The Nigerian economy is obviously in need of a push to help it leap forward in the output of goods and services. For this to happen, the country has to be deliberate about a systemic turnaround in the way the citizens work, including the educational system that equips the labour force.
Specifically, Nigeria’s productivity has to rise to meet the increasing demands on the economy by the citizens for improved standards of living. Higher productivity is needed to ensure increased efficiency in the nation’s production process.
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The truth, however, is that at the current level of unemployment and gross underutilisation of local raw materials and infrastructural constraints, the gap in the output of goods and services is bound to linger. Its eradication calls for a coordinated national policy to enhance productivity by addressing the fundamental issues and achieve higher factor inclusivity in production.
Why is labour productivity low in Nigeria? A study by the National Bureau of Statistics in the first quarter of 2015 revealed three critical facts about labour productivity in the country that must not be ignored.
First, the NBS said that Nigeria had a “relatively low labour productivity despite several years of stable and high economic growth”. Second, the study also established that growth in the nation’s labour productivity appeared to be continuously constrained by the high level of unemployment and underemployment and its expansion as well as the low skill and income requirements associated with it.
NBS reported, lastly, that “compared to other emerging economies, Nigeria’s labour productivity levels are considerably lower”.
Sadly, the factors identified as being responsible for low labour productivity in the country are pretty much with us today. At the end of February this year unemployment was 33.3 per cent; underemployment 22.8 per cent, and youth unemployment/underemployment 42.5 per cent. This is a clear indication of resource underutilisation, and therefore an intolerable exclusion of labour force from the production process in the country.
You cannot possibly achieve a reasonable level of productivity with such a significant portion of labour excluded from active participation in the creation of goods and services.
The effect of this becomes quite relevant when seen in the context of the current level of a poor standard of education in the country. While there appears to be no agreement on this, what is perhaps incontrovertible is that there is significant evidence in support of the claim that more is needed in both the content and form of Nigeria’s educational system. The quality of the output of the education process in the country is low, with many of the graduates missing the desired standards.
The essence of education, whether formal or informal, is to equip people with skills for work. Work itself is the process of transforming resources through skills into goods and services. Therefore, a poorly skilled individual is bound to be a poor, low-productivity workman, no matter the level of sophistication of the equipment put at his disposal. Such a worker, whether a teacher, welder or an engineer is bound to have low productivity because he cannot connect with the capital or technology he has to work with.
If a Nigerian engineer works for eight hours at a site, what is his productivity, compared with, say a German or South African engineer working also for the same number of hours? Productivity is key in assessing the effectiveness of work, and not just being busy working. In Nigeria’s quest to raise its output of goods and services and above all, the country’s competitiveness, the right emphasis must be placed on productivity.
This in turn will lead to questions being raised as to what can be done to raise the efficiency of the production process. Rising efficiency will ultimately drive down costs. Differences in productivity lead to differences in costs.
Therefore, in seeking solutions to the problem of low productivity, education as a factor will appear on the scene. It is important to interrogate the relevance today of the curriculum of the nation’s universities and polytechnics? How well do the schools prepare their students for work?
From agriculture, through manufacturing, to services, Nigeria must address this critical issue. Let this point illustrate the matter here. Nigerian cable wire is said to be of a higher quality than foreign wires. Builders recommend it. But in the local markets, you could still see foreign wires, which are obviously lower in quality.
Simply, the reason is that the Nigerian wire is said to be more expensive than the foreign ones. The reason for the high of the local wire partly is the fact that the copper wire for its production is imported. So local production of copper will add value, reduce the cost and therefore make it more competitive.
Nigeria should study the Chinese economic model and extract from it whatever is positive and can be adapted into the local environment. There is no doubt that the formula that has transformed China into the world’s second-biggest economy within a short time has potency.
The Chinese authorities structure their economy in such a way that when a local company imports raw materials, the system makes the finished product more expensive than the products for which the raw materials were sourced domestically.
It is deliberate. If they allow companies to depend on imports for everything, soon their people will be out of jobs. This way, they ensure that local resources, including labour, are put to work as much as possible.
For everything that we import, it is job creation for China. And that is why we do not see many companies from there setting up factories here. And if they do, it is usually to enable them to produce something that we cannot produce here.
The Chinese would rather set up trading companies here. And even when they do, they ensure that the raw material is not made here in Nigeria. With that, the company here depends on the parent company back home for the supply of raw materials.
In all of these, their target is to optimise the use of all resources, including labour or manpower. This should be Nigeria’s objective as well.
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