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Exploring the transition from farm to non-farm (II)

Many a research has substantiated for us that the process of development occurs in an economy when dependence on the agricultural sector moves to a…

Many a research has substantiated for us that the process of development occurs in an economy when dependence on the agricultural sector moves to a more sophisticated and competitive industrial sector, serving as the catalyst for economic growth. The effective development of the agricultural sector is no doubt certain to reduce income inequality and spur overall economic growth because it means that the rural poor are fully involved in the development process. However, most of the successful investments in agriculture the world over usually translate into the development of these non-farm sectors which have greater potential and effect in improving livelihoods and greater economic prosperity for the country.

We don’t need any research or deep economic analysis to see that the more prosperous countries are the more industrialised they are and that almost all the top per capita income earning countries rely heavily on industrialisation while the opposite applies to low income countries. Due to Nigeria’s burgeoning population, dwindling resources, reliance on oil and the inefficiency of its agriculture, it is imperative that we realise return on investments in the agricultural sector which should be developed with the aim of raising incomes of the poor and providing food and commodities to the industrial sector. It is our failure to do this that has resulted in stagnant growth due to rising inequalities, as well as the dependence on imports of too many things that we can manufacture locally and their accompanying exogenous shocks.

It is fairly common knowledge now that economic focus on industrialisation is the road toward economic development, given the past experiences of modernised economies during the Industrial Revolution, as well as the recent export-oriented growth of Asian economies. One economist, Mathias Dubuis, argues that ‘Productivity is higher in the industrial sector than the agricultural sector due to technological advances. The economies of scale in large, integrated supply chains have resulted in gains and concentrated manufacturing results in opportunities for capital accumulation.’

My interest in this subject is chiefly from the point of labour and its implications for the rural economies especially because I have seen that overtime, it is not sustainable to rely on improving smallholder agriculture without exploring this necessary transition. Many economists and policy makers alike have asked questions around how do we absorb surplus labour from the agricultural sector and transform the structure of the economy from agrarian to manufacturing? Realising this transition in Nigeria will not only mean that our agricultural development investments and efforts have worked but will directly lead to increased employment for rural workers and also raise the nation’s per capita income.

When I write about manufacturing or industrialisation in this context, I am referring to the high-value manufacturing worthy of providing multitudes of jobs and export opportunities for Nigeria. It is an established fact that in product development and manufacturing, the final assembly is the last and lowest value segment of the value chain (which is sadly what most Nigerian manufacturers do). Numerous upstream stages in product development from conceptualization, research and detailed design development & testing etc. are significantly larger contributors to the value of the products. I remember a venture I was part of, perhaps one of my most exciting forays as an entrepreneur a few years ago where we sought to introduce innovative and cost-effective products in the Nigerian and   West African markets. We aimed at providing innovative goods, services and solutions that will lead a major paradigm shift in Nigeria’s dependence on imported goods and build a sustainable ecosystem of knowledge and collaboration that will pave the road to a meaningful transition from agricultural labour to a more high-value employment for young people in manufacturing.

With our grand vision for better and more affordable products, built locally, creating more opportunities for economic acceleration across multiple industries, we wanted to immediately start with the design and manufacture of simple vehicles. From the fuel consumption to driving dynamics, along with its competitive price and rugged strength, the very design of motorcycles, tricycles and passenger cars were done to fit our Nigerian peculiarities.

However, most of the investors and government officials that looked at our business mistook us for a car maker. But we had lofty dreams, beyond our apparent automotive start. We wanted to establish and operate research and development facilities whose core objective will be the development of innovative new products and solutions for the automotive, aerospace, marine industries and general industrial applications; which are relevant and compliant to relevant modern international standards of safety and usability. The scope of this will encompass the entire lifecycle of any product in question ranging from conceptualisation to detailed design development, testing for certification and development of manufacturing processes for final production. The facilities will also explore development of custom-made devices and systems for supply and production, where applicable, for specific customer requirements. The nature of the products, services, or goods, we designed, developed or were not to be restricted to the aforementioned industries but only limited by our technical expertise and available technology which may be utilised for all purposes depending on the requirements and particular business cases.

To that end, we were also ambitious in hoping to provide training and education for Nigerian professionals and students alike in Science, Technology Engineering & Mathematics (STEM) subjects and other related fields and partner with educational institutions and companies with similar visions as ours. We hoped to raise the standard of engineering education provided in Nigeria through collaborative efforts with the said entities. From developing relevant curricula, to developing productivity tools and conducting research in fields relevant to applications for products/systems we develop.

All of this went well for over a year. We even started designing other machines, especially agricultural processing machinery and providing other engineering services (like mathematical modelling, product design and computer-aided design) for the local economy. We also put millions of our own money as we sought investors for our factory and company operations.

There are many unique challenges that are at the core of the continuing demise of the manufacturing industry in Nigeria, be it automotive, textile or even pharmaceuticals and not to mention electronics and information technology. Obviously, a lack of high quality skilled labour is a by-product of poor education or limited access to it. We had hoped that by laying a huge emphasis on people rather than ideas or even products, we would attain everything we set out to accomplish. We devised elaborate plans on building a skilled workforce that grows with us as a company. But it turns out there is only so much one small private sector player can do to impact a sector. A sustained, collective action is required across board from policy to our universities and the boardrooms of corporate organisations. More emphasis must be given to other sectors, especially high-value ones like manufacturing; not just agriculture.

In conclusion, we must also remember that the economic development we seek will definitely require the development of all sectors of the economy rather than focusing on agriculture or even the industrial sector in isolation. Nigeria should therefore view economic development from a birdseye perspective and develop other sectors like manufacturing as well as agriculture in its bid for diversification.

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