Obadiah Mailafia

Beyond the value chain

by Obadiah Mailafia

September 28, 2018 | 1:25 am
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It’s for me both an honour and a pleasure to address this 59th Annual Conference of the Nigerian Economic Society (NES) on such an important topic. I believe this is the first time in the almost 60 year history of this august scholarly community that the focus has been on the thematic of “The agricultural value chain”. This could not have come at a more opportune moment. Our country is just undergoing a fragile recovery from one of the severest economic recessions in living memory. All the key fundamentals had headed south – industrial output, jobs, incomes and livelihoods. The phenomenon of de-industrialisation has been a dominant feature of the economy for more than a decade.

Why agricultural value chain and why now?

Given current global trends, oil prices are not ever likely to go back to the US$100 per barrel mark or beyond. One of the global megatrends of our time is the gradual retreat from the hydrocarbon industrial civilisation that has fuelled the world for more than a century. Driven by the forces of pollution, climate change and energy insecurity, the most advanced industrial economies have been weaning their nations gradually away from dependence on oil. Major automakers in Germany, France, Sweden, the United States and Japan have set targets beyond which they would no longer produce oil-driven cars. They are committed to producing electric vehicles and to finding alternative, more sustainable energy systems. This trend is likely to send signals to the big oil majors to reduce their investments in the petroleum sector. Reduced investment will further impact negatively on the sector. We have no choice but to diversify our economy.
Dependence on oil for a half-century as the principal source of government and exports revenue in Nigeria has brought with it all the classic features of the so-called Dutch disease: artificially high exchange rates, an enclave economy, massive importation that discourages local agro-industrial production and de-industrialisation of the economy. This is in addition to massive pollution in the Niger Delta, deepening socio-economic inequalities and resource conflict within and between regions in our country.
If the drive for economic diversification had not existed, it would have been necessary to invent it. Our country has vast natural resources other than oil. We have nearly a million square km of land, out of which our arable land is estimated to be 82.0 million hectares. Agriculture contributes as much as 24.4% and it is currently leading as a major driver of macroeconomic growth, averaging 4.1% in the last couple of years. Export earnings from agriculture are a low US$1.4 billion while our food import bill is as high as US$5.3 billion annually. During the years 2011-2015, our total food import bill was estimated at more than N1.4 trillion. We have heard encouraging news these days that local rice production has marginally relieved our treasury of the heavy cost of rice importation. But we are not yet there.

The potential of agriculture as a major source of export earnings is considerable. The world’s population is set to grow astronomically to 10 billion people within the coming generation. There will be more mouths to feed than ever before. Given the accelerated rate of global urbanism in which more a dozen additional megacities will emerge, additional industries and jobs must be created. The boost on global aggregate demand for food and agricultural products will more than double. It is estimated that in the coming decade, African countries alone stand to earn a staggering US$1 trillion from exports of agricultural produce to the advanced and emerging economies. Considering that Africa some of the best uncultivated land on the planet and massive reservoirs of fresh water resources, our potential to take the lead in food and agricultural production is considerable.

Historically, agriculture has been the key to rural-agrarian transformation in the developing world. When farm inputs improve, local farming families see an increase in incomes and livelihoods. These in turn provide a boost for urban industrial development. The linkages between agriculture and industry and their potential to generate untold wealth are a well-established axiom in world economics. Our country can only fulfil its promise and potential when we achieve an agrarian transformation that links up with the industrial sector to create wealth and opportunities for our teeming millions of youths. What we need in Nigeria is no less than a mass agro-based industrial revolution. It is possible to achieve it in our life time.

One thing I worry about is the fact that our intelligentsia and the economics profession in particular are not ready. Our originality quotient has been atrociously low. I have been a student of the philosophy of science all my life. From Karl Popper to Imré Lakatos, it is a known fact that science springs from the local conditions and experiences of every country and its historical evolution. The Harvard historian and philosopher of science Thomas Kuhn said as much in his analysis of the structure of scientific revolutions and the sometimes violent shifts in paradigms that characterise such fields as relativity and quantum physics.

This is even truer of economics and the human sciences. We are the last to know that the universal laws of economics are subject to local interpretations. The economics taught in Chicago or Stanford and MIT is somewhat different from that taught in Todai, Paris, Berlin, Vienna and Barcelona. And it is somewhat different because the historical conditions and economic experiences of countries vary.

The Germans, for example, put heavy emphasis on the historical and institutional approaches to economic science. They always teach generations of economic students that the worst economic experiences of the German people centre on the hyper-inflation of the 1920s. Those tragic experiences are deeply ingrained in the collective German psyche because the economic depression the hyper-inflation was to lead to economic depression and the rise of Adolf Hitler and the dark knights of Nazism. Germany and the whole of Europe were plunged into a war that led to the death of more than 60 million people. The Germans always approach economics from that historical standpoint. The Japanese also teach economics from a quintessentially Japanese standpoint and so do the Chinese.

What about us in Africa?

We are often slaves of the latest intellectual fashion from the West. When they tell us that development planning is bad, we rush to discard it. When they tell us government-controlled companies are unproductive, we rush to throw away the baby with the bathwater. We are the most unoriginal people on earth and that also reflects in the abysmal rote-learning which characterises pedagogy in higher education.

I challenge all of you distinguished fellows and deans of Nigerian economics to think more deeply and more seriously about the kind of education we are giving our young people. It is not every policy or intellectual puzzle that is amenable to Domestic Stochastic General Equilibrium (DSGE) modelling. Even if they were, data and statistics in our clime are so scarce and as unreliable as to make the results from such econometric modelling deeply suspect.

Lest I’m mistaken: economic science requires all the rigours of mathematics and econometric applications. All students must be well trained in number theory and statistical-numerical analysis. But to do so without studying economic history, evolution of economic systems and development of institutions can lead to dangerous and perverse analyses.

I submit, most humbly, that most of what we teach in our universities these days is a lot of dangerous nonsense. We are not teaching what we revolutionise our national economy and make an industrial-technological society of the first rank among the nations of the twenty-first century. And we do not even know that some of these models being peddled from Chicago, Oxford and the London School of Economics are not relevant to our needs and our situation.

As a matter of fact, text books were written during the Cold War to enforce a fake economics discipline in Africa. I will give only two examples: The book Stages of Growth: a Non-Communist Manifesto, by Walt W. Rostow (Cambridge University Press 1960), was allegedly financed by a major Western intelligence agency to enforce a new curriculum in the developing. The book, Budgeting and Planning in Poor Countries, by Naomi Caiden and Aaron Wildavsky (John Wiley 1974), was also written with such objectives in mind.

If you think I am being unduly pessimistic, you only need to read the Confessions of an Economic Hitman (Berrett-Kohler 2004), by John Perkins. In that book he made such atrocious revelations that many would consider astonishing. They got the world’s top consultancies and the Washington institutions to fabricate fake statistics and fake econometric results just to undermine countries that they wanted to destroy. We must be more careful and more vigilant.

What has all this got to do with agriculture and the value chain?

As a development economist, I am keenly committed to unleashing a mass agrarian revolution because that is the primary occupation of nearly 70 percent of our population. But we cannot make progress unless we provide the right mix of incentives as well as provision of public goods such as rural infrastructures, basic utilities and skills development. The Training and Visit extension service systems that were so successful in the eighties must be brought back. We must also go back to the culture of planning. Planning should never be cast in stone; rather, it should provide a framework and discipline for long-term expenditure and investment planning and for allocation of scarce resources among competing demands.
The transformation of the rural countryside should be linked to a mass agro-based industrial revolution. We need it like yesterday. Nigeria will not survive without technology and industrialisation. We must industrialise or perish; we must commit to making ours an internally-directed and internally-driven centre of world economic and technological transformation. Nigerians are among the most brilliant people on earth. From the late Ayodele Awojobi to Iya Abubakar and Chike Obi, our greatest minds are second to none in the world. We can be masters of our own destiny by harnessing our natural and human resources for the advancement of our country.

The late Dudley Seers, a distinguished development economist at the University of Sussex wrote an obscure little book titled, The Political Economy of Nationalism (Oxford University Press 1984). Much of it was ignored by the economics community, I suspect, because it was largely directed at the poorest developing countries. Seers propounded the thesis that feelings of collective self-worth matter for nations that aspire to overcome poverty and underdevelopment. Centuries of slavery, colonialism racism and trans-Atlantic servitude have made the African people to develop an ingrained feeling of inferiority. The late Caribbean pastor and evangelist Myles Munroe once remarked that the most dangerous and pathetic black man or woman is he who is well-schooled but suffers from self-hate and congenital inferiority. Such a person is likely to be a liability rather than an asset to his own people.

This is the tragedy of the kind of intelligentsia we are producing today. Do not get me wrong: the Holy Qur’an enjoys people to go as far China in the search for knowledge. We should go the whole hog in search for Western education. But we must be self-assured in our own skin as African people. Anybody who makes even the slightest dent on our sense of dignity and honour must be treated as an eternal enemy.
I have scribbled down copious notes on the modalities and approaches to financing agricultural value chains which will be shared to all of you. The gist of my central argument is simply this: we need an agrarian revolution linked to mass industrialisation. We must develop new high quality products for local and world markets. We must be more confident and audacious in our thinking and policy-making. The future belongs to Africa!

• Being the Text of a Lecture to the 59th Conference of the Nigerian Economic Society, Held at NICON Luxury Hotel, Abuja, Wednesday 26 September 2018.


Obadiah Mailafia

by Obadiah Mailafia

September 28, 2018 | 1:25 am
  |     |     |   Start Conversation

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