Dele Sobowale

“An economy can only be as strong as its manufacturing base”.

Akio Morita, Harvard Business Review, May-June 1992.

(VANGUARD BOOK OF QUOTATIONS p 45).

One of the calls I received to my letter to the Finance Minister came from London, he like, Frank, from Delta State prayed that Dr Okonjo-Iweala will listen to me. Personally, I don’t expect that to happen. It is simply un-Nigerian for a top government official to “listen to” an ordinary pen pusher on a subject they consider themselves experts.

However, I have long believed that since “war is too important to be left only to generals” the economy is also too vital to be left only to governments and their experts. And if my readers don’t mind a bit of personal chest beating, my track record has beaten the best of them. Two examples will be sufficient.

My series on Nigeria’s “con-soludo-ted” banks were written while the former Governor of Central Bank was still in office assuring anyone who cared to listen, excluding me, that Nigerian banks were in fine shape. Believers in Professor Soludo, and a few ethnic jingoists, dismissed my warnings – sometimes with insults. Soludo was a world class scholar, so who was Dele Sobowale to proclaim that Nigerian banks were going burst? Well, eight of them went under right under our eyes.

To prove it was not a chance prediction, I again took on another “mega-expert”

In 2008, I literally begged Dr Ndidi-Onyuike, the former Director General of the Nigeria Stock Exchange, NSE, to quit before the exchange collapsed on her. The first article was in May, with follow-ups in September and November of the same year.

My message was the same. The Nigerian capital market was heading for a crash from which it would take years to recover. The collapse started, predictably, in 2008 and it is still going down today – three years after. Meanwhile, the former DG-NSE was assuring investors that the market will soon recover. Till today, it has not and the conditions for recovery have still not been met.

So, readers should rest assured that they need not beg Dr Okonjo-Iweala to listen; the consequences will speak for me – as they have done in the past.

Let me remind our readers that this series is still on job creation or employment generation. Government made it a top priority on their national agenda, and I support it. Like millions of parents and grandparents in this country I wake up everyday disheartened on account of our kids (all young people under 40 are “my” kids) holding unto certificates expensively procured from universities, polytechnics and even secondary schools, without jobs.

Unlike most others, the Almighty has given me the privilege to talk the truth to those in power who had been raising hopes and dashing them for years since the economic downturn of 1978 when Obasanjo’s “Austerity Measures” were introduced.

Even then and under President Shagari and Buhari, we still had some hope. Babangida’s Structural Adjustment Programme, SAP, badly executed though sound in principle, condemned the first generation of Nigerians to a life sentence of un-assured employment. It did so because it rolled back all the manufacturing gains built up from the time Unilever established the first factory in Nigeria to manufacture soap around 1914.

Industrilisation, actually took a giant leap forward during the Gowon administration and the momentum was sustained up to 1978 under Obasanjo. De-industrilisation or the death of manufacturing accelerated under SAP and the country has not fully recovered till today.

This short review has become necessary because when the Minister for Trade and Investment and the Minster of State for the ministry (do we really need two Ministers for this?) took a whole lot of people on a safari, called retreat, the emphasis was on agriculture and agro-allied businesses.

At the risk of repeating myself, I had pointed out in the series “GOVTS LYING ABOUT JOB CREATION” why they and possibly the Minister for Finance might once more be deceiving themselves about the prospects for hastening job creation. So I set out to undertake an actual case study regarding our nation’s preparedness for expanded investment in agriculture and, subsequently, agro allied industries.

For decades small and medium scale enterprises have been recognised as the largest generators of employment. For more than four decades, we have paid lip service to the same conventional wisdom ourselves in Nigeria. What governments, including the former one you served, have failed to do, is to get serious about funding those enterprises. That is another way of saying that governments have talked “job creation” to death but have not lifted a finger to make it work.

Well, everybody who has ever undertaken a postgraduate study knows that it is best to start with empirical research. So, I proceeded to start by wanting to find out how prepared our banks are to fund small scale enterprises; specifically, an agricultural project.

The borrower (name withheld but proof will be provided) approached a bank with which he had fixed some millions in fixed deposits. He needed a working capital loan for his fish farm project amounting to about 25% of his fixed deposit with the bank.

It has taken a month, since the application was made, and loads of forms to fill, including obtaining a guarantor for the loan. In addition, the borrower was able to demonstrate that he had invested over ten times the loan requested on the project. Still, he is given the run-around.

By contrast, in 1970, on account of bonus plus my share of profit sharing declared by Polaroid Corporation, I had the 5% down payment for mortgage on a house loan in Cambridge, USA. In less than two weeks, the loan was released and the house bought – just on 5%.

By now, the questions that arise are obvious. The first is: Is government really serious about making agriculture the engine room of job creation? That question is important because, the historical experience would reveal that governments embarking on rapid development and job creation take risks with entrepreneurs who have demonstrated their commitment to their own personal goals which are in tandem with those of government.

The next question, and perhaps the most important one is: if a bank delays the grant of loan to a borrower whose collateral with the bank itself is more than the value of the loan and whose investment is about ten times the loan sum, does a lender who has little or inadequate collateral have a chance?

This is vital, because my years in farming had convinced me that the vast majority of our farmers or potential farmers lack collaterals or land or anything the bank can hold. But, unless this nation is prepared to take reasonable risks with people with little or no capital, the vast possibilities for farm related job creation will continue to remain on the pages of the communiqués released after each talkfest called retreat or seminar or workshop.

The third question is: how committed are Nigerian banks to this transformation? An exhaustive study of any of our existing banks will probably reveal that governments have announced guidelines regarding the percentage of bank loans which should go to agriculture as well as small enterprises but probably no bank has ever achieved the target.

Invariably, lenient penalties are prescribed for defaults by banks which invariably prefer to pay the penalties than comply. Here again unless government develops zero tolerance for banks failing to support its efforts in this regard, the hope for job creation based on increased agricultural activities will be dashed once again.

The reader might then be wondering about large scale farms. The answers go two ways. Most large scale farms specialising in one or two products are also highly mechanised; they employ few people and can produce what thousands of subsistence farmers can produce.

The more large farms a nation has the lower the percentage of its citizens engaged in farming. Less than 2.5% of Americans are involved in farming compared to about 50% of our own people. So, if we want to create millions of farm jobs, then the farms will be small scale. Otherwise, we will again build hopes only to destroy them.

Finally, at least for now, there is an unsubstantiated assumption that million of unemployed people are prepared to work on the farm. If it was true twenty or thirty years ago, it is no longer a valid assumption to make today. Most young people, especially boys, as soon as they can catch a vehicle are heading for urban centres.

The few left behind will require months, if not years, of orientation to develop the incentive for sustained work. Years of idleness cannot be wished away by government and private employers irrespective of how determined. If we have so many unanswered, or perhaps, unasked questions about agriculture, how many more await us on manufacturing without which our economy will remain weak?

1. 0802-620-1736 OKONJO-IWEALA

U won my unalloyed admiration & support in ur frank talk & business advice to Dr Okonjo-Iweala in ..kudos.SOMNAZU, FRANCIS, ASABA.

2. 0803-266-2074 OKONJO-IWEALA

Your letter to Dr Okonjo Iweala published on 12/9/2011 on page 57 refers. It was a masterpiece that epitomized an epitaph to the economically, emotionally and socially deprived masses in a failed state. Publish it more so as to serve as menu for the army of unemployed and hungry Nigerians. I pray Dr Okonjo-Iweala is listening.. Frank Eghomien. Delta State.

3. 0807-607-0451 OKONJO-IWEALA

Your article welcoming Okonjo-Iweala..I doff my hat. Layi.