A former Minister of Agriculture, and now President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, has told President Bola Tinubu that it is Nigeria’s turn to industrialize.
His challenge to Tinubu was an allusion to Tinubu’s campaign cliché in his party, APC, that it is his turn to be the president.
To enhance and actualise this lofty dream of his, he asked the government to carve up the country into Skills Enhancement Zones (SEZs) and through that power the growth and entrenchment of industrialization to lift the country’s economic future.
Adesina threw the challenge in his keynote speech at the BusinessDay 2023 CEO Forum.
The continental development agency CEO said: “The number of Nigerians living in extreme poverty is increasing at an alarming rate. The World Poverty Clock for 2023 showed that 71 million Nigerians are living in extreme poverty. Let me be clear from the onset: Nigeria should never be a poor country; and Nigerians are tired of being poor. Nigeria must decisively shift from managing poverty to managing wealth. It is time to make poverty history in Nigeria.”
Further in his address, he alluded that “This year’s Forum is happening at a very important time, with a new government, and the palpable yearnings of Nigerians for a prosperous future. And that prosperous future can only be assured by strongly supporting the private sector to unlock wealth that will lift everyone in Nigeria.”
Driving his illustration from an analogy of a film, The Lion King, Adesina who pointed out the business in the film noted that Nigeria needs to roar like the Lion King.
He said in the Disney movie: “The Lion King, the young lion cub, Simba learns to grow up and take over his role as king.
The film cost $45 million to make but grossed over $11.6 billion by 2019. In the process, becoming the most successful animated film ever made.
Nigeria, like the cub Simba, has great promise. But the promise is yet to be realized. The day that Nigeria wakes up and becomes a lion king, everything will change for its people; and everything will change for all of Africa.”
“For now, Nigeria is developing too slowly and well below its potential. The challenge is that the lion king in the making, based on its capacity and potential, must learn how to roar,” he regretted.
Adesina called further that “The key to unleashing Nigeria’s lionhood is engineering an industrial revolution, the likes of which we have not seen before. It must be deliberate and intentional.
While the share of manufacturing in Nigeria’s GDP has hovered around 7% for decades, the nation has not been able to extricate itself from a comatose industrial manufacturing sector. The performance of the manufacturing sector in the past five years has been poor. Between 2015-2017, the sector declined by -1.5%, -4.3%, and -0.2%. This is in sharp contrast to the dynamic and rapid performance of manufacturing in Asian countries, such as Singapore, Malaysia, India, and China.
While the Asian countries focused on the export of manufactured products, Nigeria’s approach has been on import substitution. The manufacturing sector of Nigeria represents only 3% of the total revenue from exports but accounts for 50% of imports in the country. Instead of being forward-looking in expanding the share of manufactured goods in its total export revenue, Nigeria focuses on an unsustainable model of import substitution.
Import substitution, while important, is a very restrictive vision. It is focused primarily on survival, instead of looking to create wealth through greater export markets and value diversification. The result is a manufacturing sector that cannot even develop to reach its full potential nor compete globally. Rather, it is limited to a “survival mode,” and not a “global manufacturing growth mode.”
To further nudge Nigeria to do the right things to its economy, Adesina, who has won global acclaim for his exemplary leadership of the AfDB at a most challenging era, asked Nigeria to not only industrialise, but do that the proper way in tandem with the trend of the times.”
Being the right person to be listened to, Adesina was the head of the continental development bank during the testy global pandemic, Covid-19, and applied the right levers to sustain Africa from a total economic collapse.
His pragmatic ideas kept pace with bodies similar to the AfDB in whole-scale interventions and policy implementations.
The AfDB chief called out the governments of Nigeria and investors to Nigeria can unlock its industrial manufacturing capacities by taking advantage of “duty-free exports within the zone. Doing so requires decisively tackling infrastructure and logistics bottlenecks that hamper industrial capacity and competitiveness; establishing and enforcing quality, grades, and product standards; ensuring the access of industries to land, and providing investment relations management to attract and maintain investors and trade facilitation.
With the African Continental Free Trade Zone, Nigeria will face stiffer competition in the establishment of industrial manufacturing platforms. With rising wages in China and other Asian countries, as they move from labor-intensive industries to more knowledge-intensive industries, they will continue to outshore their light manufacturing industries.
The so-called “flying geese model” is on the rise, as Asian giants outsource their manufacturing capacities to new industrial manufacturing platforms with lower labor costs, from where they can launch into regional and global markets.
The newly constructed $19 billion Dangote petrochemical and fertilizer complex (the world’s largest ammonia plant) in the free-trade zone, with a new deep seaport, is exactly the kind of massive infrastructural and industrial manufacturing that is needed to make Nigeria a regional and global player in gasoline, diesel and aviation fuel, and fertilizer value chains.
Nigeria must look beyond the industries of today into the industries of the future and develop a plan and capacity to compete in the smart industries that will become the main drivers of global economies.
The fourth industrial revolution, based on automation, robotics, artificial intelligence, machine learning, big data computing, 3-D printing, and additive manufacturing is rapidly transforming industrial manufacturing. Nigeria must therefore enhance its readiness to transition to digitized and smart manufacturing.
The rising use of robotics in manufacturing is leading to a rethink in the structure of global value chains. This will pose a challenge for Nigeria’s drive to attract talent and be competitive in labor-intensive light manufacturing. As capital costs continue falling faster than labor costs, developed countries are shifting towards a reliance on industrial robots for manufacturing. As such, competition will become tougher in global value chains, as robots could wipe out low labor cost advantages that Africa can provide.
Developed countries with high labor costs have previously out-shored their manufacturing to low-wage countries, for labor-intensive manufacturing. With the declining cost of cognitive robots, the low labor cost advantage of Africa will be reduced, as these countries are now restructuring their models by reshoring previously outsourced manufacturing capacities back to their home countries.
The future of manufacturing will be digital. The global digital economy is estimated to be worth over $16 trillion. The Internet of Things will raise the productivity of labor in manufacturing, deploy smart machines, manufacturing platforms, and systems, connect machines and people, and use machine learning and artificial intelligence to improve the speed and efficiencies of complex manufacturing processes.
That future is already here.
It is time to re-imagine industrial manufacturing in Nigeria.
It is time for rapid investment in digital skills for manufacturing, retooling of workers, vocational training, digitization of industrial processes, and investments in digital infrastructure and enabling environment.
It is time to prepare students in Sciences, Technology, Engineering, and Mathematics.
It is time for the Manufacturers Association of Nigeria to establish “Industrial Digital Skills Academies” and link them to universities and technology innovation hubs.
It is time for Federal and State governments to make massive investments in digital infrastructure to support learning and skills development for global labor market demand.
He lamented that “In the Global Skills Report (2023) by Coursera, 100 countries were assessed on skills preparedness in business, analytics, and data sciences of their populations. The finding was very depressing for Nigeria: Nigeria was ranked 100 out of 100 countries, taking the first position only from the bottom. The leading countries in Africa were Rwanda, Egypt, and Morocco. Nigeria fell way behind war-torn Lebanon and Somalia. This is shocking.”