Download Is the Knowledge Economy an Opportunity for Nigeria?

The Knowledge Economy
and Growth Opportunities
for Nigeria
Osita Ogbu, Ph.D.
Economic Adviser to The President
Federal Republic Of Nigeria
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Is the Knowledge Economy an
Opportunity for Nigeria?
The Critical elements of our past
Nigeria has in the past made limited progress in
exploiting technology to create a basis for higher
productivity and growth
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Weak link between agriculture and industry
The dominance of primary commodity export (lack
of value addition)
The macroeconomic effects of oil dominance
Technology- intensive oil sector have limited
technology externality or transferability to other
sectors
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Critical elements of our past contd.
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Trade-liberalization and domestic technology
capability building
( Eroding the initial gains made in textiles, garments
and footwear)
Weak link between industry and knowledge
generating institutions
Knowledge Dependence
( The bundling of knowledge and aid)
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Contemporary issues
a.
The questions of leapfrogging
a.
FDI as a source of knowledge transfer
b.
a.
Lack of appreciation of the role of
knowledge in national strategic
plans/PRSPs/CAS
Reform of the Educational system
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Nigeria and the KEI Ranking
Nigeria’s ranks 110 out of 128 countries ranked on the
overall KEI. Composite rankings: Economic Innovation:
127, Innovation: 83, Education 105. Infrastructure: 111.
Source: World Bank Knowledge Assessment Methodology (KAM). World Bank.
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Knowledge Economy and
Opportunities for Nigeria
Where we are today
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Opportunities in all the sectors: both low and high end.
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Some recent successes including in telecoms, computers and a
few other high value chains such as shrimps, high value leather,
motor spare parts and banking
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Government now being more strategic in its approach to
promoting emergence of knowledge economy
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Local content policy
Rebuilding of knowledge generating institutions.
Creating of institutions that can domesticate technology
and knowledge
Mainstreaming science, technology and innovation policy in
our reform strategy( NEEDS)
Building confidence
Nigeria is undertaking a major reform of its S & T infrastructure
( in collaboration with the Japanese govt and Unesco)
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Where we want to be
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Nigeria desperately needs productivity improvements to
spur and maintain rapid growth—technology provides an
opportunity to do this- 10 percent annual growth rate
on a sustained basis
Given the significant constraints on external
competitiveness, harnessing the large domestic and
regional market for improved productivity and growth
is what is most achievable in the short to medium term.
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The Challenges
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Since 2000, growth has strengthened:
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Growth is higher averaging over 5% annually
between 2000 and 2005, and 6.1% and 6.3% in
2004 and 2005 respectively;
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Non-oil sector has grown strongly: 7.4% and 8.2%
in 2004 and 2005 respectively;
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FDI and exports in non-oil sector picking up
But:
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Jobs are not being created in sufficient numbers
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Economy still highly undiversified and excessively
dependent on oil
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Move up the technology ladder limited—primary
production dominates. Manufacturing contributes
only 4% of GDP
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The quality of FDI remains an issue
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Some success stories: Nigeria's
Telecoms Revolution
Triggered by government’s liberalization policies initiated in
2002 including entry of GSM operators and improved
regulatory framework for sector
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Nigeria’s telecoms sector is now the fastest growing in the
world.
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Direct employment has increased from
12,000 to over 120,000. Indirect
employment increased over 400,000
Not exporting much ICT directly but ICT
development is key to economy’s
competitiveness and was a major
constraint to business activity in the past
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Nigeria Telecoms Sector:
Fastest Growing in the World
Telephone Subscribers and Penetration Levels
25,000,000
18.00
16.00
14.00
12.00
15,000,000
10.00
8.00
10,000,000
Teledensity
Telephone Subscribers
20,000,000
6.00
4.00
5,000,000
2.00
0
0.00
2000
2001
2002
2003
Total Telecom Subscribers
Source: ITU, eShekels
2004
2005
Teledensity
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The Otigba Computer Cluster
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Has evolved from trading in imported ICT
equipment, components and products over
12 years. Now a beehive of computer
hardware and software trade and
production and an ICT market that serves
Nigerian and other West African markets
About 50% of firms in the cluster export
with exports growing about 18% in 2004
Has attracted and generated diverse skills
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High Value Shrimp Exports
Rapid growth in industry over last few years has
made it a potential knowledge intensive export
product
Value added component provides ample room to
cover both the primary input costs as well as the
logistics costs. Profit value estimated at about
18% of value added
Success is a turnaround from previous decline in
the industry and is due to
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Nature of the product—high value shrimp
Production of quality good—shrimp that meets
international quality standards; and
Competency in the trade transaction process
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Main Channels of Technology
Transfer in Nigeria
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Traditionally FDI has been key channel for
technology transfer but in Nigeria’s case has been
limited to oil sector. Now some evidence of FDI
improvements in non-oil sectors including through
privatization process
Nigerian Diaspora, is an important potential market
for traditional products; source of new ideas and
financing for targeted investments and points of
entry for developing new markets. Large share of
new non-oil sector FDI flows coming from Diaspora
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Government Role in Nurturing
Technology Intensive Industries
In past tried to do this mainly through approaches
which introduced a lot of distortions in the system
and defeated the original purpose. Examples:
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Major public investments in heavy industry (steel,
aluminum, fertilizer etc)—poorly planned and executed
High levels of effective protection including outright bans
on imports for domestic manufactures
Poorly designed product and location specific incentives,
including tax and import duty rebates, and development of
export processing zones. Several of these schemes were
subject to gross abuse because of weak governance
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Government Role in Nurturing
Technology Intensive Industries
More recently approach has been changing as part of
the ongoing reforms
Direct:
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Creation of NITDA and clear articulation of technology
development policy
Revamping targeted incentives to make them less prone
to corruption and abuse
Indirect:
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Privatization and liberalization reforms creating confidence
and conditions for participation of private capital bringing
in modern technologies and innovation. Telecoms is a
good example but happening in steel and in other
technology intensive sectors
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