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A MAJOR RISK IN THE APPROACH TO REFORM OF NIGERIA’S ECONOMY – Strategy needed to avoid looming mass unemployment in Nigeria

Ever since the agrarian society of centuries ago, people have been the main factor of production in many societies. Even with the advent of the industrial revolution, machines that were created needed a lot of human input and control to function. That reality created lots of jobs for humans to do and the industrial revival led to many economies to close to having full emploNigeria_politicalyment status for many generations. But as we gaze deeper into the twenty-first century; things are changing radically.

Significant advances in technology are driving a lot of changes to the tapestry and architecture of a nation state in a way never seen before. With the talk of smart cities, advances in robotics and microengineering as well as the Internet of Things (IoT), we are at the cusp of a new world. The Internet of Things refers to the ever-growing network of physical objects that feature an IP address for internet connectivity, and the communication that occurs between these objects and other Internet-enabled devices and systems.

The “Internet of things” is becoming an increasingly growing topic of conversation both in the workplace and outside of it. It’s a concept that not only has the potential to impact how we live but also how we work. Broadband Internet has become more widely available, the cost of connecting is decreasing, more devices are being created with Wi-Fi capabilities and sensors built into them, technology costs are going down, and smartphone penetration is sky-rocketing.  All of these things are creating a “perfect storm” for the IoT.

internetofthings-1200x800Simply put, this is the concept of basically connecting any device with an on and off switch to the Internet (and/or to each other). This includes everything from mobile phones, coffee makers, washing machines, headphones, lamps, wearable devices and almost anything else you can think of.  This also applies to components of machines, for example, a jet engine of an aeroplane or the drill of an oil rig.

The analyst firm Gartner says that by 2020 there will be over 26 billion connected devices. That’s a lot of connections (some even estimate this number to be much higher, over 100 billion). The new rule for the future is going to be, “Anything that can be connected will be connected.” There are many examples of what this might look like or what the potential value might be.

Say for example you are on your way to a meeting; your car could have access to your calendar and already know the best route to take. If the traffic is heavy your car might send a text to the other party notifying them that you will be late. What if your alarm clock wakes up you at 6 a.m. and then notifies your coffee maker to start brewing coffee for you? What if your office equipment knew when it was running low on supplies and automatically re-ordered more? The possibilities are endless.IIOT-Big-Data-in-line

All the foregoing have huge implication for the role of human beings and employment rate in many societies. The traditional labour intensive job model is dying at an alarming rate and digitally-enables jobs are the key to the future. So as there is a massive curl of manual and analogue jobs; new digital and technology driven jobs will emerge.

This leads me to my concern about Nigeria. We are still in the manual labour mindset in our employment ethos as a nation. We are also failing to prepare our citizens for the future that is imminently going to be upon us. If the country is to modernise, we will have to embrace technology in all sphere of national life. This will, in turn, lead to massive unemployment as machine and technology take over previous manually executed function in our society. Business processes will be streamlined and automated in the new world we will find ourselves, yet the majority of our citizens are not being sensitised, trained and facilitated to reskill and upgrade their capacity to be able to leverage new technologies for national growth and society transformation.

Speaking to a friend in government a few days ago; he explained of technologies that can run our airports in such a way that if applied to the International Airport in Lagos will reduce staff numbers by seventy percent overnight. From, automatic invoicing and accounting systems, to robotics to handle luggage and so on. This model will create one of the most efficient airports in the world if implemented. But at what cost? Jobs. There will be massive unemployment as the staff currently in employment have not been Internet-of-Things-no-id_Section1_1920x1280equipped, trained or helped to transition to new technology jobs of the future.

If the nation is to modernise successfully; I will, therefore, advise the government of the need for a new focus on education in Nigeria. This will involve formal, informal and vocational education that will be technology focused in preparation for the future that is fast approaching. In Singapore, the government aims to make the country the first smart nation in the world. There is now a massive investment in technical education and technology training for both young and adults across that country.

The government is preparing the nation for a future that will become a reality for them in the next five to ten years. With sensors on every street corner and lampposts, lots of anonymised data is being collected in the country to inform the IoT technology that is being planned. This will automate a lot of tasks and functions in Singapore and make several current jobs redundant. Streetlights will come on not at a prescribed time but based on the weather condition. The street lamps will automatically order a new bulb for itself when it notices a burnt bulb. A lot of manual jobs will disappear but it will alsostock-photo-digital-economy-abstract-business-concept-wallpaper-background-17711158 create many new jobs that are technology driven, which is why the government is investing in the technical education of children and retraining of adults in technology and microengineering on a massive scale. Adult education classes are freely given to adults to reskill while still working in their current roles (that will soon become extinct). This will make transitioning very easy for the workers of Singapore to adapt to new jobs as they lose their current analogue jobs for digital explosion expected.

A lot of manual jobs will disappear under the new industrial dispensation but this will also create many new jobs that are more skilled, technology driven, which is why the government is investing in the technical education of children and retraining of adults in technology and microengineering on a massive scale in Singapore. Adult education classes are freely given to adults to reskill while still working in their current roles (that will soon become extinct). This will make transitioning very easy for the workers of Singapore to adapt to new jobs as they lose their current analogue jobs for digital explosion expected.

Why-the-Digital-Economy-is-important-to-our-Region-any-region-in-factThe Nigerian government is not approaching their duty in an integrated fashion. As the government role out new technologies, there will be job losses on an industrial scale. How many of these workers are going to be able to get a new job with the outdated analogue skills they possess? The inefficiency in many government operations in Nigeria is linked to the need to create jobs for people but not necessarily to deliver an efficient or optimised service. Our airports are an example; where there are too many agencies of government with duplicating functions, overlapping responsibilities thus slowing down passenger experience.

As this government tries to modernise our infrastructure and government procedures and processes; they should avoid creating a big unemployment problem as they go along. This will require a national revamp of our educational system and adult education infrastructure that is focused on technology skills that will be needed for the future. Solving one problem by creating another is not wise leadership in government.

New technical colleges may need to be created. The curriculum of state schools should be reviewed to place more emphasis on technology. Vocational and adult education facilities should be created. The government need to begin a massive exercise to reskill the working population in preparation for the inevitable changes that technology will bring.

A stitch in time saves nine the adage goes. Nigerian government need an integrated approach to development by doing a Change Impact and Job Impact analysis of every policy before implementation and put in place a national strategy to mitigate these impacts and prepare the population for the new world before it is too late.

Otherwise, Nigeria could end up in a lose-lose situation. Massive unemployment caused by technology-driven changes and also new technology platforms and initiatives that will fail due to lack of trained manpower to effectively manage it. These are both avoidable consequences if the government takes note and act now. God bless Nigeria.

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NIGERIA’S TRUE REVOLUTION: The Blueprint for the Re-election of a President

As an observer of the Nigerian political drama over the past many years; I have never been fanatic in my support for any candidate. I am passionately pro-Nigeria; hence my support for any political player hinges on my analysis of his or her effect on Nigeria as a nation. It has been perplexing to watch the venom and blind positioning of both pro and anti-Jonathan brigade in real life and on the social media. This is not a new development in global democratic experiments and implementations. There are political figures that evoke such divided passions all over the world. But my concern in this article is Nigeria as a nation. How do we move past these divided allegiance in the interest of the nation?

In my analysis; there are ten percent of the voting population that are pro and anti-Jonathan regardless of what he does or does not do. These people are not driven by any objective rationale but sentiments, emotion and personal beliefs for or against President Jonathan. These people are beyond sensible redemption so to speak; hence my article is not directed at them. It is a waste of time trying to convince these Jonathanists or Anti-Jonathanists as I call them. These people are easy to identify. They are loud and bully their way into every argument. They don’t make sense in their position many times, but they do not care. Their existence is just part of life. Sadly the ten percent GEJanti-Jonathanist are not any better. They oppose for opposition sake. To them the President is always wrong, no matter what he does. These opponents of Jonathan do not have any articulated policies or constructive alternative. Their job is simply to pollute the polity and confuse everybody along the way. They are not better than the administration they claim to criticise. Such opposition will equally fail if ever elected.

This leaves Eighty percent of the voting population amenable to change and persuasion based on rational and superior arguments; evidential explanation or analysis and transformative policy implementation. These are the people that support or oppose President Jonathan but not in a fanatic sense. They are open to be convinced and swayed if needed. I am directing my writing to this group of people. I have written in the past criticising the claims of economic growth & development by Dr Okonjo-Iweala, the finance minister and other players in the Jonathan administration. Belching out banal macro-economic statistics (even if correct) does not translate to real experiential economic progress by the average citizen.

Those who support President Jonathan are quick to remind us of his achievements. The major players in the government are always ready to unleashed statistical figures that shows Nigerian economy as growing and enlarging. They quote good GDP growth figures and Foreign Inward Investment rate for instance. While these figure may be true; they mask some of the key problems in the economy. Ever since the GDP (Gross Domestic Product) was invented by the Americans as a measure of economic performance; it has been criticised by many leading economists and political leaders for not measuring the “real state of affairs” in the lives of ordinary citizens.

For instance in a country like Nigeria; a 20 percent export-led growth by the ten largest companies like Dangote etc can easily feed into a substantial growth in GDP. But that does not mean the average person is better off or address the cost of living crisis that Nigerians face daily. It does not address the negative income growth due to inflation and wage stagnation in many sectors of the economy. The fact that people feel worse off is not captured by this macro-economic numbers. Hence; there are many thing GDP does not measure.

Dr Joyce Banda , former President Republic of Malawi said last year as follows: “As for me, growth is not merely about GDP growth. Growth is about wealth and prosperity for all, opportunity for all, happiness for all, political and economic freedom for all. Growth is about growing and improving access to education for our children, and creating jobs for our youths. Growth is about growing the number of mothers who give safe birth in a hospital. As women leaders, we should not allow children to suffer from malnutrition. We should refuse to allow our children to learn under trees rather than proper classrooms. We should refuse to allow mothers to die while giving birth because the nearest health centre is far away .Whenever these challenges are prevalent, our economies cannot meaningfully achieve the sustainable economic growth we all aspire for”.

I could not have said it any better. The OECD and other global outfits have a measure of nation’s economic performance that is all encompassing and goes beyond GDP. This is called The Prosperity Index (developed by the Legatum Institute). This is the only global measurement of national success based on both income and wellbeing. Their econometric analysis has identified 89 variables, which are spread across eight sub-indices.

By measuring prosperity holistically they are able to identify and analyse the specific factors that contribute to the success of a country beyond just GDP statistics or other banal statistical measure that does not impact on the true economic realities of a nation’s citizenry. These Eight Prosperity indices are: Economy, Entrepreneurship & Opportunity, Education, Health, Safety & Security, Governance, Personal Freedom and Social Capital. According to the Institute’s survey of Entrepreneurship in Nigeria; 0413-nuclear-summit-Goodluck-Jonathan_full_600the raw GDP statistics masks major weaknesses in indices of national prosperity and economic wellbeing. In its report in 2013 it noted that economically (reference to 2012 performance), Nigeria paints a mixed picture. GDP growth is recorded at an impressive 7.9%, however a high inflation rate of over 7%, high levels of unemployment, and poor internal infrastructure stifle long-term, sustained growth it said.

Nigeria it stated has significant oil reserves but its reliance on revenue from oil has been described as “damaging”, while the risks of relying on oil reserves as a one-pronged economic strategy is well documented across Africa. They concluded that “Factoring in the current instability of the global economy as a whole, we may reasonably conclude that a diversified, entrepreneur-led economy is crucial to Nigeria’s long term success and stability”.

The Legatum Institute produced in 2013 its annual National Prosperity Index for 142 countries in the world. Nigeria ranked a dreadful 123 out of 142 countries in 2012, that is a relegation from our already bad rank of 104 in 2011 and 106 in 2010. That means by a holistic measure of national prosperity and wellbeing as measured globally; Nigeria has slipped backwards and performed worse between 2010 and 2012. South Africa was ranked 74, Tunisia 78, Namibia 83, Ghana 87, even Mali was did better than us at 104. Looking behind the overall poor ranking of Nigeria; we performed worst between 2010 and 2012 in the following indices: Economy (drop of 31 point), Safety & Security (27 point drop) and Education (17 point drop). We however improved in Personal Freedom (gain of 10points) and Social Capital (gain of 3points) measures.

So while I praise the Jonathan government for some of its high level macro-economic achievements; attention now needs to be paid to the wellbeing of Nigerians in a holistic way. In this article, I will be looking at one of such a way. It is a known economic fact that there are more business opportunities in any economy than job opportunities. The engine for growth in Nigeria therefore will not be just more jobs for the unemployed (although that is needed by many) but an entrepreneurial explosion. It is true that it is the private sector that creates job in any economy that grows, but the State should create the enabling environment. Government should encourage and promote new businesses and our universities should emphasize entrepreneurship more rather than the current focus on getting a degree and going to apply for jobs that are not always available.

There exists today a multitude of objective data about entrepreneurship in Nigeria. For example, the Index report states that the average time it takes to start a business in Nigeria (31 days; although in some areas this can be over 3months), the total tax rates, as a percentage of commercial profits, faced by Nigerian entrepreneurs is 32.2%. The growth of any economy is based on the growth of Small and Medium Enterprises. A concerted and unified strategy is needed to make a success of this vision. So rather than trumpeting pure statistics that means little to average Nigerians, the government should put more effort in productive activities and strategy that impacts on the day to day living of the people. Of the eight indices measured, Nigeria improved in only two of them under this government. So we have slipped backward in six of the Prosperity Index in two years since the President was elected.

While I congratulate this administration for some of its macro-economic successes; the nation now need real cost of living growth by the average citizen. Like I said before; the government cannot keep employing people to reduce unemployment. This is madness and unsustainable. It is growth in new small and medium businesses that grows the economy and impact the positive experiences of the average citizen.

So I will address one of the many actions the government can take to directly impact the people’s lives positively and grow the economy; beyond the GDP figures. I call this the Entrepreneurial Revolution.

The government should therefore consider the following seven steps as part of its immediate strategy:

  1. Improvement in the Power situation in the country is vitally needed. Starting a business in Nigeria is like building a small town of your own. I know people who had to build their own road to their new factory, generate their own electricity and water, employ their own security and so on. These add up to 60 percent to the cost of production in some sectors. An improved power supply will help reduce substantially the cost of running a business. I know this is being addressed by the government. But we need to see more evidence of progress as soon as possible.
  2. The government should create an easy online company registration process. In the USA, there are states in which you can register a company and print out your registration certificate all in 10mins. In the UK you can do same within 24hrs. Why must it take weeks to register a company in Nigeria and at a huge cost. The average cost of registering a company in Nigeria I am told is N100,000. Some are less and most are more depending on who does it for you. This is about £400. To register a company in the UK cost about £25 and you will be emailed your certificate within 24hrs. The government should commit to an Entrepreneurial revolution by simplifying and bringing down the cost of registering a business. With some small scale businesses like Candle making possible with N150,000 capital investment; can you imagine requiring another N100,000 just to register the business. This is madness. So until such electronic portal is ready; the government should abolish its own registration fees charged to new businesses and work to reduce drastically the cost and time needed to get a business registered.
  3. The government should setup a network of nationwide free and easily accessible Business Advice Centres in every state. These centres will provide all its services for free and will be able to advice entrepreneurs on running a small business. These centres will also be able to provide support to businesses needing investment by linking them with government and other grants available and advice on best practices in business operations management. These centres will also be one stop shops for all government business forms and registration. This will simplify access to government requirements and encourage compliance by new businesses.
  4. The government should build a series of Business Parks across the country to house small businesses office needs at subsidised rate. These parks will be well located where there is easy transport links and be equipped with basic facilities and communication needs of small businesses. It will be like Hotdesk rentals for small businesses with shared meeting rooms etc. This will provide easy postal, fax and physical reference points for new businesses.
  5. The Federal government should make it a policy (just like in the USA) for a fixed percentage of all government contract annually to be exclusively for only new and small businesses. This will apply to single contract limit of up to a determined sum; for instance N1Miilion for instance. The average in most countries with this policy is Ten percent of all government contracts. This will guarantee some steady work stream for new and small businesses. The procurement requirements for these contracts will be simpler and take into account that these are new businesses. So for instance asking to produce Five years previous Accounts or tax clearance for a business that is two months old is an impossibility.
  6. The government should sponsor an annual small business award event encompassing all sectors. This will not only celebrate small businesses but also help showcase and highlight them to the wider economy. Big private sector companies will be able to see the benefit of using the best in the small business community.
  7. There should be a Federal Minister who job is simply to promote and support the case for new and small Businesses across government. This will not only show government commitment but ensure any presidential policy directives are implemented effectively in all departments. This minister will also champion policies that promotes new and small businesses across government.

The best case for the re-election of any government is its positive impact on the lives and wellbeing of people. This government should begin to measure its actions by its impact or benefit on small businesses and not just be seen to be promoting Big Business interests. When this being to happen; the average man on the street will be able to see and experience the trickle-down effect of government policies and will be more supportive of such a government.

The Jonathan administration can easily trigger such an entrepreneurial revolution and warm its way into the hearts and minds of the people. When you are loved by the people genuinely; there is nobody that can rig you out of power without invoking the wrath of the people. It is time for the government to focus more on the needs of the majority and not just the few. The Nigeria of our dream is possible if there is courage and wiliness to make it happen.

The easiest way to get re-elected is for Mr President to embark on such mass revolution that will positively impact majority of the people. This will win the votes of most of the 80 percent rational citizens who loves Nigeria but want to see policies and actions that improve their lives. This is not too late to achieve.

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