“THE ISLAND THEORY”
(SOCIAL AND INDUSTRIAL DEVELOPMENT IN NIGERIA)
By Romano Pisciotti
“We are children of our fertile land, sons of the great river and the fresh salty breeze blowing on the lagoon, we are the daughters of the green hills and the silent desert: we are all sons and daughters of Greater Nigeria.”
Romano Pisciotti
In recent decades, NIGERIA has shown growth in the industrial and agricultural sectors, but its economy still depends on the oil sector. A country of over 180 million inhabitants cannot base its economy solely on the oil sector, especially since its crude oil production often fails to reach the annual quotas assigned to it by OPEC and, above all, the oil & gas supply chain in the country it has not managed to complete itself and express its potential. It is not the objective of this report to analyse the causes of the failure to fully exploit oil, gas reserves and refining capacity….. all issues that can be dealt with separately.
Population growth requires the development of a large employment base in industry, services and agriculture to ensure a prosperous future for the country, consolidating both the ruling class and the middle and working class. Welcoming the enormous mass of young people into the world of work must be a political duty and a priority for the whole country.
Despite a certain slowdown in demographic projections compared to past decades, Nigeria could, however, reach worrying levels of population growth if not followed by solid GDP growth.
All of Africa is already subjected to demographic stress, which, since it cannot be resolved with mass emigration, creates enormous problems in the economies of many states. European countries experience the opposite problem: low birth rates, but even these countries will not be able to solve the problem with immigration alone! Even if announced by many, it will not be possible to reach biblical levels of migration: no European country is willing to totally abdicate the “new invasions”, nor does Africa want to return to being the cultivation basin of raw materials and manpower! Reason, conscience and pride will not allow any type of neo-colonialism on the land of Africa!
The globalization of well-being is much slower than economic globalization, therefore, only an internal political- economic push will be able to harmonize investments and development with well- being in “Greater Nigeria”.
If it is banal to say that there cannot be development of a country without industrial and technological development, it does not seem very obvious that the development of a country must pass through education and the acquisition of knowledge.
A population that grows only numerically risks only increasing pockets of ignorance and poverty.
The fundamentals of a country’s development are:
1) Industrial investments and rapid technical growth for managers and workers who are today the vanguard of the country’s growth. 2) School and university learning for young people who tomorrow will be the architects of the solid development of human society and industrial and technological society.
The Internal Market will fuel continuous growth for many decades, unlike countries defined as “Western” or “developed” which have already saturated their domestic markets. The hunger for industrialization and development of a huge and populous country like Nigeria is, for the “West”, the natural outcome… as it has been for decades.
However, the laws regarding “Local Content” must limit the onslaught of foreign industry and find the right balance between the import of goods and the import of knowledge and technology. I don’t feel like I’m saying new things, but this balance has often remained a hope.
Nigeria is certainly not an “easy” country: drawn on a map uniting totally different ethnic groups, religions and geographical environments… but its large extension, its biodiversity and its people are a continental force, not just a national one! A homeland that must listen to the message of peace and justice of its national anthem, addressed to ALL compatriots!!!
Such a large, varied and populous nation cannot develop by dispersing possible resources throughout the territory: if I have a handful of rice I won’t feed everyone, if I grow that little rice I will ensure meals for more and more people.
This is the basis, the principle, of the “ISLAND THEORY”…and on the “islands” I will be able to grow rice or wheat or fruit, choosing the most correct sowing method for a given environment.
Despite good intentions, too often, in the search for solutions favourable to development, the mistake of a too broad and generalized approach has been made: history has shown that massive and generalized interventions, over a large part of a country, rarely lead to to an equally generalized benefit in terms of safe and constant growth, just as they do not lead to equitable redistribution.
In the past we have seen the famous Soviet five-year plans fail (or at least fall short of their promises). Just as the so-called “battles” for development have never achieved the desired results, often due to having concentrated on the objective without involving all sectors of the economy in that mission.
The results of these “battles” have certainly given some advantages, but too often to the detriment of other sectors and, just as often, the rush for the result does not give time for a clear and correct analysis of the starting
situation.
In China, after abandoning Maoist policies, the development plans covered only some areas; these areas have become so large as to guarantee robust development for the entire nation. The industrial and social gap will be narrowed with the creation and development of other areas. The Communist Party has abandoned part of its origins and has specialized industrial areas connected, step by step, by excellent infrastructure.
In the USA, the creation of a “technology park” (or island) where all the economic and human resources were concentrated (Silicon Valley) was the success factor, subsequently granting the planetary distribution of the results.
In Nigeria, tax levers and customs duties have been used for some time to encourage industrial development based on local content. We have mainly seen two solutions: the customs discount offered only on the basis of local production or the creation of free zones.
For the first case we can take as an example the reductions in duties for truck assemblers: the results were only good to a superficial observer. In the country there are more than ten companies that have had access to this customs discount and other tax benefits, in reality many of these companies have stopped at “screwdriver technology”, that is, they have limited themselves to assembling finished truck parts, often even pre-assembled beyond the established rules.
The ease of these operations has led to a counterproductive proliferation of assemblers who, in addition to not having adequate assembly lines or permanently employed personnel, have created a spot and fractional offer. (Do not confuse this with the competitive spirit; this way of operating is closer to fraud).
Few companies have actually invested in assembly lines, learning to assemble ever smaller parts and making the most of new technologies; these few companies will be able to form a supply chain for the local production of some parts for the original equipment or spare parts. These companies have created a unique island with good potential.
The second case, that of free zones, is the one with the highest potential. It should be noted that some truck assemblers have actually chosen a free zone as their operational base.
Naturally, not all free zone experiences have been success stories, there are many causes of failure: the lack of an entity responsible for the operation, capable of choosing and coordinating the most fruitful activities for that specific area, or the choice of area too difficult, or too expensive, to reach even with the best possible logistics.
I know very well two free zone: Lekki and Onne.
In both cases we had a coordinating body and investors interested in attracting other investors; both free zones have built or expanded a port area (to connect with the rest of Nigeria and the world), have attracted other production and service companies (creating an internal supply chain), have made massive private and state investments, they have built impressive infrastructures, they have employed local and foreign personnel (foreigners who bring knowledge and pay their taxes in Nigeria and spend locally for their needs), an impressive economy has developed in the surrounding areas.
I gained experience in the free zone of Onne and I can testify to the massive integration that has developed over time with the local population, schools and hospitals.
There were thousands of local workers, in various sectors related to offshore, as well as construction and services.
Local supplies ranged from raw materials, such as tons of iron ore for pipe lining, to fruit and vegetables for internal canteens and private homes.
In the free zone boats were built, the assembly had already been overcome long ago! State-of-the-art vehicles operated on the piers… all maintained in WAMS and the agreements with IVECO had already been signed to create a truck assembly line. Anyone who knows about coating for large diameter pipes will be able to understand what it means, for PCN, to obtain worldwide approval from Mobil for 5-layer coating… the only company in all of Africa!
The creation of a gas power plant capable of serving all of Onne had already been studied, while the new hotel with the conference center was already a reality. In WAMS, a professional school was already planned to train electricians and mechanics… all significant investments, certainly for the benefit of investors (foreign and Nigerian), but with full local enjoyment.
Onne, what I call “island”, had already produced investments and economic synergies in nearby Port Harcourt and in Lagos as well as in Warri… Here is the birth of other islands or their expansion, spreading and combining in jobs, acquisition of knowledge, international affairs at the service of the best politics and, consequently, of the whole country!
In a free zone, foreign investors feel more guaranteed and protected from tribal (uses and habits) or religious issues or any local controversy which, not knowing, they fear. Obviously the Government must monitor its own interests and the investors themselves, also using internationally recognized third parties.
Governance, understood as a set of principles, rules and procedures that concern the management and governance of a society, therefore plays a fundamental role in the push towards sustainable transformation and, in general, towards all processes of change and innovation.
The splendid rise of the Onne free zone has experienced a major setback… and the causes or faults can be discussed, but there are many things to consider:
1) Alltheinvestmentsmade,thelogistical organization, the monumental piers, villas and palaces, warehouses and industrial structures are there and they are a reality.
2) The country’s industrialization needs have not disappeared, on the contrary, they are even more pressing.
3) The thousands of former employees and new potential workers are waiting for answers.
4) There is no shortage of investors for good proposals.
LET’S GIVE LIGHT BACK TO ONNE
Thank you for your attention, Best Regards
Romano Pisciotti
