YEARS after the attainment of Political Independence Nigeria is not yet economically independent. But economic independence as we know is a necessary pre-requisite to political freedom.
As the Finance Minister, Dr. Ngozi Okonjo-Iweala aptly puts it, “Now that the political independence of Nigeria has been assured, the vital concern is to secure the rapid development of the machinery to enable us to assume our responsibilities to safeguard our economic freedom.”
Since the era of the oil boom in the 1970’s, Nigeria has been a victim of monolithic economy and since then has beenenjoying what istermedas “petro-Naira” without adequately evolving a sound policy that will put the nation’s economy on a firm foundation for steady growth. Though the country recognized the importance of establishing industries to ensure a diversified economy, the mineral oil assumed greater and greater prominence over the year as a crucial production and dynamizing sector. This was to the detriment of the other sectors of the economy, and given the fact that the revenue got from it was not properly appropriated but on white elephant projects.
The phenomenon has been described by the World Bank as the “Outch Disease.” The oil glut in 1978 fired the first warning shot, while the weakening of the international oil market clearly spelt out the consequence of total dependence on one commodity – oil. The declining extent of earnings from crude oil arising from the fall of prices plunged the Nigerian economy into a crises of recession.
Nigeria’s production was pegged by OPEC just as prices tumbled from a height of about 840 per barrel in 1981/82 to less than $15 in 1957, export earning collapsed from $23 billion to around $16 billion. There was need therefore to augment foreign exchange earnings from oil through an aggressive expansion of non-oil export. This will lead the country to the best and effective way of solving the problem. This solution is “industrialization” which stands as the main emphasis in this submission, which is not justified just because it ensures diversification of the economy, but because it also accelerates the economic development of a country.
In fact, the basic premise is that, if a country wishes to accelerate the overall rate of economic development, it must have manufacturing production arising faster than the overall rate of growth of the Gross National Product (GNP) and this has to be reflected in an increasingly dominating role of manufacturing industry in the total economy. So important are industries that they have become the major indices for classification of nations in terms of levels of development. No wonder then why industrialization forms the centre piece of the development programmes of most third world nations including Nigeria.
Generally therefore, the transformation of an economy from pre- modern to modern depends on the development of the manufacturing sector.
On the other hand, finance is the life blood of every business organization. Every business enterprise whether big or small, newly formed or and already existing one requires funds without which it cannot operate. In other words, there can be no investment without funds and it is a vital ingredients for the establishment and running of industries. Capital formation is basically a two phased process which includes savings and investments in which banks (including the World Bank) stands in between.
The traditional macro-economic role of banks is “financial intermediation which entails the mobilization of funds from savers and then transfers then as credit to investors. It is basically on this that we shall examine the extent of the banks (World Bank’s) contributions as well as the roles they are supposed to play in the industrial development of Nigeria. We shall also analyse the necessity of industrialization and the factors that have impeded the nation’s rapid industrial development in exception of inadequate finance.
In concluding, the researcher suggests remedies and recommendations to problems encountered in the process of industrialization as well as suggesting solutions for enhancing active participation of the bank to rapid industrialization of the country.
That industrialization is the catalyst of economic prosperity for many nations in the 21st century cannot be disputed. It has been a much emphasized development strategy in Nigeria, as many other countries see industrialization as providing the basic means of overcoming their economic backwardness.
While the exact relationship between industrialization and economic development has been a controversial issue in the economic literature, not many economists doubt the capacity of industry for rapid growth and in turning sharply the table of economic progress.
To less developed countries like ours, the high level of industrialization and rapid economic growth of the advanced countries are taken account of and are making frantic efforts towards attaining that same level too, through several industrial policies aimed at encouraging both individuals and the public/government to establish industries and keep them functioning and operational.
However, the greatest obstacle to rapid industrial development in Nigeria has been identified to be inadequate finance: Abdulkadri (1984) pointedly puts it that “if the country’s industrial aspirations are to be achieved, the provision of adequate finance should be accorded high priority. But regrettably, Nigerian industrialists have been badly starved of this very important ingredient for both the establishment and maintenance of industries, and this exists in the following forms:
(1) Inadequate initial capital for take off
(2) Inadequate funds, for maintaining existing industries
(3) Insufficient funds for expansion.
The lack of funds by industrialists has greatly denied the nation of many opportunities of attaining development in the industrial sector. And this is a height which Nigeria has always longed, hoped and craved for.
Considering the enormous importance attached to industrialization in our economic development, any problem militating against its achievement should be of interest to us. The question, therefore, is : To what extent has the World Bank helped?
During the early 1970s, which is the oil boom era, the economy experienced a high inflow of foreign exchange which brought much money into the pockets of people owing to the various salary awards/adjustments at the time. This increased revenue, rather than being used in the importation of almost everything used in the country. This ensured capital flight and before we realized it, we were back to square one with the gains of the oil boom era, lost to indiscriminate white elephant projects; when the price of oil later fell, the country found it difficult to adjust its expenditure pattern but rather went borrowing to maintain or sustain its current level of finance outlets. This greatly hampered the nation’s industrial development as it has to grapple with several other sectors for a share from government’s lean. Interest in the amelioration of this problem of inadequate finance to industries stems from the realization of the fact that as industrialization is the engine of any economy so is finance the life blood of industrial development
To be continue.
