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Industrial development and business-civic leadership in Nigeria

Naji PMakarem5 July 2016

Why is unemployment and poverty rising in Nigeria, despite over a decade of robust economic growth? According to new research from, Naji P. Makarem, the organized private sector (OPS) has the opportunity to leverage its clout and political influence for urban governance. To do so however, it must strengthen its urban organizational capacity and shift its political attention beyond pure-efficiency to broader conceptions of functional urban agglomerations. A failure to do so risks locking Nigeria into a ‘low-productivity trap’, long after it has overcome its chronic ‘efficiency-crisis’.

 

Since its independence in 1960 Nigeria has been struggling to industrialize and diversify its economy away from low-productivity agricultural employment and dependence on Oil & Gas export revenues.  It has adopted numerous government strategies from import substitution to market liberalization; yet the economy continues to be highly dependent on oil reserves and imports of food and consumer goods from abroad.

 

It is estimated that 70% of households are currently living on less than $2 a day and a similar proportion is employed in the informal economy. Impressive GDP growth and considerable diversification into new sectors such as ICT, Real Estate and Professional, Scientific and Technical services over the past decade have failed to translate into sufficient employment generation, with unemployment rising significantly over the period to well above 20 percent according to government figures.

 

Figure 3 Unemployment in Nigeria, 1999-2010 Source: NBS data.

Figure 3 Unemployment in Nigeria, 1999-2010
Source: NBS data.

 

Jobless growth over the past decade can be attributed to two aspects of Nigeria’s industrial structure: About a third of the growth in output since 1990 has been driven by Oil & Gas, ICT and Real Estate, which together employ a mere 1.4% of formal sector workers. These are highly productive sectors with considerable impact on employment within the cities where they are concentrated, such as Lagos, but they do not generate sufficient employment to absorb Nigeria’s growing labour market.

 

Figure 6 Contribution to Real GDP Growth 1990-2010 Source: Authors’ calculations using NBS data

Figure 6 Contribution to Real GDP Growth 1990-2010
Source: Authors’ calculations using NBS data

 

On the other hand, manufacturing, which suffers from low productivity even compared to countries within the same development club, such as Kenya, India and South Africa, has contributed a mere 5% to GDP growth since 1990. Today Nigerians import the vast majority of the products they consume. They also import the machinery and high value inputs of the few products which they do produce, such as foam, steel pipes and pharmaceutical products. If Nigerians produced more and imported less (or developed favourable terms of trade) more of the money going into tills and ending up in the pockets of investors, entrepreneurs and workers abroad could be going to Nigerian workers, investors, entrepreneurs and the government. Tradable industries in general, and the manufacturing sector in particular, offer Nigerians the opportunity of generating employment, income and public revenues, which are all necessary for poverty reduction.

 

Nigeria’s 55 year struggle to boost its tradable industry is hampered by the country’s chronic ‘low-efficiency’ trap. Consider the following thought experiment to illustrate: take a successful exporting firm in China and place it and its managers and employees in Nigeria. It would not operate anywhere near as efficiently. Here’s why: In Nigeria the same firm would struggle to find serviced industrial land, having to build or fix its own slip roads, dig its own bore hole to access water, build its own sewers system, run its operations on costly diesel generators and hope the land it acquired is not claimed by somebody else, it would have to contend with often negotiated and opaque duplicity of taxes, inconsistent government regulations, a user-unfriendly bureaucracy, competition from counterfeit products produced locally or that enter the market illegally through poorly regulated international borders, an unreliable judiciary, poor quality roads connecting cities across the country with multiple check-points for informal bribes, slow clearing of imported intermediate goods at ports, tariffs on imported inputs which are not locally available, the risk of arbitrary increases in import tariffs for dubious reasons, double-digit interest rates and precarious access to finance and foreign exchange (Although this month, June 2016, the government floated the exchange rate).

 

These dysfunctional aspects of the business climate are well known and well researched by the World Bank’s ‘Doing Business’ reports which in 2016 ranks Nigeria 169 out of 189 countries in terms of ease of doing business. They are substantiated by our 77 interviews with business and civic leaders in Lagos, Kano and Port Harcourt, as part of DPU research for a DFID-funded project called Urbanization Research Nigeria (URN).

 

Yet the dysfunctionality of Nigeria’s economic development context runs much deeper than these ‘efficiency-related’ aspects of its urban and national contexts. Economic development theory highlights agglomeration economies, the home market effect (local demand) and productivity drivers as engines of industrial development and productivity growth, the essential conditions for income growth and quality jobs. Efficiency, while extremely important especially in contexts of cost-based competition, is just one of many development drivers urban regions and countries produce, and which firms draw on to compete.

 

The question is how can Nigeria break out of its chronic ‘low-efficiency trap’? While conventional wisdom would point to the need for good governance, this is not very useful advice in and of its own (it’s too obvious). Our research takes a different approach. Drawing from economic sociology, we argue that business-civic leadership has the potential of influencing policy and governance. Moreover, the perceptions and world views of the business community and business civic leadership can shape the formal institutions that govern them (see Figure 1). So we investigate the degree to which the private sector in Nigeria is organized, and the scope of their political attention.

 

Source: Authors’ calculations using NBS data

Source: Authors’ calculations using NBS data

 

Our research found the Nigerian business community, from small to large firms across different industries, to be highly organized. The peak business association which has been gaining power and influence since independence is the Manufacturing Association of Nigeria – MAN. The political attention of the organized private sector (OPS) focuses almost exclusively on efficiency-related aspects of the business climate. However, they overlook aspects of the urban context related to agglomeration economies and non-efficiency related productivity drivers; both indispensable features of functional cities for people and businesses.

 

These overlooked urban features include access to affordable, secure and serviced housing which are essential for human capital development; public transport which is indispensable for worker access to work places; education and skills development which are essential for human capital development and innovation; public R&D in related industries to support knowledge creation; firm- and industry-level support strategies for facilitating coordination and knowledge sharing; public space and cultural amenities to enable interaction, identity formation and innovation; and initiatives designed to bridge fragmented communities and develop appropriate and widely shared perceptions and world views in pursuit of social capital.

A failure to focus political attention on investing in functional cities risks locking Nigeria into a ‘low-productivity trap’, long after it has overcome its chronic ‘efficiency-crisis’.

 

 

This is a Blog about a recently submitted URN report to DFID. It will be publicly disseminated soon.


Naji P. Makarem is co-director of the Msc. Urban Economic Development at the Bartlett School’s Development Planning Unit (DPU) at UCL, and a lecturer in Political Economy of Development.

 

Impediments to Development: A Cursory View of Nigeria

OlusegunOgunleye14 October 2015

What is development?

Source: Sun.Star http://gallery.sunstar.com.ph/Editorial-Cartoons/i-hWjMJP8

 

There is no universally accepted definition of development. Different definitions and measurements have been proffered over the decades. These range from the use of indicators of economic affluence, such as GDP and poverty line, to use of social variables encompassing rights, education, and freedom, such as the Human Development Index. Nonetheless, no matter the approach adopted, a generally consensus is that many countries in the developing world, including Nigeria, are at the lower end of the development trajectory.

Why are developing countries not developing?

Source: SMART Technologies http://exchange.smarttech.com/details?id=88de0e47-b103-491c-ab9b-401d9554f440

 

“Corruption is one of the top three issues facing Nigeria, along with insecurity and unemployment. We must act to kill corruption or corruption will kill Nigeria”. [1]
Many issues have been attributed for the slow pace or lack of development in developing countries such as Nigeria, with a lot of emphasis laid on corruption. This is buttressed in Nigeria by the fact that successive governments have prioritised tackling corruption. Corruption, especially in its endemic state, has a negative impact on development. Such negative impacts include negatively impacting on the business environment, a decrease in funds available for developmental projects, increasing cost and time of transacting private and public business, etc. Such impacts, which affect the day to day living of citizens, has resulted in a hegemonic narrative that if corruption could be tackled then Nigeria would be on the highway to development.[2]

Hegemonic narrative overshadows other impediments to development.

“The fight against corruption is a full time job that the Federal Government will carry with sustained resolve. I have always maintained zero tolerance for corruption. I am even more committed to fighting this number one enemy decisively because I am convinced beyond any shadow of a doubt that the much needed impetus for our country’s survival is held back by corruption”. [3]
This hegemonic view has resulted in the relegation of other substantive issues hindering development to the background. Furthermore, by focusing so much attention on tackling corruption, policy makers lose sight of the fact that corruption could be directly or indirectly tacked by focusing on other substantive issues. One such substantive issue that is not being given adequate attention in Nigeria is urban development planning and management.

Urbanisation and development

It is widely agreed that urbanisation is a necessary condition to achieve development beyond a modest level of income. This is because urban centres are important drivers of development and poverty reduction, as they concentrate much of the national economic activities, and provide crucial links with rural areas, between cities, and across international borders. According to the World Bank, more than 80 percent of global GDP are generated in cities. [4]

Why are cities/urban centres critical to development?

The answer can be seen in the fact that cities, right before the creation of nation states in the 16th century, have existed to perform crucial functions which allow development to flourish and these functions are still germane today. These include: presence of thick markets around multiple workplaces and division of labour; shared infrastructure and service providers resulting in the dynamics of backward and forward inter-linkage of firms in industrial systems; and the emergence of localised relational assets promoting learning from knowledge spill-overs and innovation effects. [5] These functions are enhanced as productive cities tend to have a high concentration of support services; from high end legal and accounting services, financial and management consulting, repair and logistics, advertising, to public services like education and policing.

Nigeria’s experience

Findings indicate that successive Nigerian governments have not come to terms with the critical roles of cities/urban centres. This is based on the fact that with the exception of Abuja and Lagos, urban governance structures are lacking or non-existence in Nigerian cities.[6] This is despite the fact that Nigeria’s urban population was estimated at 47% of her total population as at 2014 and it is predicted to rise to 67% by 2050.
The above fact is further nuanced when the functions of Ministries, Departments and Agencies (MDAs) saddled with urban development issues are examined, as well as, the coordination of urban issues amongst the national, state and local levels of government. Nigeria’s Federal Ministry of Housing and Urban Development is responsible for urban development initiatives at the federal level. At the state level, Ministries of Physical Planning and Urban Development exist in some state, although they may bear different nomenclature. While planning for local government areas are undertaking by state MDAs in most states in Nigeria.
A deeper look at the activities of these MDAs reveals that while at the federal level the focus is geared towards housing related issues such as provision, state MDAs focus on physical planning, mainly designing of master plans and enforcement of planning laws and regulations, which many states see as a tool for revenue generation through development permit. Coordination of urban development issues amongst the national, state, and local levels of government can be said to be non-existence, despite provisions made to this regard in the 1992 Nigerian Urban and Regional Planning Law, decree No. 88 as amended in 1999.

Realisation

If the preceding facts are correlated with the conclusion arrived at by Cities Alliance that “no country has ever attained middle-incomes without urbanising, and none has reached high income without vibrant cities that are centers of innovation, entrepreneurship and culture”,[7] then the situation in Nigeria and other developing countries, where policy makers are yet to come to terms with the need to create structures and systems to effectively manage cities/urban centres, is a cause for concern. This is because when corruption is eventually tackled in these countries there will be a realisation that attaining development is still a mirage.

 

References
1. A Statement by the President of Nigeria President Muhammadu Buhari. Source Punch Newspaper http://www.punchng.com/news/buhari-to-split-nnpc-into-two-plans-fresh-bid-round-for-oil-blocks/
2. Editor Punch Nigeria Limited, 2015. PUNCH. [Online]
Available at: http://www.punchng.com/editorials/corruption-let-the-war-begin-in-earnest/
[Accessed 3 August 2015].
3. Statement by the President of Nigeria President Muhammadu Buhari at the US Institute for Peace on 22nd July 2015. Source: Punch Newspaper http://www.punchng.com/news/buharis-speech-at-us-institute-for-peace/
4. http://www.worldbank.org/en/topic/urbandevelopment/overview
5. Miller, H., 2014. What are the features of urbanisation and cities that promote productivity, employment and salaries?. s.l.:EPS-PEAKS.
6. Well-being and citizenship in urban Nigeria (2015) Forthcoming publication by Andrea Rigon et al.
7. Knowledge platform: Urbanization. http://www.citiesalliance.org/sites/citiesalliance.org/files/7%20-%20WB%20Urbanization%20KP%20Full%20Document.pdf

Tags: Development, Urban development planning and management, urbanisation, corruption, cities/urban centres


 

Olusegun Ogunleye is a development practitioner with several years working experience in the field of town planning in Nigeria. He has also taken part in urban-based research in Nigeria, London and, Dar es Salaam. His passion lies in the area of urban governance as he sees it as a veritable tool to ensure and enhance the wellbeing of citizens. He also believes in the potential inherent in community-led development as a means of ensuring sustainable development. Olusegun graduated from the MSc Urban Development Planning in 2014.

One city, different realities: Infrastructure development and urban fragmentation in Nigeria

OlusegunOgunleye22 July 2015

Osbourne Foreshore_wide

Modernity meets Informality at the reclaimed portion of Osborne Foreshore

Every day on my way to work, when I cross Third Mainland Bridge and look to my right, I see the type of planning portrayed by conventional wisdom as progressive, reformist and modernist in its contribution towards attaining societal goals. In Lagos this is manifested in the high rate of construction activities observable in Osborne Foreshore, Banana Island, and Lekki axis.

These developments demand the reclamation of large expanse of land, raising environmental concerns. However, when on my way back home and on the other side of the bridge, I see ‘blighted areas‘ such as Makoko and Okobaba; [1] they remind me of what Oren Yiftachel referred to as the dark side of planning – where government actions or inaction leads to the marginalisation, oppression, and impoverishment of citizens.

Bana & Osbourne

Land reclamation at Banana Island (left) and Osborne Foreshore (right) as seen from Third Mainland Bridge

The accumulation of wealth in places like Osborne Foreshore is in stark contrast to the endemic poverty prevalent in places like Makoko and Okobaba, hence resulting in a great divide. However, of greatest concern is the fact that government action and/or inaction is – whether knowingly or unknowingly – reinforcing, reproducing, deepening and institutionalising the divide.

My concern is premised on the belief that the government’s infrastructural development drive, which places emphasis on road infrastructure, is based on the hegemonic assumption that all citizens, in spit of their of diverse socio-economic backgrounds, will benefit equally.

An example is the 1.36 km cable-stayed Lekki-Ikoyi Link Bridge built at a cost of N29 billion of public funds (approx. £93 million/$145 million). Although lauded as a good initiative, more pertinent questions to me are, who are those benefiting from the presence of the bridge? Whose productivity, livelihood and wellbeing does it enhance? Whose position is it privileging?

Lekki-Ikoyi Link Bridge_500

Lekki-Ikoyi Link Bridge

I would posit that the government is, whether by design or accident, indirectly subsidising the means through which the elite/property class can ensure their livelihood and wellbeing at the expense of the poor/non-property class. Especially when such interventions are substantiated with discriminatory and exclusionary acts such as not allowing commercial means of transportation – the main means of mobility for majority of Lagosians – to use the Lekki-Ikoyi Bridge.

Such practices have been revealed to be detrimental to sustainable development and akin to what David Harvey termed ‘the quiet redistributive mechanism’, which helps to maintain or widen the socio-economic gap.

My thoughts therefore are: if government can subsidise the wellbeing of the elite/property class, why same cannot be done for the poor, marginalised and non-property class? A good opportunity for such was when residences of Makoko submitted a regeneration plan for their area, which was rejected by the government on the basis that the community did not have legal title to the occupied land. [2]

I view this as a missed opportunity for local collaboration and partnership with these community-based organisations, especially those designated as ‘blighted areas.’ This could be used as the basis for developing an alternative model for urban development and slum/informal settlement upgrading in Lagos, hence setting a precedent which could have been gradually institutionalised through wider public learning.

View from Third Mainland Bridge towards Makoko (left) and Okobaba (right)

View from Third Mainland Bridge towards Makoko (left) and Okobaba (right)

This is given added significance in view of a statement by officials of the Lagos state government, in a 2008 Cities Alliance report, confirming the limited implementation, success and, sustainability ratings of the government’s approach towards slum upgrading.

I am of the opinion that if the government really wants to promote sustainable and inclusive development, it needs to take deliberate actions to ensure the poor and marginalised are not excluded from accessing opportunities for wealth creation.

Also of importance is seizing opportunities, such as the Makoko scenario, when they arise to expand the room for partnership and collaboration with poor and marginalised communities. This is because, as aptly pointed out by Agbola & Agunbiade, “marginal people are unlikely to have access to the resources that are required to overcome the restrictions imposed by marginal environments and thus enable them to live beyond the limits of subsistence”.

I believe that if the government does not take deliberate steps to address the great divide we are currently seeing, it will result in the continuous fragmentation of Lagos along the lines of socio-economic conditions and levels of infrastructural development.

References:

[1] 42 ‘blighted areas’ were identified by UNDP in 1995 (Agbola & Agunbiade, 2009).

[2] This is not peculiar to this case but is a general issues with most slum/informal settlements (Agbola & Agunbiade, 2009). For the experience of Ijora Badia another blighted community refer to The Social and Economic Rights Action Centre (SERAC), 2013, If you love your life, move out! Forced eviction in Badia East, Lagos State, Nigeria, London: Amnesty International.


Olusegun Ogunleye is a development practitioner with several years working experience in the field of town planning in Nigeria. He has also taken part in urban-based research in Nigeria, London and, Dar es Salaam. His passion lies in the area of urban governance as he sees it as a veritable tool to ensure and enhance the wellbeing of citizens. He also believes in the potential inherent in community-led development as a means of ensuring sustainable development. Olusegun graduated from the MSc Urban Development Planning in 2014.

How can social media help assert citizenship rights?

OlusegunOgunleye5 March 2015

The use of social media by people to assert their citizenship rights and make demands of their government has been enabled through the emergence of a variety of platforms such as Twitter, Facebook, change.org and avaaz.org.

This can be traced back to incidents such as the Arab Spring, and the ‘Occupy’ movements seen in some western countries such as the United States of America (Occupy Wall Street being perhaps the best known). More recently political crises in Spain and Greece, and significant campaigns such as #bringbackourgirls and Je Suis Charlie have found a global audience online. Social media as a mobilising tool continues to gain in currency.

The successes of social media have varied from locality to locality based on different factors and contexts. What cannot be denied is that such practices have increased the ability of citizens to rally around solidarity not only locally but global issues.

Source: Punch Newspaper | Credit: Olatunji Obasa

Source: Punch Newspaper | Credit: Olatunji Obasa

#bringbackourgirls: Global visibility shrouds local action

One recent incident that is especially close to home for me, as a Nigerian, has been the #bringbackourgirls campaign. This originated in Nigeria due to the kidnap of 276 girls by the Boko Haram sect from a school in Chibok located in North-eastern Nigeria on April 14, 2014.

Reflecting on the #bringbackourgirls campaign: its gains were its ability to solicit global support and situate the blight of those impacted by the Boko Haram insurgency into the international consciousness. However, its key pitfall has been the inability to elicit concrete response and action from the Nigerian government.

My conclusion is that the reason for this can be attributed to several factors among which is the fact that the global support garnered was not matched by sustained local pressure. Additionally the politicisation of the issue by both the government and the opposition has meant that in the process the voice of the victims been muted somewhat.

Silencing the victim’s voice

Before delving further into reasons for the limited success of the #bringbackourgirls campaign, I would like to expand on this critical issue; the silencing of the victim’s voice, which came to the fore. This is not particular only to the #bringbackourgirls campaign but its reflective of various mass movements of activism in the developing world.

Vyncent Elvin Eebee highlighted this in an article titledFor Whom Does the Speaking Woman Speak?, where she concluded that rural women’s voices are submerged by the voice of urban female advocates, which result in rural women becoming invisible due to the articulation of their voices by the other.

She further stated that when the rural woman participates in action, it is upon trumpeted and highly advertised invitations, which are not conducive to effective participatory mass movements.

To me this was visible in the #bringbackourgirls campaign, because these trumpeted and highly advertised invitations were tools utilised by the campaigners, government, and the opposition to publicise themselves while the plea of the victims was not concretely tackled.  

Segun pic 2

The ‘digital divide’

In my opinion key factors that contributed to the limited success of social media in Nigeria and developing countries as a whole relate to the digital divide.

This is not only in terms of penetration but also with regards to access and understanding of how to utilise these tools and platforms, especially when the literacy rates in many countries are taken into consideration.

This was reflected upon by Merridy Wilson who acknowledged that

“the problem of the growing technology and/or knowledge gaps between and within countries, places certain groups of people further in the shadow regions of global information flows. These gaps persist both at the level of access to ICT infrastructure, and in terms of the form of information conveyed and who is able to use, understand and produce the information and knowledge which ICTs potentially make accessible.”

We need conscious, strategic approaches to effectively use social media for change

My conclusion therefore is that social media can become an enabling and transformative tool for people to assert their citizenship rights and make demands in developing countries, such as Nigeria. But it calls for prudent adaptation of techniques and tactics for effective strategies towards mass mobilisation.

This can only be attained by being conscious of local realities in the African continent, as in other climes, and supported by concerted and sustained pressure on ground to match the global support a social media audience provides.

What this therefore requires, as put in the words of Andrew Burkett,

“are much more difficult, time-consuming and probably not as glitzy as ICT development efforts – that is, political will, recognition of personal and social responsibilities, and ultimately action on the part of governments and civil society.”


Olusegun Ogunleye is a development practitioner with several years working experience in the field of town planning in Nigeria. He has also taken part in urban-based research in Nigeria, London and, Dar es Salaam. His passion lies in the area of urban governance as he sees it as a veritable tool to ensure and enhance the wellbeing of citizens. He also believes in the potential inherent in community-led development as a means of ensuring sustainable development. Olusegun graduated from the MSc Urban Development Planning in 2014.