Essay: POLITICAL ECONOMY OF NIGERIA’S INDUSTRIALIZATION

Abstract
This paper look into the relationship between political leadership, politicking, achieving industrialization and the benefits that can be achieved from a relatively peaceful and progressive political climate.  Comparative analysis of Turkey and Singapore with Nigeria was carried out for the purpose of synchronizing their industrialization experiences and political climate with that of Nigeria so that we can learn some lessons from them. The paper highlights the need for  the leadership of a country to be  strong, devoted  and dedicated to the development of the country as in the case of Turkey and Singapore. Furthermore, the issue of political stability cannot be relegated to the background.  The paper conclude that there is need to change our ideology from self centeredness to the development of our nation.
JEL Classification:  P16, L51, I38
Introduction
As African countries were granted political independence in the 1960’s, the craving for economic independence through rapid industrialization has been the economic policies of majority of them. The respective governments saw industrial development as a means for the continent to gain self-reliance and reduce their dependence on industrialized economies (Aliya and Odoh 2016). Industrialization has been on the agenda of successive governments in Nigeria since independence in 1960. However, the country has gradually moved from an agriculture based economy to a crude oil dependent one. The discovery of oil in  commercial quantity and its subsequent exploration in the late 60’s and early 70’s led to a shift in focus from agriculture to oil which then became the main export product and foreign exchange earner for the country. The discovery of oil led to difficulties in the industrial development of the country. These difficulties were attributed to a weak raw material base, inadequate technical manpower, poor policy implementation, poor entrepreneurship, political instability, corruption and poor technical know -how (Aliya and Odoh 2016).
During the colonial era, the economy boomed with exploitation and massive production of agricultural products and resources such as tin, iron ore and coal from which foreign exchange was earned. Regions had considerable amount of control over their resources and considerably contributed to the center.  Northern region was known for groundnut, the west for cocoa and the east,  palm oil (Osita, 2016). The British political economy in Nigeria was along the line of economic exploitation of the colonized by foisting it into the orbit of European capitalist economic system (Njoku 1998). This simply implies that although the British economic policies did not favour stimulation of local economic activities, major projects like railway tracks and roads were politically and economically motivated with to the extent that they were built close to where raw materials were obtained and shipped out of the country. The purpose of this paper is to show the relationship between political leadership, politicking, achieving industrialization and the benefits that can be achieved from a relatively peaceful and progressive political climate. Following the introduction is the history of industrialization in Nigeria in section 2. Section 3 presents role of political leadership in industrialization through the comparative analysis of Turkey and Singapore while section 4 provides the link between political leadership and industrialization in Nigeria. Section 5 discusses the relevance of political ideology to industrialization in Nigeria while sections 6 and 7 contains conclusion and recommendation respectively
II. History of industrialization in Nigeria
The influence of politics on industrial development and economic policies in Nigeria is overwhelmingly evident in the various economic plans since 1960. The first National Development Plan (1962-1968) was influenced by the competition among the various regional governments to develop their regions in terms of infrastructure and education. The industrial policies of the 70’s were influenced by the aftermath of the civil war (1967-1970). The main objectives were reconciliation, rehabilitation and reconstruction. It therefore came as no surprise when there was heavy spending on heavy industrial projects sited in various parts of the country for political rather than economic reasons (Daibi 2014). By independence the discovery and exploitation of crude oil otherwise known as black gold  changed the dynamics of the Nigerian economy. The economic history of Nigeria is not complete without its history of oil production. Oil has become the main stay of the economy and unlike the Arab countries of the gulf it has been a curse to most Nigerians instead of a blessing.
From independence Nigerian regional governments passionately pursed import substitution industrialization as a response to the low industrial capacity left behind by the British. They actively pursued industrialization in their respective regions even without having any form of industrialization policy on ground. In the first three years of independence, value added in manufacturing grew by an average of 11.4% per annum (Uzochukwu , 2008).
Between 1962 and 1980, rapid growth of manufacturing sector and diversification of industrial activity were the major objectives of various economic growth and industrial development policies adopted by successive governments. Despite the civil war between 1967 and January 1970 the 1960’s is generally regarded as the golden years of industrialization in Nigeria.
The major reason being the stiff competition among the various regions controlled by the different political parties. Each region’s aspiration to be superior to the other in terms of economic transformation and industrialization was the index by which such transformation was measured. The preferred method by all however, was import substitution industrialization.
The 70’s was a unique decade in Nigeria’s history both politically and economically. It was the first decade of undiluted military rule, the period of the first oil boom which placed massive resources in the hands of the military rulers and the period of the indigenization policy that crippled major industries till date. It was a decade with  heavy direct government intervention in manufacturing; when government exercise near complete monopoly in some sub-sectors of industry (Uzochukwu, 2008).The main features of the decade are the oil boom and government’s reaction to it, the indigenization policies and government investments on the establishment and location of industries most of which were politically rather than economically motivated.
The oil boom in the 70’s  provided most of the revenue for government spending. The prices of oil in the international market had quadrupled and there was high optimism about the new revenue source of the unitary style federal government. The size of government increased so much that by 1980 the public sector accounted for about 70% of employment and 50% GDP. This expansion resulted from provision of services and infrastructure and the payment of wages and salaries. The government adopted a spendthrift attitude that came with the optimism of ever increasing oil revenue.  Despite high government investment,  the economy nosedived and has not recovered to where it was in the 60’s.
The spendthrift attitude of the military led federal government was influenced by the politics of the day. There was a policy of rehabilitation and reconstruction after the civil war especially in the southeast. Besides that the military government was eager to sustain its legitimacy. Thus Nigeria entered an era of sponsoring students abroad on scholarships and increasing bonuses and salaries of civil servants. According to Yakubu Gowon the military head of state at the time stated that Nigeria was so rich that the state has a problem with spending. By the 1980’s most of the programmes embarked upon will prove to be unsustainable when a glut occurred in the international market. The politics of the day called for a sharing of the ‘national cake’ which fuelled the distribution of bogus contracts and the enactment of the indigenization policy which ruined the few companies and industries available at that time.  The bulk of the productive investments were made in education and infrastructure (Uzochukwu, 2008).
Uzochukwu (2008) posits that such spending might have been induced by the drive for rents. Before 1973 the Nigerian government had nurtured capitalism by creating a congenial business climate alongside policies and programmes designed to assist and stimulate business. The oil surge since 1973 however has transformed government treasury into the predominant source of economic surplus which has turned the Nigerian economy into pirate capitalism from nurture capitalism before 1973.
According to Schatz 1984,  “for the most vigorous, capable, resourceful, well connected and lucky entrepreneurs and potential entrepreneurs (including politicians, civil servants, army officers, etc.) productive economic activities, the creating of real income and wealth, has faded in appeal. Access to and manipulation of the government spending process has become the golden gateway to fortune”
Huge rents from oil made the politicians, bureaucrats, and citizens to crave the need to share in the new wealth (Uzochukwu, 2008).   The new wealth enabled the government to sustain a high exchange rate, high and unrealistic consumption levels and government investments in almost all the sectors of the economy; especially in unproductive and ambiguous projects. All these involved some form of rent for the participants and helped perpetuate the rent seeking economic model. Little wonder Nigeria is often being referred to as a rental state with no meaningful economic base. Once the rent dries up chaos will ensure. The new system induced a misallocation of productive resources, industrialization was state led and the private sector was devoted to chasing rents from government. At the end of the oil boom,  the private industrial sector was feeble and only contributed a little to GDP.
The major events of the 1980’s with its ripple effects still being felt today was the coups of 1979 which unseated a civilian government and the palace coup of 1983 whose government initiated and introduced the structural adjustment programme. Poor implementation crippled the economy totally and plunged the country into huge debts with international creditors and brought about double digit inflation rates such as never been seen before. The attendant political instability in the 80’s affected the economy with different economic policies being touted by each succeeding administration which set aside the economic policies of the previous administration. Rubbishing the little gains and progress made. This instability led Nigeria to borrow from the International Monetary Fund (IMF) for the first time in her history. There was massive rate of unemployment and the government could no longer fulfill its obligations as many Nigerian students on government scholarships abroad were stranded as the government could no longer pay their fees. This was the origin of the phenomenon known as 419, as Nigerians stranded abroad had to resort to unorthodox ways to survive.
SAP marked a turning point in the political and economic history of Nigeria and the country has not recovered from its after effects. The failure of the 1970 regime and the objective conditions of the 1980’s necessitated the dire need for a new set of reforms. Nigeria’s structural defects were exposed with the 1982 collapse of the International market. Foreign exchange difficulties became acute, and the entire manufacturing sector (based on ISI strategy and heavy dependence on imported inputs) was in serious trouble (Oesterdiekhoff, 1991).  This was evident on the drastic fall in manufacturing capacity utilisation from 73.3 percent in 1981 to 63.6 in 1982. It fell further to 49.7 and 38.8 percent respectively in 1983 and 1986.
The SAP agenda favoured a ‘no industrial policy’ and liberal trade regime. Most policies were made to favor donor agencies and were of no benefit to the average Nigerian. The then government survived through the set of reform measures, and  in many cases having to quell street riots against the programmes.. (Osita , 2016).
Several factors were brought to the fore with Nigeria’s experience with SAP. There was a loss of policy autonomy because the IMF and its partners could veto any economic policy they deemed not favorable to their collective interests. In what seems like resistance to the policy, implementation of economic policies under SAP was very poor. It illustrated the power of ideology which was the driving force for the neo-liberal policies under SAP. Domestic interests could not be killed in the face of foreign policy domination. Nigerian bureaucrats simply found a way around the policies and rendered SAP ineffective in the long run.
1990-1998 was the rolling plan era. The country implemented 3 rolling plans and their main objective was to consolidate on the achievements of the Structural Adjustment Programme and solve other pressing issues prevalent in the economy. These objectives ranges from  strengthening of programmes being carried out by the National Directorate of Employment; resolving the lapses and inefficiencies in the operations of monetary and credit instruments, low level of capacity utilization of industries (especially the refineries) and the issue of rising unemployment figures in the country; and dealing with unemployment issue.
With the return to Democratic rule in May 1999, the civilian administration adopted a four year national plan called “national economic direction’ (1999-2003). Its primary objective was to pursue a strong, virile, broad based economy with adequate capacity to absorb the effects of external shocks although its objectives and approach was not really different from that of the Structural Adjustment Programme (SAP).
The National Economic Empowerment Development Strategy (NEEDS) was launched in 2003 to elapse in 2007. It was a plan that expected the states and local governments to also have their own variations in all parts of the federation. It focused on creation of employment, generation of wealth, reduction of poverty and re-orientation of values. This was the first time indices like societal values and national character was acknowledged in the various attempts to industrialize the country. It supported privatization of public enterprises and private sector led economic growth. It cut down on imports while trying to improve small scale enterprises in the country.
The Seven Point Agenda was launched in 2007 and it included focus on the following areas of the economy;
i. Transportation
ii. Power and energy
iii. Food security
iv. National security, Niger Delta and Energy security
v. Education and human capital development
vi. Land tenure reforms and home ownership
vii. Wealth creation
This economic plan was successful to a certain extent by achieving peace in the Niger Delta thereby ramping massive oil productions which kept the economy afloat.
The plan was replaced by the Transformation Agenda which still favoured private sector led industrialization with massive input into basic infrastructure especially in Transportation, Agriculture, Health and some inroads into education with the establishment of Nine Federal Universities across the six geopolitical zones of the country.
The economic plan that followed in 2016 the “change agenda” leaned heavily toward public oriented service and public sector led industrialization. The economic agenda had a lot of welfarist intentions which critics believe will not be sustainable in the country’s economic framework. The economy entered into a recession late 2016 into 2017 and a new economic plan has been formulated to bring the country out of recession. The Economic Recovery and Growth Plan (ERGP) is meant to last for three years 2017-2020. Its main objectives include ramping up oil production, privatization of public enterprises, private sector led industrial growth, diversification of the economy and promotion of local content in industries to create a vibrant manufacturing and export based industry.
III. ROLE OF POLITICAL LEADERSHIP IN INDUSTRIALIZATION: A COMPARATIVE ANALYSIS
All the economic policies since 1960 have been geared toward rapid industrialization and exports. But much of these have only ended up on paper. There has been a huge imbalance between planning and implementation. Thus Nigeria has great development and industrialization strategies on paper but a much different version in reality. In the Nigerian context much of these ineptitude and failure has been attributed to political instability and the near zero political and economic ideology of the political and leadership class as this paper will strive to prove. Also of note is the winner takes all attitude of the political class which leads to corruption and ineptitude in leadership.
The aim of this comparative analysis is to examine the most effective and efficient leaders of the above mentioned countries and the economic policies they adopted in the industrialization drive of their countries vis-à-vis the policies adopted by Nigeria’s political class over the years.
Turkey
The republic of turkey was created when sultan Mehmet VI Vahdetti was overthrown by the new republican parliament in 1922. This brought an official end to the Ottoman Empire which had lost all its major territories following the losses it suffered in world war one. Modern turkey was birthed on October 29, 1923 with Mustafa Kemal later known as Ataturk (father of turkey) as the country’s first de facto leader. He led turkey until his death in 1938.
The new Turkish republic inherited a highly centralized political structure from the old Ottoman Empire; a structure that featured authoritarian management with an agrarian economic infrastructure and commerce and industry dominated by Europeans.
The Turkish economy was underdeveloped: agriculture depended on outmoded techniques and poor-quality livestock, and Turkey’s industrial base was weak; the few factories producing basic products such as sugar and flour were under foreign control as a result of the capitulations. (Wikipedia)
Mustafa kemal’s regime was reform oriented. Although the new country had a claim on the historical heritage of an empire, Ataturk turned to the western institutions and methods in the early phase of political and economic reconstruction. Celâsun& Rodrik (1989); argues that the regime of Kermal was characterized by deep social and cultural reforms that include the adoption of secular principles in the country’s politics in his first fifteen years.  Tarkim and Yilmaz (2010), divided the economic policies of the Atartuk into two and tagged them  “liberal era”( period between 1923 and 1929) and “étatism era”( the period between 1929 and 1938)
Throughout the 1920’s the Kemal led government grappled with two sets of economic problems. The first was the renegotiation and servicing of the huge external debt inherited from the defunct ottoman empire and the dismantling of the capitulations imposed on the ottoman empire after the losses of world war one. The capitulations granted foreign powers the right to collect tax revenue and fix import tariff, thereby effectively limiting domestic policy initiatives to redesign foreign trade and fiscal regimes for an improved national economy.  The external political and economic influence on turkey was heavy due to the treaty of Lausanne which required turkey take over the debts of the old Ottoman Empire. An independent economic policy was not pursued for the first few years because of the effect of the treaty.
Tarkim and Yilmaz, (2010), posits that the country headed towards conservatism and active and  condensed etatism  after the clearance of the restrictions of Lausanne (1929). Meanwhile, the dream of Ataturk for creating a strong Turkish state was achieved during his life time. By 1929, most of the capitulations had been lifted and debts settled. By the 1930’s an industrialization drive was anchored on the import substituting economic policy; industrialization was state led and was largely successful.  Celâsun& Rodrik (1989) submits that  the government-led industrial drive of Turkey in 1930’s was successful as major investment projects were implemented within the framework of industrial plan.
There is a generally accepted perception that Ataturk’s political economy originated from the economic congress in Izmir in 1923. Principles and objectives in regards to the nationalization of the young country’s economy were specified amidst a sea of delegates with the spirit of nationalistic enterprise. The decisions taken at this congress formed the foundations of republican turkey. Tarkim and Yilmaz (2010), observes that the goal of the congress was  to reach an agreement on the  economic policy that  would be practiced  among major actors in the country. The congress met the desires of the military bureaucrats to have a political and social relationship with the proprietary class and enhance these relationships via a consensus. Ataturk affirmed that there could not be political freedom without economic freedom while stating his economic objectives in his opening address at the congress. For a country to be totally independent national sovereignty must be supported by financial sovereignty.
The leadership style of Ataturk was one of the major reasons for the success.  Although he had his own share of opponents, his reforms towards westernization laid the ground work for the strong state that turkey is today. He had the charisma and power to lead turkey down the difficult path of modernization and change for the better. Some of his major policy changes include:
unification of education; the discontinuation of religious and other titles; the closure of Islamic courts and the replacement of Islamic canon law with a secular civil code modeled after Switzerland’s and a penal code modeled after the Italian Penal Code; recognition of the equality between the sexes and the granting of full political rights to women; the language reform initiated by the newly founded Turkish Language Association; replacement of the Ottoman Turkish alphabet with the new Turkish alphabet derived from the Latin alphabet; the dress law (the wearing of a fez, is outlawed); the law on family names; among others.
These reforms helped to speed turkey on its way to full westernization and engendered more patriotism on the part of the average Turkish citizen. His successors followed his examples although there have been periods of interruption of democracy by military elements and periods of severe economic crisis. Turkish leaders all have one thing in common, military or civilian; the advancement of turkey into a superpower rival or greater than the Ottoman Empire it succeeded.
Singapore
Singapore has achieved the American dream, but not in the American way; it is a prosperous, clean city, with imposing skyscrapers and glittering shopping centers. The multinational corporations of the world are welcome here; you can buy any brand name you’ve ever heard of; the highways are lined with tropical flowers and crowded with BMWs. And at the head of this thriving free-market state is a clever, socialist dictator- Donella Meadows speaking on LEE QUAN YEW –May 5, 1988
Singapore got independence in 1965 and their leader Li Guangyao took over Singaporean politics in “soft authoritarianism” until his retirement in 2011. The success of the country is directly attributed to his personal vision and ability (Zakaria, 1994)
The development in Singapore came from the fact that the challenges of rebuilding brought about the need to quickly push towards export-oriented light industries to balance trade because most of food and water were imported to sustain the country. Singapore decided to supplement the lack of labour (technical and managerial knowledge) by attracting international firms and as such used their resources to -start off the light industry that would provide the backbone of the country’s economy n the nearest future.
There was a dramatic change in the structure of Singapore’s economy in the 70’s with more focus on the manufacturing and heavy industries.
The decision of Singapore along this line was as a direct response to the threat the rapid increase of China’s light industry under Deng posed to Singapore’s output. The country therefore combined reinvestment of wages in industry, infrastructure, housing and communications through the Central Provident Fund and an increase in minimum wage to force employers to seek more efficient modes of production (Vogel, 1991).  The Central Providence Fund established the infrastructure needed for heavy industry while Li played a dominant role as the principal mover in the development of Singapore’s economy.
Lee Quan Yew is known as one of the most influential leaders of the twentieth century; an authoritarian leader who turned Singapore from a poor tiny island nation into one of the wealthiest countries in the world. The story of Singapore cannot be told without telling the story of Lee Quan Yew. He oversaw Singapore’s transformation from a war battered and corrupt state to an Asian economic tiger (powerhouse). He pursued long term policies instead of short term palliatives and crushed all opposition ruthlessly; Singapore was more or less a one party state but there was massive economic progress.
He was highly criticized for curtailing civil liberties and bringing libel suits against political opponents. His defense was always that such disciplinary measures were necessary for political stability, which together with rule of law was essential for economic progress.
At his death in March of 2015, 1.7 million people filed past to pay their respects at his lying in his state.