Nigeria’s greatest National Security challenge to a large extent is the unemployment crisis. Hundred of thousands of young people graduate from tertiary institutions yearly with no corresponding job placement opportunities and corresponding industrial growth. Globalization has made it sometimes cheaper to import goods and services rather than local production. This has greatly affected employment generation as existing local companies increasingly find it difficult to compete with imported goods coming in at lower prices, and manufacturers have no zeal to invest into new production companies because of risk of failure.
Globalization has brought competition to all levels, from production to distribution and even exchange. The after effect for most developing nations who failed to catch up with the symmetry of cheaper mass production, industrial growth, subsidized tariff regimes, and new global workplaces made possible with internet connectivity and technology is massive unemployment. This is where Nigeria finds herself. Now, how did we get here? To be factual, the rise and advent of Business Process Outsourcing (BPO) which is a method of subcontracting various business- related operations to third-party vendors/Countries was not favorable to Nigeria during its advent just like most African Countries.
When BPOs began, it applied chiefly to manufacturing entities, such as soft drink manufacturers that outsourced large segments of their supply chains. However, it is now applicable to the outsourcing of services like tech support, inbound and outbound sales, including trading and marketing. Today it is easy to operate an office in Washington DC and your entire support staff are drawn from Indonesia. Developed nations were able to adapt with new knowledge, new technologies and new skills acquisitions, but for most of Africa, especially Nigeria and our poor educational sector, it meant massive unemployment as our graduates could not fill the new void and the nature and requirements of the new workspace that was not location bound. At the advent, BPO depended on necessary technology/infrastructure that allows external companies to efficiently perform their roles, but Nigeria was less prepared and our major telecommunication company NITEL in the 90s was at its worst shape when these jobs moved to Singapore, Indonesia, Malaysia where most of Asia was better prepared.
So it is easy to trace the root cause of massive unemployment twenty years later in Nigeria and the low rise of an industrial revolution due to poor competition in prices of locally produced secondary products and cheap imported products. The new reasoning amongst most development experts today is that Nigeria must revert to local state sponsored industrialization and investment in Infrastructure and Trade if we must tackle our job creation crisis. While it may be challenging to connect into the new global workplace, we can take advantage of our local population and markets and drive a home-grown industrial revolution. I will use Ben Ayade’s Industrial Projects to drive home my argument. Bill Gates in his recent visit to Nigeria, had opined, that to anchor the economy over the long term, investments in infrastructure and competitiveness must go hand in hand with investment in people. People without roads, ports and factories can’t flourish. And roads, ports and factories without skilled workers to build and manage them can’t sustain an economy, Bill Gates Concludes. This I assume is the reasoning driving Cross River State Industrialization and Proposed Capital Projects. The outstanding question still remain, do we pursue the new industrial revolution by investing directly in Small and Medium Size Enterprises (SMEs) as the World Bank has done in the past decade or rather than SMEs, should State Governments invest directly in Industrial projects, through State run Corporations, source for new markets, build industrial production Capacity before transferring this state owned Industries to the Private Sector?
I would rather argue, given what I would refer to as the Nigerian factor, that for large scale industrialization, the type that can create jobs and reduce unemployment, that state governments should be direct partners if we must have a head way. State involvements in Production relations would not in any way hinder the growth of the private sector, rather, it will strengthen the private sectors delivery capacity through Public Private Partnerships. More question: Has SMEs financing failed to produce desired economic growth results in the past decades? No it hasn’t, but the type of financing often allocated, the type and class of jobs and the type of international competition out there puts too much financial burden on most SMEs, so much that majority of them barely struggle to survive, and as such, SMEs financing has not produced the type of job creation that could drastically affect or reduce unemployment especially among university graduates and skilled trained people.
SMEs over the years funded by world bank has produced artisans, Carpenters, welders, radio mechanics amongst others, professions that created jobs that could not absorb our graduate unemployed youths. This is the core of the problem to the rising graduate unemployment in Nigeria.
It should be noted that virtually all the SMEs programs funded by Nigeria’s CBN, World bank and other Institutions are too economical with financing. Nigeria does not have a credit system that is value or behavior based as found in most countries, our credit system is collateral based, and as such our SMEs are not given the type of facilities that can build medium sized industries, the type that can absorb our teaming graduate unemployed youths and still compete favorably in the international markets. History shows that our institutions are more interested in financing Small Scale Enterprises a way of reducing risk investments. More so, The Government does not have an efficient mechanism to ensure loans are applied to sectors originally designed for, the Banks do not trust the people and no efficient value-based credit mechanism to guarantee repayments or penalties, so to reduce risk, the disbursements are minimal and this has great impact on job creation and employment generation.
The Country is eager to build an industrial based economy, yet loans released to prospective SMEs can only start up small investments and trades, never enough to invest and build medium or large Industrial Projects capable of mass production with sufficient capacity to create jobs at a meaningful scale. These has been the pattern for over three decades. No nation develops this way. So State direct involvements in Large scale industrial projects remains one of the only meaningful options left, and should be encouraged as a pathway to sustainability and massive job creation. Let us now take a look at the Cross River State Industrial Initiative as a case study. Ben Ayades Industrial Model Since 2015, Ben Ayade’s government has initiated an Industrialization model which I think other Nigerian States should follow and Donor Partners should use as a test case for future investments and donor support. The strategy combines industrialization, Production management, value chain upgrades and employment generation. If properly planned and managed with the right human Capacity, technical component and the right market engagement, local and international, the strategy has the ability to turn around the fortune of the state and create sufficient graduate employment within the next decade. To achieve this goal, the Cross River State government initiated industrial projects in some local governments that produced raw materials that can be used to feed the new industries.