Godwin Obaseki, Executive Governor of Edo State of Nigeria Godwin Obaseki, Executive Governor of Edo State of Nigeria Vanguard

Edo State - Right Moment for Paradigm Shift? Featured

By Opinion / Thursday, 19 April 2018 01:24

The long read.

At the point of its birth in 1963, Midwestern Region of Nigeria was at every level considerably inferior to the country’s other federated units in economic terms. The foundation for Midwest’s economic development was signposted by inexistent infrastructure. The parliamentary act that compelled its creation did not provide for a take-off grant, nor  supported by   blueprint  for the region's  socio-economic development. 

What occurred appeared to have been a mere re-designation of a chunk of territories formerly under the country’s Western Region and the transfer of its administration to new set of political actors, i.e., Midwestern politicians. At the point this occurred, this may have seemed “a natural thing” to do. 
Of greater significance was the fact that on policy planning level, the region lacked trained and experienced manpower it needed to design a grand socio-economic policy blueprint required for the occasion. This antecedent was in the same measure repeated in 1968, 1976, 1989 and 1996,  under successive dispensations, with the birth of new regional units and reshapping and renaming of others. 

In value and consequence, states carved out of Nigeria’s original regions have not fared better than mere administrative units. The logic that behind state creation process in Nigeria was largely defined by intrigues of an exclusive and minute class of politicians. Local politicians were motivated by prospects of being elevated to senior positions in government, or  higher up the rung of power, as "hanger-ons".  By means of fissure expansion  in outlook of various communities, he acquired for himself a fiefdom, i.e.,  "brand new state".   Such is it that   55 years after the   the very first of these units was created, i.e., the Midwest, the process of wealth creation and credit accumulation for reinvestment in each of the new units remains insignificant. In a nutshell, the vast majority of Nigerian states were unplanned for, and have remained units for reinforcing or refuting the assertion that statehood in Africa is an invalid concept.

However, reconstruction needs caused by the succesful persecution of  Nigeria's war with "Biafra" successionists  achieved for the country's  federated units, a  relatively brief period of rapid economic growth. In this period  the Midwestern regional government was  unquestionably positioned as an agent of change. Its policy and actions impacted quite positively on all facets of infrastructure and human capital development. Whatever growth recorded in the post war period could not be sustained both in the Midwest, and the rest of the country. 

Thus, it may be said that as far as economic and human capital development is concerned in the Midwest, its ethno-tribal political elite   (an extension of the country’s ruling elite class) proved themselves to be incapable state policy planners and business policy decision makers.   They appeared uninterested in defining a strategy for business survival and economic growth  in a world of shrinking resources, competing technology and emergence of global economic players. Politically speaking thus, policy measures conceived to accommodate the interests of this category of people (across the country), and to have them consolidate their positions within circumscribed latitudes of their perceived influence in federated units were not rational. 

Yet, should the failure of Nigeria's post 1963 federating units to  serve as agents of "change" be blamed entirely on the local politician?  Though an obvious factor, his unwillingness to  extricate his "politics" from his attraction to medieval anachronisms, but this  the sole causative?  Indeed, it is obvious that a people’s creative energies are released in explosive fashion, by availing them access to  factors and instruments of wealth creation.  Unfettered access to land,   credit,  communication and access to markets, education, free and fair competition, rule of law and political freedom, had their impact.  Still, is it true that Nigerians  were ever prevented from conducting business and amassing wealth by anyone at any time? Was any administrative unit in Nigeria ever considered less than an entity of "a national whole" , since the advent of self rule in the country in 1960?
If no, what factors have prevented a release of people’s creative energies in Nigeria of post independence era?

The answer rests somewhere between the mode and purpose of socio-economic production and wealth creation during colonial and post colonial administration of the country. Using the Midwestern region, and its past and more or less current representation, i.e., Edo State as example, "continuity" becomes obvious in production mode and purpose of wealth creation. The motherboard remains essentially the same. Essences that were supposed to have changed, have not. 

Structurally, Midwestern economy since 1963, has remained essentially that conceived for Benin Province aftermath its occupation in 1897, i.e., a conduit, not a composite economy. Therefore, a primary issue of "re-planning" may be  a primary factor constraining the release its creative energies  (Not just the Midwest, but Nigeria's  other federating units as well). Vis-a-vis dominant influence of larger than life political actors (aforementioned), state policy failure with regards to wealth creation, may be seen more in relation of a “cause”, and less, than as an “effect” of “bad politics”, leading to underdevelopment and corruption.

In the period before the Kingdom was sacked by the British in 1897, Benin was an economic hub. Studies on economic production among pre-colonial societies in the province suggests the existence of internal market structures. Though trade with foreign merchants was sustained,  the internal economy of the province largely remained composite, though largely peasant agrarian and artisan. 

Economic development in Benin Province under British colonial administration aligned to the logic that informed European mercantilist class to install estates  in virtually every inch of the planet’s landmass for the purpose of consolidating and exploiting its resources.There was a purpose, for the replication  of  the European state  image everywhere on earth.  Which was that its ominipresence created conditions for  a more effective exploitation and management of earth's resources.  In consequence,  the planet became a unified global market interconnected by a  of  sea corridors and intricate credit and finance system. 

Intensified trade between societies of people now living in estates or states across the planet encouraged specialisation in production (origin of comparative advantage), and with this emerged production hubs and trade nodes.  Survival for once composite economies equated to establishing means for connecting to the international trade and accessing foreign credits, usually via trade.      At the point of exposure to externalities or interaction with the global network,  economic survival of a previously healthy composite economy could only be assurred by an interplay a single factor. The speed at which it could be reinvented into a hub, or a viable interface between local production and international credit. This reality defined the birth of virtually of all Sub Sahara African (SSA) states.  Transformation from composite to "hub" economies brought success to some, and spelt the doom of others. A hub's gravitational pull was simply irresistible.  

From  a "hub"point of view, the intent of such pull was  the extraction of resources within its catchment structure for the purpose of export.  Inversey, a hub's standing was measured in terms of its capacity to absorb, market and distribute imports, just as quickly. With this is linked its ability to attract credits investment for sustaining the outlined processes. To sustain allegiance of productive groups and units within it, a legal system evolved.  Fending off competition from  "wannabe" hubs in regions contagious to it made territorial dearcations of estates informed the need for estates to maintain foreign policy regimes with clearly spelt "national interest" markers.  

For newly independent African countries, this new attraction had rewards, though many of them temporary. All of them (rewards) were  exclusive  only to those with claims over what is momentarily in demand internationally.  Be it certain commodities, a certain service physical, unskilled or trained manpower, etc. This was the  defining logic of legacies bequethed contemporary African societies, including Nigeria's Midwest region.

The practice of targeting, and specific rewards (compensation, payment, etc) for those with acceptable claims or deeds over “targets” is called “comparative advantage”. Never mind the neoliberal superficial principle invented to “hoodwink”, i.e., “trickle down principle” by which they mean that crumbs from rewards bestowed on owners of claims may shower on "underdog" people and communities, from  dinning table of the "selected". And that by some unexplained magic, these crumbs will by themselves accumulate into quantum resources required to stimulate economic growth in every other sector of in an underdeveloped economy. This simply will not happen in Nigeria's midwestern region.

Sustained over a long period of time, the pursuit of this illusion  in itself becomes a system. A strategy for sustaining poverty, undermining human capacity development, underdeveloping communities, fanning social dislocations, promoting ethno-religious strife and fermenting civil wars.  D. Senghaas calls this system  Cryptocapitalism. According to him;

“…Cryptocapitalism is a term used to describe the existence of structural gaps in the market structure of a given economy. It describes a condition that permits the development of little optimally monetized islands within a national economic complex buoyed by foreign capital investment, and wholesome infusion of scarce credit sourced from the internal markets by the local state actor for investment in sustaining production and expansion of capacities in these islands, for the purpose of accessing foreign credit accruable from the export of commodities produced in these islands. But surrounding these little islands of prosperity are vast undermonetised, under-regulated and under developed economic spaces. These archipelagos in national economy are often populated by actors operating on the margins of national economy (informal economic actors). The vast majority of the country’s citizens depend on low income and low turn-over economic activities undertaken in primitive conditions within these archipelagos…”

Cryptocapitalism denies an economy the structural foundation and operational mechanism it needs for seamless internal market operation. It encourages the under-exploitation of factors of production, capacity utilisation and promotes wastage in sections of it serving the internal market. This it does by starving these sectors of the economy of credits required for investment in research and expansion of capacities. Because foreign credit or hard currency cannot be generated from economic activities in the internal market, cryptocapitalism thrives in an economic environment that is oriented towards serving the demand needs of foreign markets, for the purpose of earning foreign credit. It prevents sustained and endogenous economic growth in affected countries while starving sectors of the economy serving local demand of investment credit and the capacity to accumulate capital, deepen the internalization of operations, as a way of insulating the internal markets from the effects of externally induced shocks. Cryptocapitalism is often the result of compartmentalised development (growth pole economics, i.e., comparative advantage and market specialisation) of certain enclaves of national economy at the expense of others. 

Nigeria’s seeming inability to break out of its dependence on crude oil export finds explanation in the cryptocapitalistic structure of its economy. Reference to this as symptoms of a much talked about “Dutch Disease” clearly misses the point. Before the advent of crude oil production and exports in Nigeria, it was the export of cash crops.  They both tell a story of the absence of an internal economy and overexposure of the country’s productive forces to externalities. This much is obvious in M. Iyoha and D. Oriakhi’s assertion that by late 1960s, “The Nigerian economy could accurately be described as dualistic, with a small export enclave sector superimposed on a largely subsistence agricultural one…”   M. Iyoha and D. Oriakhi may however be faulted in their failure to recognise relations between contradictions identified in their "dualism".  The Dutch Disease phenomenon isn't a causative factor, but the by-product of  comparative advantage principle.  In anycase, continued investment in the so-called ..." largely subsistence agricultural one" had proved an unwise policy course by the end of the 1970s. Limited latitude for exponential expansion in the country's agric industry put paid to that.

Thus, on federal and and regional administration levels, especially for states like Edo, attractions of  how good "old times" seem, must discountenanced. For the simple reason that it will not happen again that the region will a world leading exporter of palm oil, or rubber. In today's world of groundbreaking innovations in polymer technology, developing export capacities in palm oil and rubber production is an unwise short term policy thinking. More importantly, it may be noted that the state has over 4 million people inhabiting a landmass of 17,802 km² in size (i.e., 180 persons per square kilometers). With its rapidly shrinking high rain forest cover, and dangers posed by this to its aqua system, wild life and  flora and fauna enviroment, expansion of capacities in certain kind of agriculture must be de-emphasised.  Continued destruction of virgin forests for cultivation of cash crops to serve cravings for hard currency to procure foreign made goods comes at highly prohibitive cost. (Why not have factories established to process, package and export commodities sourced from elsewhere in the Niger Delta and ECOWAS region, via road and sea - Gele-Gele?). 

In metric tonnes, Nigeria produced  366,300 in 1961 , 303, 800 in 1962, 347,300 in 1963, 346 ,300 in 1964, 388, 400 in 1965, but 900,000 in 2011. Where is the shame in this? That Indonesia has overtaken Nigeria as the world's leading producer of palm oil, or that Nigeria resort to imports to meet up with local demand is the result of an interplay of two factors, unrelated to   "Dutch Disease".  The first being that industrialization and population growth caused a spike in consumption pattern, and limited scope for geometric scale expansion in   palm  production capacity, constituing a second factor.  With population density of 121 /mi2 to Nigeria's 167/mi2, and population growth rate of 1.28% to Nigeria's 2.67%, what is unatural in Indonesia taking over from Nigeria as the world's largest producer and exporter of palm oil?

Given that roughly 60% of Nigeria's palm produces is sourced from Edo State and 8 other states in the Niger Delta region (i.e., 70,000 km2  or 7.5% of Nigeria's land mass), it may be seen that a longing for "old times", is the product of a "crytocapitalistic  mindset. It will do  Edo State government a lot of good to shy away from such compulsions.

Policy response to structural defects in the economy handed Nigeria's post independent leaders by British colonial administration.  The Midwest Region (subsequently, the Bendel and Edo States) fared worse than some other federating units. A good number of cottage industries established to drive industrialization process forward in the region foundered less than a decade after  they were commissioned.   A combination of factors, that included inexperience,   an absence of resolve, flexibility, and tenacity to drive forward with the policy initiative resulted in policy failure.  Of overriding importance, was the region's political administration to attract the credit quantum required to expand installed capacities in the cottage factories.  Aligned to this was the inability of successive administrations in the state to raise sufficient funds for inveestment in developing communication, transportation and logistics infrastructure. Human capital development also suffered disservice. 

Back to Basics.
Developmental planning is not magic. State policy drive towards pre-conceived ends is not without enormous restraint, uncompromising insistence on fidelity, temporal mistakes and failures, frustrations and rebellion, unspeakable challenges and voluntary sacrifice. There exist no short cuts. For developing societies, successful implementation of policy design conceived to attain marked targets in socio-economic growth is necessarily long, hard and testy.  There are no shortcuts. 

One way or another, a plethora of cottage industries must not just be re-planned for, rebuilt, developed to stimulate transformation in production mode within various sectors of the state’s internal economy, they must work. And their operation must be in sync with the operating mechanisms of the internal market. State policy in this regard must go beyond the point of standard regulation to market construction and the strengthening of capacities in the internal market. The “market” is man’s invention, not God’s creation.   

The first shortcoming in earlier efforts toward industrialisation in the midwest  was a  seeming overdependence  on imported technical input. This may have seemed an inevitable policy direction, given the very low level of trained technical competence.  Sudden shortfall in hard currency flow into the Federation’s account  (and the state's share of it), caused by a decline in the value of commodity exports left the region's industrialisation plan was in tatters.  Foreign technical partners departed,  one after the other. 
In the face of rapid population growth, declining revenue from federation account,  declining productivity and  poor HDI ranking,  the people of Edo State are even more insistent in in their demand for better life for everyone.  Inversely, government ability to attend to demands of  the people is remains in negative, and progressively so. 

In its current  state, not much can be done to make Edo State (or any other Nigerian State), attractive enough as to inspire the deluge of Foreign Direct Investment (FDI) to industrialise the state's internal economy.

So, why the wait for "Mr. Godot?"

 (Continues tomorrow)


David Danisa

David Danisa



Edo Investment Summit - Alaghodaro 2017 CNBCAfrica
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