POLITICAL CLASS, ELITE RUINED NIGERIA . . . Nigerians are trapped in the quagmire of hunger, poverty and human insecurity. . . PROF. OYEBANJI OYELARAN -OYEYINKA.

By Mike ALADENIKA.

The Nigerian elite and the political class have been fingered in the sabotage of every effort aimed at industrializing the Economy, even as they exhibit a high degree of bad governance which is the bane of Nigeria's development.

The Senior Special Adviser on Industrialization to the President, African Development Bank (AFDB), Abidjan, Prof. OYELARAN- OYEYINKA  OYEBANJI who made this known at Igbinedion University, Okada's  22nd Founder's Day celebration while delivering a paper on "INDUSTRIALIZATION AND NIGERIA'S  POST - CRISIS ECONOMIC RECOVERY" said Nigeria will remain ever poor unless it's Policy of shipping raw materials out to industrialized countries and importing manufactured or finished products is changed.

"Most African countries suffered major economic collapse due to reliance on commodity exports
that is subject to significant volatility and instability. Structurally, African minerals and oil exporters whose trade is highly concentrated in few commodities and limited number of partners have  experienced very limited economic diversification."

According to Prof OYEBANJI, "COVID-19 accentuates two types of dependencies into which African countries are
locked. First, is the dependence on export of commodities such oil, minerals, and agricultural raw materials. Second, the pandemic led to the crash of oil and mineral prices; both events exacerbated Africa’s economic challenges and taxed the health system in the most severe of ways. Africa imports around 80% of its drugs and medical supplies from China and India. According to the African Development  Bank (AfDB), potential losses in GDP are to the magnitude of $ 173 and $236 billion in 2021 and 2022 respectively. The second dangerous dependency is the reliance on food imports, especially grains imports, estimated at $45 billion in 2019.

"Economic diversification entails a shift away from a single income source (oil and minerals)
toward multiple income sources from an increasing spectrum of sectors, products and markets.
In pursuit of long-term recovery and sustainable development, Nigeria needs urgent economic diversification. Nothing is more poignantly demonstrative of the danger of over-reliance on a single or narrow range of commodities than the recent crash in oil price we saw in 2020 due to the COVID-19.

"COVID-19 has more than wreaked havoc on all areas of society. Lives have been lost untimely.
Businesses and otherwise thriving families put in disarray. Besides the grief visited on individuals and communities, the plague has had huge negative impact on Africa’s health and food systems.
We were largely unprepared and our lack of resilience severely tested and exposed our capacity for autonomous response in stark relief. Nigeria depends too dangerously on others for basic needs.

Prof. Oyelaran-Oyeyinka Oyebanji said the unpatriotic policies of past and present governments in Nigeria have shown that the political class and elites have done the greatest damage to the nation, he  illustrated with comparison, two countries, "Nigeria and South Korea that were at the same level of per capita income in the 1960s. On the one hand, Korea, a non-resource based economy has performed
incredibly strongly through export diversification and growth since the 1960s. Considerable energy was devoted to the accumulation of industrial manufacturing that propelled its remarkable growth. The country is now ranked one of the: “most innovative countries on earth”.

"In 1953 when the Korean War ended, the nominal GDP of Korea was $1.3 billion; it grew rapidly for the last six to seven decades; to 1.65 trillion in 2019. The GDP/Capita rose to $32,000 from a
mere $158 in 1960.
In contrast, Nigeria hardly diversified. The country got locked-in into petroleum export for export earnings to the detriment of value-added agriculture and manufactures.

"The result is low contribution of the manufacturing sub-sector which fluctuates between 5% to 8% to aggregate output in Nigeria compared with its peers in Asia (Korea about 30% in the 1990s) is staggering".

The African Development Bank official said "the outcome is a Nigeria characterized by structural dualism. The agricultural and informal sectors
consist of peasants, poor low-skilled traders with an admixture of subsistence and modern farming,
co-existing with an evolving industrial sector largely labor-intensive. Nigeria’s GDP/Capita was $93 in 1960 and $2,222 in 2019. Oil export as percentage of GDP was 57% in 1970, this rose to
96% by 1985.

"In contrast, Korea’s per capita is just shy of that of the status of a rich advanced industrial nation.
Nigeria is stuck at low-medium income with a large proportion of very poor. Nigeria is in a state of stalled industrialization.
Economic Progress comes only to producers. Poverty is the lot of those that always buys from
others. I quote from the Economist magazine five years ago: “BY MAKING things and selling
them to foreigners, China has transformed itself—and the world economy with it. In 1990, it produced less than 3% of global manufacturing output by value; its share now is nearly a quarter.
China produces about 80% of the world’s air-conditioners, 70% of mobile phones and 60% of shoes. Today, China is the world's leader in manufacturing and produces almost half of the world’s
steel. The key words are “Making” and “Factory”.
Nigeria and other poor African countries remain poor because they continue to produce raw materials for rich countries."

Prof OYEBANJI said  "economic diversification requires
investment in infrastructure. We estimate Nigeria's infrastructure deficit at $100 billion annually.
This is three times the total 2021 federal budget, projected at $34.51 billion. Clearly, one of the most significant barriers to industrialization, value addition and competitiveness of Nigerian firms
is poor infrastructure. According to a recent Financial Times (FT) report: “The congestion at the port in Lagos has become so bad that it can cost more than $4,000 to truck a container 20km to the
Nigerian mainland these days, almost as much as it costs to ship one 12,000 nautical miles from China”. The estimated loss in economic activities is $55 million per day.

"Industrial development depends on a wide variety of hard, soft and advanced infrastructure.
Electric power, water/sanitation, roads, railways, ports and airports propel all modern production structures such as factories and agricultural value chains. Think about how global productive
agricultural economies work: they are heavy users of chemicals, fertilizers, pesticides and agricultural machinery. Look at the world’s most productive service economies: they rely on top-
tier computer technology, transport equipment and, in some instances, mechanized warehouses.

"Nigeria must break its Dependence on oil and Raw Materials Export
Africa will continue to remain at the bottom of global wealth table measured by GDP as long as it is a raw materials exporter. In National Accounts, GDP measures value-added not materials buried under the ground like oil, nickel or copper; but then Africa hardly adds value to its vast raw materials assets.

"In Nigeria, cocoa production fluctuates between 250,000 to 400,000 tons per year. Nigeria exports about 85% of total cocoa production as raw beans and only process and mostly export theremaining 15% into butter, liquor, powder and cake.
Contrast the case of Indonesia: the cocoa processing industry contributes significantly to Indonesia’s foreign earnings. According to official records, the cocoa industry processes nearly
80% of the output for exports. In 2019, processed cocoa products contributed over $1.01 billion in export value. Currently, the cocoa industry produces several products including cocoa liquor,
cocoa cake, cocoa butter, and cocoa powder, with the main export going to countries such as the United States, the Netherlands, India, Estonia, Germany, and China.
Globally, cocoa is a $100 billion annual market. Ghana and Cote d’Ivoire produce 70% of global cocoa beans but their share of this market is less than 10%. The bulk of the value goes to value  adding chocolate producers.
A similar story applies in the oil palm industry. Nigeria and Malaysia were practically at the same levels in the 1950s. The two countries drew from the same gene plasm; Nigeria relied on wild
groves, Malaysia developed a strategic industrial masterplan in 1956. The sector in Malaysia enjoyed systematic investment including R&D spending, aggressive breeding and tissue culture
developments investment in science and technology.

"Currently Malaysia has six million hectares of plantation while Nigeria has 10% of that at 600,000 hectares. It is a contrasting story of industrial  transformation for them and stagnation and bad governance for Nigeria.
Today, with the rapid expansion of cultivation in South-East Asia, Malaysia and Indonesia are the leading  producers of palm oil supplying more than 80% of the global production and continue to
dominate the international trade. Malaysia earned RMB 67 billion (US$ 16 billion) from oil palm in 2018.
Nigeria is a leading cashew producer but as with cocoa and oil palm, it exports raw cashew mostly.
One tonne of raw cashew fetches $1,200 while processed cashew nuts sells internationally for $10,000. Nigeria as with most African producers exports most of its in-shell cashew nuts — in raw
form.
David Pilling of Financial Times describes the unequal trade relations of the 21st Century thus: “For centuries, the world’s most advanced economies used African slaves to pick their cotton and harvest  their sugar in places such as the US and the Caribbean. Slavery has been banned. The West would now prefer to leave these workers where they are to produce what the world needs. The power relations remain essentially unchanged”

The African Development Bank High-5s among others can if implemented fully will
allow the continent achieve prosperity. The starting point is the determination to engineer a structural transformation process that ends over time this import-dependence that keeps Africa in poverty. It is time for the region to create strong industrial value added capacities that actively promote autonomous industrialization.

 According to Prof Oyebanji, "One of the historical challenges that Nigeria is dealing with and which has been a clog in the wheel of progress is the emergence of institutions that oppose industrialization. An enclave economy such as oil tends to breed rent-seeking behavior including widespread corruption. Rent seeking as different from profit seeking expends huge resources to gain a larger share of existing wealth rather than create new wealth. Since such wealth is expended without creating a new one, the net effect of rent seeking is reduction of total social wealth. However, we know that individuals operate
institutions - and often-powerful groups - whose interest lies in non-industrial activities. One can say with little contradiction that the Nigerian elite by their behavior have sabotaged every
industrial initiative ranging from iron and steel, petrochemicals/refineries, aluminum, fertilizer
projects to name a few."
#SPARKNEWSNAIJA(SNN)
+2348180442222(WhatsApp only)