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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.

 

Development Administration and Planning – Understanding how development intervention is planned and implemented in Kampala, Uganda

LilianSchofield20 June 2016

Over the last two decades, Uganda has attained a remarkable record of delivering development in the areas of growth and poverty reduction. The country has also seen a significant increase in the involvement of nongovernmental organisations (NGOs) in the development process. The MSc Development Administration and Planning field trip to Kampala was focused on exploring how development intervention is planned and implemented in Kampala, Uganda, as well as examining the role of the practitioner and observing the tools and approaches that are used to conceptualise, design, manage, monitor and evaluate development interventions.

Kampala

Kampala

Kampala city tour

The field trip commenced with a guided city tour of Kampala, which was organised not only as an introduction to the environment but also to elicit and encourage observation and reflection in terms of spaces in the city, forms of social and cultural life.

Kampala is the biggest city and the capital of Uganda. It is also the administrative and commercial centre of the country.  Kampala has undergone changes within the last few decades and with rapid urbanisation and population growth, the city has had to deal with challenges congruent with urbanisation. Kampala, a city, which was originally built on seven hills, has now expanded to one on more than 21 hills.  The town formerly designed for 500,000 is said to now have a population of more than 2 million with migrants coming in from outside Kampala to work and find work in the city. This appears to have had a huge impact on the infrastructure.

Kampala faces a number of challenges, which is typical of urbanised cities in developing countries – aside from improving basic necessities; these challenges also include the lack of infrastructure and population increase. NGOs in Kampala are seemingly filling in some of the gaps in government provisioning such as being involved in service provisioning. The upward trajectory of NGO prevalence seems to demonstrate that NGOs in Kampala will continue to be involved in service provisioning as the city continues to grow and government struggles to fulfil their responsibilities.

 

Field site visit

The students were divided into eight groups with each working with one of our eight partner development organisations in Kampala. The students spent two weeks visiting their partner organisations and observing first-hand the processes and tools involved in carrying out development projects. Through employing research strategies and appropriate methodology, students utilised various theoretical frameworks and research methods to explore and understand the phenomenon under investigation.

 Field site visits were also organised for all the students to observe development projects in action. One of the field sites visited was a project supported by Shelter and Settlements Alternatives (SSA) called ‘Decent Living Project’. SSA is a Ugandan based NGO involved in advocacy and sharing information for better housing policies, programs and practices towards sustainable improvement of human settlements in Uganda.

Decent living project

Decent living project

 

Decent Living Project – Kwafako Housing Cooperative

The Decent Living Project, which is one of SSA’s projects, supports its beneficiaries by providing affordable and eco-friendly houses as well as improving the lives of people living in informal settlements in Kampala. One such beneficiary of this project is a group of individuals living with HIV and formerly inhabiting an informal settlement. They came together and formed their own cooperative called the Kwafako Housing Cooperative. The students were introduced to some of the beneficiaries of the housing project and were also briefed about the history of the housing cooperative, which was said to be the idea of one of the beneficiaries known as Madam Betty. She was said to have noticed the lack of help for people living with HIV within her settlement and convinced them to come together and seek help. The cooperative is currently made up of 34 members who are mostly women, except for four males who upon the death of their spouses became members automatically due to the cooperative’s policy which states that once a female member dies, their husbands become members.

Machine used in making the interlocking bricks

Machine used in making the interlocking bricks

SSA supports this community group through advocacy, providing capacity building through workshops. The members of the cooperative group were trained in the art of making the interlocking soil stabilised brick used in constructing their houses. Strategies used by SSA in meeting objectives include transferring affordable, sustainable and environmental housing technology.  For example, the materials used in making the interlocking soil stabilised brick are dug from the same soil found within the housing project environment. This ensures maximum utilisation of land, keep costs at a minimum and affordable whilst also being environmentally friendly. They also encourage making bricks without the need of burning wood which they explained was not environmentally friendly and as such not supported by one of their funders.

The project which has 24 units which are almost completed is said to be also partnering with Water Aid who plan to provide water facilities to the project. Madam Betty stated that they participated in the design of the houses as well as making the bricks and helping with the building construction.

The members of the cooperative demonstrated how the interlocking stone brick technology is made. This gave us the opportunity to observe the process of making the interlocking soil stabilised bricks as well as encouraging deeper understanding of the capacity and hard work involved.

Housing engineer demonstration the process of making the interlocking soil stabilised brick

Housing engineer demonstration the process of making the interlocking soil stabilised brick

Apart from the quotidian activities which involved field site visits, collecting data and frequent group meetings, the students prepared presentations of their findings to tutors, peers and the partner organisations.

The above picture shows demonstration of how the bricks are interlocked

The above picture shows demonstration of how the bricks are interlocked

Reference:

Golooba-Mutebi, F., & Hickey, S. (2013) ‘Investigating the links between political settlements and inclusive development in Uganda: towards a research agenda’ (No. esid-020-13). BWPI. Manchester: The University of Manchester.

Lambright, G. M. S. (2014), Opposition Politics and Urban Service Delivery in Kampala, Uganda. Development Policy Review, 32: s39–s60. doi: 10.1111/dpr.12068

Matagi, S. V. (2002) ‘Some issues of environmental concern in Kampala, the capital city of Uganda’, Environmental Monitoring and Assessment, 77(2):121-138


Dr Lilian Schofield is the Graduate Teaching Assistant for the MSc Development Administration and Planning (DAP). She joined the students on the overseas field trip to Kampala.  Each year, the MSc Development Administration and Planning students embark on an international research field trip. In recent years, the MSc DAP students have visited several countries including Ethiopia and Uganda.

Building Partnerships for South-South Cooperation

DaljeetKaur29 July 2015

Considering the increased focus on South-South Cooperation development dialogue and India’s long standing presence in assisting development in various regions of the world, the UK Department for International Development (DFID) is implementing a new model of cooperation support in India.

DFID India’s Global and National Team (GNT) is at the centre of delivering the transition from an aid-based UK-India development relationship to a mutual partnership for global development, in line with the vision set out by the Former Secretary of State in his Emerging Powers speech at Chatham House in February 2012. Enhanced policy engagement with India on national and global issues through programmes like the Knowledge Partnership will be at the heart of this transition.

The Knowledge Partnership Programme (KPP) with which I am associated as a Senior Programme Manager from the last two and half years will be completing its pilot phase in June 2016.

Women Development Group Members in Oromia region of Ethiopia

Women Development Group Members in Oromia region of Ethiopia

IPE Global, where I work, is implementing the programme on behalf of the UK Department for International Development (DFID). The programme aims to produce and disseminate high quality research and analysis products, share Indian and global evidence on policies that impact development outcomes and support advocacy towards strengthening policy design and implementation.

To date we have promoted sharing of Indian evidence, best practices and expertise with Low Income Countries in order to facilitate evidence-gathering and uptake.

Priority Areas

Since its beginning, the programme has prioritised the following areas for engagement: (a) food security, resource scarcity and climate change; (b) trade and investment; (c) health and disease control; (d) women and girls; and (e) development effectiveness.

The aim is to step up collaboration around ideas, knowledge, evidence, accountability, technology and innovation between UK, India and the developing countries of Sub-Saharan Africa and South East Asia. The work my team and I carry out, focuses on Indian policy and practice with the explicit intention of developing India-Global networks, strategies and sectors to promote knowledge exchange through south – south collaboration.

Recently, we were able to facilitate a partnership between, Kudumbashree, a state led mission in India and Ministry of Women, Children and Youth Affairs Ethiopia, on the theme – women economic empowerment.

Delegates with Kudumbashree SHG members - women construction workers

Delegates with Kudumbashree SHG members – women construction workers

What can Self Help Groups contribute?

Today, the MFIs in Ethiopia are motivated to extend the frontier of financial intermediation to those traditionally excluded from conventional financial markets, the Poor, and especially the poor women. At the same time, various studies point out that the Self Help Groups (SHGs) can act as a tool for advancement and empowerment of women in India.

The microfinance movement through the SHG model in India has also been considered an effective development tool to enable women SHG members to graduate to microenterprises and in turn, to address poverty. The Indian experience of empowering marginalized women through formations of SHGs with institutional linkages and the growing demand for microfinance development in Ethiopia created an ideal situation for us, at the programme, to promote collaboration and cooperation between the two countries.

In my opinion, this India-Ethiopia alliance on SHGs represents a success story of mutual cooperation between two nations. It reiterates the potential for knowledge based cooperation and collaboration between nations in the global south to set their agenda and achieve sustainable development.

Indian SHG Group Leader and Ethiopian SHG Group Leader

Indian SHG Group Leader and Ethiopian SHG Group Leader

Progress towards SDG Goal 17

As development processes become ever more complex, I see a growing demand for knowledge and analytical products that can provide evidence and learning for policy changes and reforms. Informing and influencing policies are hence critical aspects of inter­national development and I believe, together we can bring a change by focusing on advocacy along with service delivery.

By adopting the new Sustainable Development Goals, countries are also committing towards achieving the Goal 17 – to strengthen the means of implementation and revitalize the global partnership for sustainable development.

More specifically, countries will promote multi-stakeholder partnerships that mobilize and share knowledge, expertise, technologies and financial resources to support the SDGs. In addition, these collaborations will encourage and promote effective public, public-private, and civil society partnerships.

These two targets 17.16 and 17.17 are banking on the existing North-South cooperation and the emerging South-South, and triangular cooperation.

Ethiopia Delegates; Kudumbashree Executive Director; Chairman Dr.M.K.Muneer, Hon’ble Minister for Panchayat & Social Welfare; IPE Global Team

Ethiopia Delegates; Kudumbashree Executive Director; Chairman Dr.M.K.Muneer, Hon’ble Minister for Panchayat & Social Welfare; IPE Global Team

India’s role in the post-2015 development agenda

In the post-2015 era, India plays a critical role in sharing learnings it has accumulated in the process of gradually upgrading from a low-income to a middle-income country. I hope partnerships based on knowledge will support effective and targeted capacity building in developing countries and help achieve common objectives.

Through activities undertaken and studies supported by the programme, we hope to engage more with policymakers and key stakeholders. By providing informating their choices through evidence-based advice, we hope the effectively influence the policy environment and reforms in India.

At the same time, we through the KPP are also aiming to strengthen India-UK partnership and significantly contribute to global development opportunities across the developing world.


Daljeet Kaur has a double Master’s degree in Environment and Sustainable Development from the DPU and Environmental Planning from School of Planning and Architecture, New Delhi. She has worked as a qualified planner and an architect for more than eight years at a variety of organisations.

At present she is working as a Senior Programme Manager for the DFID funded Knowledge Partnership Programme (KPP), implemented by IPE Global. The programme has established more than 50 partnerships to date with a wide range of partners in a number of sectors, including IDS (Sussex), UNDP, FAO, and Governments of Ethiopia, Nepal, Bangladesh, Kenya and Malawi. For more information about the programme please visit www.ipekpp.com.