Inadequate funding and lack of working capital for SMIES as well as weak institutional structures for fostering their growth.

• Ineffective institutional arrangement for the development of indigenous technology. This is anchored on weak linkage between institutions engaged in the development of technologies and industrialists that are expected to utilize them

• Our people’s seeming lack of confidence in indigenous technology. This is compounded by the lack of the shelf industrial machinery and fixtures to demonstrate successful indigenous production process for acquisition by end users.

• Heavy dependence on imported industrial inputs, indigenous technologies would hardly thrive when faced with imported technologies, which are usually more efficient and price competitive and

• Non-utilization of research and development findings. This arises from poor financial position of enterprises and also lack of dissemination of information on such research works to end-users.

GOVERNMENT RESPONSES

The Federal Government Industrial policy has been designed to support the industrial sector. However, it has been noticed that the gap between policy formation and implementation has frustrated efforts towards serious industrialization of the country.

In recent years, the government has come up with some policies to address the identified problems confronting the industrial sector. In recognition of the role of the SMEs as veritable vehicles for rapid industrialization, the Federal Government has approved the establishment of Small and Medium industries Development Agencies (SMIDA) to promote and address the problems of the SMEs. Similarly, the Federal Government has approved the establishment of the Bank of Industry (BOI) to facilitate access of credit to the real sector. In response to the Government concern and efforts at revitalizing the economy, the Bankers’ Committee, representing the banking industry in Nigeria, has launched the Small and Medium Industries Equity Investment Scheme (SMIEIS). This scheme involves the banks setting aside annually 10% of their Profit Before Tax (PBT) as equity contribution to development of SMEs.

REPOSITIONING THE INDUSTRIAL SECTOR FOR NATIONAL ECONOMIC DEVELOPMENT

For the industrial sector to be repositioned for national economic development, the following policies and measures must be adopted.

INSTITUTIONAL SUPPORT

In order for the Nigerian manufacturing sector to catch up with those of the rest of the developed world as early as possible, the sector should be refocused in the following ways. Foremost, the sector should account for at least 25 percent of the GDP. It will be recalled that the Vision 2001 Committee had recommended a similar figure. This figure is also close to that of Korea, Malaysia and indeed South Africa. The contributions of the manufacturing sector can be increased to the projected level, if institutional support is given to the sector and also by tackling some of these identified problems.

CONSISTENCY IN POLICY FORMULATION

The Government has made some efforts to channel financial and technical assistance to the development of SMEs. However, the SMEs cannot thrive if the macroeconomic policy environment is not stable. Macroeconomic stability is crucial because it shapes the overall investment climate and determines the degree of confidence investors have in an economy. This is because high inflation, unstable and widening exchange rate differentials and negative real interest rates create uncertainty, encourage capital flight and favour short term speculative activities over long-term investment in physical plant and equipment.

STRENGTHENING THE FINANCIAL SECTOR

Beyond creating an enabling macroeconomic environment, there is also need to undertake measures that will strengthen the financial sector and ensure that the scope for effective financial intermediation is widened. This will include continuous reviews of the role of development finance institutions and putting in place an appropriate policy environment so that commercial and merchant banks would be more willing to finance SMEs.

THE CAPITAL MARKET AND SME FINANCE

Appropriate policies to prop up the capital market must be pursued vigorously to make it a veritable source of SME financing. This will include the institution of a well-packaged enlightenment campaign to dissuade investors from their usual aversion to ownership dilution. Similarly, listing procedure on the Special Tier Securities Market on the Stock Exchange should be re-fashioned in order for more SMEs to access the capital market for needed funds.

IMPERATIVE FOR INDUSTRIAL AND FINANCIAL SECTORS SYNERGY

Indeed, the strong need for synergy between the two sectors cannot be overemphasized against the background of the central objective of the present administration’s economic blueprint to jump-start the economy in the direction of growth.

If indeed the industrial sector being the pivot of the real sector is regarded as the engine of economic growth and the financial sector is widely acknowledged as the lubricant of that engine, there cannot but be a synergetic relationship between these two sectors. The new initiative of the Banking Industry to inject 10% of their profit before tax into small-scale industries would develop a new relationship, hopefully, based on trust and transparency of all concerned. The proposed equity investment scheme of banks in SMEs is designed to ensure that Banks get involved in identifying, developing and packaging these projects with customers that have a flair for entrepreneurship. For the scheme to succeed, the Central Bank of Nigeria (CBN) and the Bankers’ Committee should review the lending requirements of this fund to the SMEs. They are too strenuous security requirements, which is like a camel passing through the eye of a needle. There is the need to review the requirements to enable the real sector benefit from the fund.

THE ROLE OF THE PRIVATE SECTOR IN DEVELOPMENT

The characteristic nature of the new industrializing countries is the redefinition of expected roles and responsibilities of government coupled with a very determined effort to really downsize the involvement of government in economic and commercial matters. Experience has shown that the private sector thrives best and foreign investment blooms in such a setting.

The government should reduce to the barest minimum its participation in the economic and commercial life of the state. The government should limit its role to setting the general philosophy, guidelines and ground rules within which private sector becomes the main engine for economic and commercial development. The empowerment of the private sector should further be assisted by effective implementation of laws, which enhance accountability and transparency in public life and institutionalizing rules and procedures, which minimize bureaucratic interference in the private sector.

PROMOTING INVESTMENT IN THE REAL SECTOR

Nigeria had been aptly described as an investment haven. This description can be said to be very appropriate considering the vast investment opportunities that abound in every sector of the economy. The potentials of most of these opportunities have been assessed and found very profitable. Where some of these opportunities are already being tapped, the potentials have not been fully harnessed.

In this regard, I will suggest that more emphasis should be focused on the industrial/agro-allied sector of the economy. The potential of this sector and its contribution to the development of the country’s economy cannot be over emphasized. In spite of the heavy investment in this sector, the potentials cannot be said to have been fully harnessed. In actual fact, investment in the sector can be said to be growing arithmetically, while the potentials keep rising geometrically. The lesson of economic history the world over seems to suggest that the advanced nations of the world developed their agricultural sector first and foremost in order to act as catalyst for industrialization.

The only guarantee for foreign investment is a stable body polity built on democratic values. Unless the country works towards the growth of democracy, our present campaign aimed at wooing foreign investors might be fruitless. The Government should address with necessary decisive measures, factors that stifle the attainment of veritable investment climate. We must re-educate public officials about our roles in investment promotion and the need to portray Nigeria in a positive light. Nigeria must market itself, by embarking on aggressive but truthful image building programmes.

UTILIZING THE BENEFITS OF AFRICAN GROWTH AND OPPORTUNITY ACT (AGOA)

The recent passing into law of the African Growth and Opportunity Act (AGOA) by the United States is being viewed as an opportunity to generate growth in Africa. The logic is clear and compelling. The U.S. contains the largest single market in the world, with an effective demand in the region of trillions of dollars. For instance, African-Americans alone command a purchasing power of over $530 billion a year. The textiles and apparels market is close to $200 billion. It is argued that if Africa could target just about 10% of this huge market, her development destiny could radically change. There is a lot to be said on this opportunity for Africa to trade with the United States. Indeed, trade and investments would be useful to Africa than development AID.

The successful implementation of the provisions of this act would emphasize the current trend in relationship between developed and developing nations, which has shifted from that of AID, characterized mostly by a MASTER-SERVANT relationship to that of TRADE, which promotes mutual dependence. While AID reinforces dependence of the developing countries on the developed ones, TRADE on the other hand is associated with economic growth, employment generation and poverty reduction. AGOA will have direct effects on Africa and especially, the Nigerian economy, which in itself should be seen as a manifestation of this global shift.

The government would have to address promptly and with urgency, the problem of infrastructure setting, trans-shipment, customs certification, market accessories, and timeliness of delivery that could rob Nigeria of the benefits within the AGOA. This calls for serious and prompt attention towards the development of such infrastructural and financial incentives to be required for Nigeria to respond to the challenges of producing and exporting products to specifications from the US market.

Furthermore, there is the need for government to select from amongst the numerous products that are of high export prospect and which could be developed within reasonable time frame. The selected products should be informed by Nigeria’s comparative advantage in the production and exportation of such items.

TRANSFER OF TECHNOLOGY

If the industrial sector is to be repositioned for national development, we must find an answer to the current technology gap. We have to create appropriate technology for Nigeria’s development. The way things are moving in the world, material resources are no longer a serious advantage. It is knowledge that appears to count.

Therefore, Nigeria must invest heavily in the fields of science and technology. There is need to promote research and development as a matter of deliberate policy to encourage manufacturers to improve on quality and cost so as to enhance the competitiveness of their products. Research findings should be utilized towards the realisation of identified goals set out by the government. Science and Technology results should be translated into concrete programmes for local production. Adequate attention should be given to the commercialization of research findings. I suggest also that government should give loans at concessionary rates to the industrialists that are involved in converting research and development efforts into agricultural and industrial development.

MEETING THE CHALLENGES OF GLOBALIZATION

The process of globalization being facilitated by information and communication technologies has set in motion new dynamics of development. On its own part, Government should recognize that to achieve competitiveness and ensure the efficient allocation of resources, the growth and development of the Nigerian economy must be anchored on the global economy to meet the challenges of globalization.

Apart from carrying out major tariff amendments to simulate greater capacity utilization, reduce operating costs and inflationary pressures, Government should commence the process of developing a new trade policy framework that is consistent with developments in the global economy. The trade policy thrust should be aimed at promoting trade liberalization and competitiveness, while at the same time providing appropriate measures to safeguard the interests of domestic producers against the influx of imports and unfair trade practices.

Specifically, the operators of the Nigerian manufacturing sector should form partnership with their foreign counterparts with a view to gaining access to modern technology, which will make the made-in-Nigeria goods internationally competitive and acceptable. In essence, the focus of the strategic alliance with foreign counterparts should be to modernize the machinery and equipment. Through this strategic alliance, the resulting manufacturing enterprise should actively promote the development of ancilliary small-scale input or service supplier.

REGIONAL ECONOMIC CO-OPERATION AND INTEGRATION IN AFRICA

In the face of numerous challenges to world peace, Africa has no choice but to promote co-operation and integration. The 21st century is not the century of small nations. The world is gradually transforming into powerful regional blocs in Europe, North America, Latin America and Asia. Africa must unite! Regional economic integration is the way forward being moved each day at the world’s currency markets. Through e-commerce, huge volumes of commodities can be shifted in the world’s commodity markets without the prime e-movers ever moving. The Internet has virtually collapsed space and time. Africa will do well to vastly improve its information and communication technologies. The gap is getting wider by the day. Like I said earlier, some of the issues raised above are beyond the power of democracy to resolve. Yet they are critical to Africa’s development potentials.

Nigeria should harness her human and material resources to ensure that Africa’s economic integration becomes a success. The leadership role the country has been playing in similar economic integration in theWest African sub-region should continue. The industrial sector must be encouraged to prepare for the challenges of economic integration in West African sub-region in particular and African in general.

ECONOMY IN FLEDGLING DEMOCRACY

Democracy has been widely accepted through the ages as the best form of governance through which the wishes and aspirations of the majority of the people could be fulfilled. Indeed, the democratic system of government with such inherent attributes as consultation, representation, separation of powers, the rule of law, an efficient judicial process, effective law enforcement, fundamental human rights, a free press, transparency and accountability in governance, etc. is now the norm in all progressive societies the world over.

There is no doubt that there is a linkage between democracy and politically open societies on the one hand and economic development on the other. For the industrial sector to be refocused to accelerate economic development, Nigeria’s developmental process should continue to be people-oriented, broad-based, market-oriented, self reliant, highly competitive and private sector driven. Specifically, the strategies, targets and goals for attaining recovery growth as well as development within the framework of the recently launched National Economic Blueprint should be diversification of the positive base of the economy through enhanced capacity utilization in industry, increased agriculture productivity and accelerated development of gas and solid minerals. In addition, there should be promotion of sustainable non-inflammatory (single-digit) economic growth through the achievement of macro-economic policies.

The biggest challenge to our economic survival today is the need to promote non-oil export and earn foreign exchange not just as an integral part of our national economic policy but also as a cornerstone of our corporate philosophy. Unfortunately, non-oil exports have not received the desired attention by the past administrations because of reliance on oil. The need for the country to promote non-oil exports cannot be over-emphasized. Since oil boom years, efforts have not been concentrated on the development of productive sectors. This is the time to reverse the trend.

It is interesting to note that Nigeria and South Africa have about 58% of Africa’s GDP. Thus, by the time you add the economies of Egypt and Kenya, nearly 70% of Africa’s GDP is accounted for. Therefore, Africa needs Nigeria and South Africa to succeed with democracy. Indeed, to quote former President Bill Clinton, The world needs Nigeria to succeed.

CONCLUSION

The Industrialization Policy of Nigeria should be anchored on government’s disengagement from all activities, which are strictly private sector-oriented. The government should concentrate on provision of incentives, enabling environment to assist the private sector play a role of engine of growth. The government should be committed more than before to the pursuit of economic liberalization and deregulation, which would further serve to open up the economy to a greater level of private investment, both locally and internationally.

The government should carry its privatization programme to a logical conclusion. Privatization exercise as a measure of economic management has recently become a worldwide phenomenon in view of the enthusiasm which it is generating among various countries irrespective of their state of economic development. I suggest that the government equity holding in these firms slated for privatization should not be more than 20 percent. In carrying out the exercise, adequate consideration of the possible socio-political and economic problems in the implementation of the policy in a state with diverse interests and disparate income groups like ours should be taken into account.

The development of industries is the cornerstone of any development. We need to focus more on both the manufacturing and agricultural sectors in order to achieve an accelerated and balanced growth of the economy. The manufacturing sector can draw a lot of input from agriculture in which the country has an obvious comparative advantage, but the growth of agriculture can be constrained by lack of industrial development. I therefore suggest that both agriculture and manufacturing should be accorded top priority by different tiers of government.

The Obasanjo administration should be committed to the strengthening of Nigeria’s structural competitiveness by improving physical infrastructure, formulating effective policies for economic growth and development by ensuring the rule of law, transparency and accountability, safety of life and property, macroeconomic stability and the significant reduction of the cost of doing business in Nigeria. The Nigerian private sector must therefore rise up to the challenge by building and strengthening its capacity to take advantage of these opportunities and effectively respond to the challenges of globalization.

In a nutshell, the National Economic Blueprint that will sustain democracy must ensure, first, launching the immediate turnaround of the Nigerian economy from its current deteriorating condition. Second, defining the strategic and long-term economic direction, which when properly implemented, can lead Nigeria towards a high level of sustainable economic development. The challenges ahead should be examined in a wide, global perspective. In today’s highly competitive and uncertain global economic environment, the country must adjust its economic policies to meet the changing requirements of global trade, capital, technology transfer, and market forces.

Nigeria can attain the expected economic prosperity in this increasingly interdependent world, if it creates a viable economy capable of competing in global markets. A consensus building process is necessary and it must involve all stakeholders interested in Nigeria—both national and international. An economic philosophy with widespread public support is the foundation of an enabling environment conducive for private investment, good governance and economic development, which will no doubt improve the quality of life for all Nigerians. These are fundamental issues that are essential in repositioning the industrial sector for national economic development in a fledgling democracy.

Thank you for your kind attention. God bless.

STATE OF SECURITY AND THE QUEST FOR DIRECT FOREIGN INVESTMENT INFLOW IN NIGERIA—THE MANUFACTURER’S ASSESSMENT2

I feel highly privileged and honoured to be called upon to make a short remark at this occasion to this distinguished audience. This forum will undoubtedly afford us the opportunity to share experiences of the various national and international initiatives and strategies on investment promotion aimed at promoting growth and development of Nigeria. It will also go a long way in enhancing our understanding of the issues involved and the task with regards to attracting capital inflows into the Nigerian economy.

A number of studies has shown that the level of foreign private investment in any given developing country is affected by the potential investor’s perception of the business environment. A survey by the German Industrial Funds, for example, reveals, that the major constraint to investment is the difficulty in dealing with government authorities and security problem.

Thus, I have appropriately titled this paper State of Security and the quest for Direct Investment inflow in Nigeria—the Manufacturer’s Assessment.

The Nigerian economy is faced with the challenge of not only retaining existing investments and sustaining their capacity, but also attracting new investors with carefully designed and enduring incentive structures. This involves not just the creation of favourable tariffs, tax and exchange regimes, it also encompasses the qualitative assurance of a warm, cordial and mutually beneficial relationship between an investor and the host country. Therefore, the objectives of investment drive are essentially to resuscitate and strengthen existing investment and simultaneously captivate the interest of new investors.

STATE OF SECURITY

This is by and large a fundamental factor in providing the right climate for investments to thrive. Security of life and property is so important that where it cannot be guaranteed, investors will not be interested in the environment even if it promises maximum returns on investment. This issue has been critically addressed by the Nigerian government in view of recent experiences with ethno-religious strife, economic and violent crimes during the military era. Having security of life and property presupposes efficient maintenance of law and order. Law and order can only be efficiently maintained where public law enforcement agencies are:

— Adequately staffed with high quality, highly motivated and honest personnel; as well as the

— Provision of necessary facilities and equipment for prevention and detection of crime, and prosecution of offenders.

Before the country returned to democracy, there was a sudden surge in the rate of violent robberies and attacks on persons all over the Federation especially in Lagos State. Another worrisome trend was the increasing resort to violence by aggrieved Nigerians as a means of airing their grievances. During the several years of military dictatorship, many Nigerians were reported to have lost their lives to unknown gunmen in most parts of the country, particularly in Lagos state. The spate of assassinations gave rise to speculations that, perhaps, secret killer squads existed that were unleashed by their sponsors either for unknown vendetta purposes or simply to cause panic and a general sense of insecurity in the land.

Owing to frequent abuse of fundamental human rights of Nigerians by the military, many ethnic nationalities resorted to use of violence to advance their cause. It was therefore not surprising that rather than exercise patience and channel their grievances appropriately, they had largely taken laws into their hands. From the Niger-Delta crises, to the Ogbe-Ijaw, the Oodua People’s Congress’ riots, Sharia riots, Bakassi activities in Eastern Nigeria, and the Ife-Modakeke uprising, the modus operandi was the same, violence was the medium of seeking attention or redress for past injustices, real or perceived.

It was sequel to these security problems that most privately owned companies like Spa Waters Limited decided to take the security of their premises and workforce into their hands by constructing and equipping police posts, hiring of private security personnel and apparatus. It is on record that our above-mentioned company single-handedly built, equipped and