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[-7. 3:3 flit!» ‘:““‘?‘é'w ““ {$51.37. “1,221.?" .I 2 {I . ‘3\ 3 r If“ ..W§LCJ/tx»"‘:-.‘ 5" < «.- LM 1“: “‘y“r.‘.;."$iw‘ "i‘mil w\11m\\\‘\.“:li\\“\\l\‘\i\i - w ‘9 3 5“ 9’ = 3 1293 '\ LIBRARY;— Michigan Stat. University J_J E This is to certify that the dissertation entitled ’. THE IMPACT OF PUBLIC CAPITAL EXPENDITURE ON THE DEVELOPMENT OF THE MANUFACTURING SECTOR OF SUB-SAHARAN AFRICAN STATES: THE CASE OF NIGERIA presented by Okune I. Ojong has been accepted towards fulfillment of the requirements for DOCTOR OF PHILOSOPHY RESOURCE DEVELOPMENT degree in flQQQM Major professor .lDate September 9, 1988 MS U is an Affirmative Action/Equal Opportunity Institution 0-1277 1 PLACE IN RETURN BOX to remove this checkout from your record. TO AVOID FINES mum on or bdm date duo. DATE DUE DATE DUE DATE DUE If if MSU I. An Afflrmdivo ActlorVEquul Oppoflunlty Institution THE IMPACT OF PUBLIC CAPITAL EXPENDITURE ON THE DEVELOPMENT OF THE MANUFACTURING SECTOR OF SUB-SAHARAN AFRICAN STATES: THE CASE OF NIGERIA By Okune l. Ojong A DISSERTATION Submitted to Michigan State University in partial Fulfillment of the requirements For the degree of ‘ DOCTOR OF PHILOSOPHY Department of Resource Development 1988 DATE: 07/06/89 DATA SHEET NO. 310629-005 OF 007 NON-COPYRI GHT SCHOOL: 0128 MICH-SU-D-BIND ISSUE: 50-038 MICROPILM: 1 TOTAL 0 C/R + 1 SCH 0 L/C MICROPICHB: 1 TOTAL 0 C/R + 0 SCI-l 1 L/C PUBNO AUTHOR DEGR PGS EXPO 8912624 OJONG, OKUNE IGNATIUS 1988 0193 -—— LUV PAGINATION: SPECIAL INST: pp +13 1-180 /l ‘__l ‘q/ cows: 1%; I. UNBOUND SEE: MJS ABSTRACT THE IMPACT OF PUBLIC CAPITAL EXPENDITURE ON THE DEVELOPMENT OF THE MANUFACTURING SECTOR OF SUB-SAHARAN AFRICAN STATES: THE CASE OF NIGERIA By Okune l. Ojong The aim of this study is to evaluate two policy objectives of development in Nigeria. viz.: (I) to promote growth, and (2) to distribute equitably the profits of the growth in the manufacturing sector. These policy objectives constitute the essential components of development. and are widely pursued in the national government development plans of Sub-Saharan African (SSA) states. In more specific terms, the evaluation is centered around the impact of public capital expenditure on: (a) growth of the manufacturing sector; and (b) equitable distribution of selected variables associated with the manufacturing sector of Nigeria. Nigeria is used as tne case study of SSA states. Overall, a high positive correlation (r = .8) was found between public capital expenditure and the contribution of the manufacturing sector output to the GDP of Nigeria. Further evaluation indicated that the contribution of the Okune I. Ojong Inanufacturing sector output to the GDP of Nigeria was very low compared to developed countries and some developing countries, especially of non-SSA-countries. The evaluation of the impact of public capital expenditures on the distributional equity (across the regions of Nigeria) of six variables associated with the manufacturing sector showed a very high and increasing disparity among three of the variables. Several reasons were offered to explain these findings. Based on the findings of the study recommendations for policy and strategy changes were made. The recommendations included a shift in emphasis in public capital expenditure to: 1. Greater dependence on local sources for capital goods, raw materials inputs, contractors, managers, and technicians. In other words, a shift to greater self—reliance in industrial establishment and production through the promotion of local managerial and technological capabilities. 2. The establishment of extensive research and development centers, industries consistent with local talent, promotion of practical work, experiential training (i.e. learning by doing). Okune l. Ojong and commercialization or dissemination of research products. The creation of new or reconstituted Public Development Administration (P.D.A.) to promote and coordinate all development efforts. Government incentives and infusion of capital in the form of grants and loans into the private sector to encourage research, to offset the low investment capital in the private sector, and the inefficient management associated with government ownership of the factors of production. Recommendations are also made for further studies. ACKNOWLEDGEMENTS The author is indebted to several persons without whom the production of this dissertation probably would have been impossible. My gratitude is first and foremost to my parents, and the Department of Resource Development at Michigan State University. In particular, I am indebted to the following persons: Professor George Axinn, my dissertation director for his diligence, speedy feedback, useful insight, and professional assistance and guidance; Professor Thomas Edens, my academic advisor, who inspired me throughout the program, and for his insightful assistance in the production of this document; and finally to Professor Frank A. Fear and Professor Assefa Mehretu, my dissertation committee members, for their invaluable constructive criticism. All have offered encouragement through an inexhaustible review‘ of this document to improve its quality. Their professional guidance, and generous assistance has provided the inspiration needed to complete this dissertation. Finally, I would like to thank my typist, Joanne Lewis, for her fast and accurate typing of this dissertation. ii TABLE OF CONTENTS List of Tables . . . . . . . . . . . . . . . . . . List of Figures . . . . . . . . . . . . . . . . CHAPTER ONE INTRODUCTION . . . . . . . . . . . . . . . . . . Purpose of the Study . . . . . . . . . . . . . . The Scope and Nature of the Problem . . . . . . . The Scope of the Problem . . . . . . . . . . . The Nature of the Problem . . . . . . . . . . . The Assumptions of the Study . . . . . . . . . . Policy Objectives . . . . . . . . . . . . . . . . Significance of the Study . . . . . . . . . . . . Reasons for Using Nigeria as a Case Study . . . . Reasons for Studying the Manufacturing Sector . . Questons to be Answered . . . . . . . . . . . . Definition of Development Relating to this Study . The Objectives of the Study . . . . . . . . . . Concepts and Variables Evaluated in the Study . . Organization of the Study . . . . . . . . . .'. . CHAPTER TWO A REVIEW OF RELATED LITERATURE AND THEORETICAL CONSIDERATION . . . . . . . . . . . . Chapter Focus . . . . . . . . . . . . . . . . . . Chapter Organization . . . . . . . . . . . . . . . A Brief Historical Statement About the Involvement of P.D.A. in the Modern Manufacturing Sector and Development of Nigeria . . . . . . . . . . . . . . Theories Associated with Models of Development of SSA States . . . . . . . . . . . . . . . . The Necessity for P. D. A. Involvement to Facilitate the Development of SSA States . . . . . The Reasons for P.D.A. Involvement to iii Page vii meNIO‘UIUIU'iNNN— - th l6 l6 l6 I7 26 44 Page Facilitate the Development of SSA States . . . . . 45 The Stage of Development of SSA States . . . . 46 The Poor Distributional Equity of Resources . . 47 A Theoretical Definition and Conceptual. Clarification of the Concept "P.D.A." and the Role of P.D.A. in Facilitating the Development of SSA States . . . . . . . . . . . . . . . . . . 50 The Origin and Case of Planning in Nigeria . . . . 61 Public Development Policies (P.D.P.) . . . . . . . 68 Contribution of Past Studies and the Present Study to the Subject of Development of the Modern Manufacturing Sector of Nigeria . . . . . . 70 Contribution of Past Studies . . . . . . . . . 70 Contribution of the Present Study . . . . . . . 71 CHAPTER THREE PROCEDURE AND METHODOLOGY . . . . . . . . . . . . 72 The Aim of the Chapter . . . . . . . . . . . . . . 72 The Sources of Data . . . . . . . . . . . . . . . 72 Questions Evaluated . . . . . . . . . . . . . . . 73 Procedure and Methodology . . . . . . . . . . . . 74 The Procedure and Method for Evaluating the First Question and Sub-Question Posed for the Study . . . . . . . . . . . . . . . . . 74 Operational Definition of Growth . . . . . . . 74 Computation of Growth Rate and Average Annual Rates of Change . . . . . . . . . . . . 75 Pearson Product Moment Correlation Coefficient 76 Computation of Pearson Product Moment Correlation Coefficient . . . . . . . . . . . . 77 The Procedure and Method for Evaluating the Second Question Posed for the Study . . . . 78 Operational Definition of Distributional Equity . . . . . . . . . . . . . . . . . . . . 79 Computation of Distributional Equity . . . . . 82 Computations of Gini Coefficient (G) . . . . . 83 Computation of Location Quotient (LQ) . . . . . 84 iv CHAPTER FOUR EVALUATION . . . . . . . . . . . . . . . . . . . Empirical Questions and Data Presentation . . . Location Quotient for Public Capital Expenditure Among the Regions of Nigeria . . . . . . . . . . Location Quotients for Number of Manufacturing Establishments Among the Regions of Nigeria . . Location Quotients for Output in Manufacturing Among the Regions of Nigeria . . . . . . . . . . Location Quotients for Value Added in Manufacturing Among the Regions of Nigeria . . . Location Quotients for Number of Manufacturing Employees Among the Regions of Nigeria . . . . . Location Quotients for Employees Wages Among the Regions of Nigeria . . . . . . . . . . . . . CHAPTER FIVE ANALYSIS . . . . . . . . . . . . . . . . . . . Analysis of the Findings of Chapter Four . . . Reasons for the Observed Low Growth of the Manufacturing Sector of Nigeria . . . . . . . . The Over-Emphasis on Heavy Capital Intensive Import Substitution Industries . . . . . . . . The Neglect of Local Research by the P.D.A. of Nigeria . . . . . . . . . . . . . . . . ,,, Distributional Inequity Among the Regions of Nigeria in Manufacturing Activities . . . . . . Variation Among Regions in Public Capital Expenditure and Employees Wages Among the Regions of Nigeria . . . . . . . . . . . . . . Variation Among Regions in Employees Wages . Variation Among Regions In Manufacturing Establishments . . . . . . . . . . . . . . . Variation Among Regions in Output and Value Added in Manufacturing . . . . . . . . . . . Variation Among Regions in Manufacturing Employees . . . . . . . . . . . . . . . . . . Page 85 85 102 104 106 109 118 121 121 121 122 I36 140 141 142 I43 146 147 CHAPTER SIX SUMMARY. CONCLUSION. AND RECOMMENDATIONS Summary . . . . . . . . . . . . . . . . Conclusions . . . . . . . . . . . . . . Recommendations Based on the Findings of Study . . . . . . . . . . . . . . . . Recommendations for Further Studies . . APPENDIX A PEARSON PRODUCT MOMENT CORRELATION . . APPENDIX B ‘ POPULATION OF NIGERIA . . . . . . . . . APPENDIX C-1 PUBLIC CAPITAL EXPENDITURE . . APPENDIX C-2 MANUFACTURING INDUSTRIAL ESTABLISHMENT . APPENDIX C-3 OUTPUT IN MANUFACTURING . . . . . . . . APPENDIX C-4 VALUE ADDED IN MANUFACTURING . . . . . . APPENDIX C-5 TOTAL EMPLOYMENT IN MANUFACTURING . APPENDIX C-6 WAGES OF EMPLOYEES . . . . . . . . . . . APPENDIX D-I PERCENTAGE DISTRIBUTION OF ECONOMIC INDICATORS BY REGIONS . . . . . . . . . APPENDIX D-2 PERCENTAGE DISTRIBUTION OF ECONOMIC INDICATORS BY REGIONS . . . . . . . . . APPENDIX E COMPUTATION OF AVERAGE ANNUAL PERCENTAGE RATE OF CHANGE (r) . . . . . . . . . . BIBLIOGRAPHY . . . . . . . . . . . . . vi Page 150 150 151 153 158 160 161 162 163 164 165 166 167 168 169 170 171 LIST OF TABLES Page Distribution of firms in Nigeria by forms of ownership . . . . . . . . . . . . . . . . 40 Contribution of oil export to GNP and to balance of payments (1966-76): Oil companies payments to the Nigerian government . . . . 66 Computation of arithmetic and proportional equality: Hypothetical Illustration . . . . 82 Sectors contribution to the gross domestic product of Nigeria (selected years 1960-1980) (percent of total) . . . . . . . . . . . . . 86 Correlation between public capital expenditure and value of manufacturing and craft in GDP (1962—1974) 0 O O O O O O O O O O O O O O O 88 Federal government’s oil revenues as percentage of total current revenue (1969-1976) . . . . 90 Sectoral growth rates in the Nigerian economy in constant prices (in percent) . . . .'. . 91 The contribution of manufacturing industries to gross national product . . . . . . . . . 93 Percentage of value added in Nigerian manufacturing prior to 1970 and after 1970 by various sectors . . . . . . . . . . . . . 94 Percent distributional pattern of Nigerian manufacturing industries . . . . . . . . . . 98 Gini Coefficients for individual variables of the manufacturing sector of Nigeria (prior to 1970 and after 1970) . . . . . . . . . . 102 Location Quotients: Distribution of public capital expenditure by regions . . . . . . . 103 vii Location Quotients: Distribution of number of manufacturing establishments by regions . Location Quotients: Distribution of output in manufacturing by regions . . . . . . . . Percent of total output of the manufacturing sector by regions (1968—75) . . . . . . . . Location Quotients: Distribution of value added in manufacturing by regions . . . . . Location Quotients: Distribution of number of employees in manufacturing by regions . . Percent of total employment in the manufacturing sector of Nigeria by region . Percentage share of total manufacturing industrial employment by regions and sectors Distribution of total gainful employment (both traditional and modern sector) . . . . . Location Quotients: Distribution of the wages of manufacturing employees by regions . Ownership of industries in Nigeria by selected establishments . . . . . . . . . . . Distribution of selected major construction and development projects in Nigeria as of 1985 A comparison of the proportion of expenditure on the importation of products by three categories of the economic structure . . . . . Percentage Composition of Nigeria Imports (1954—1975) 0 o o o o o o o o o o o o o o o o Extent of dependence of import substitution manufacturing industries on imported raw material 0 O O O O O O O O O O O O I O O O O 0 Distribution of firms by industry and proportion of foreign raw materials to total raw materials used . . . . . . . . . . . . . . viii Page 105 107 108 112 113 114 116 119 125 127 129 130 132 132 Import content of the intermediate inputs of Nigerian industries . . . . . . . . . . . . National Development Plan Allocation--Revised and actual allocation to research and development by sectors (1970-1971) . . . . . . Correlation between public capital expenditure and value of manufacturing and crafts in GDP (1962-1974) . . . . . . . . . . . . . . . . . Population (Millions) of Nigeria by Sub-regions . . . . . . . . . . . . . . . . . Public Capital Expenditure by Sub-regions of Nigeria (1968/69 - 1971/72) (N Million) . Number of Manufacturing Industrial Establishments by Sub—regions of Nigeria (1968-1975) . . . . . . . . . . . . . . . . . Output in Manufacturing by Sub-regions of Nigeria (N Million) . . . . . . . . . . . . . Value Added in Manufacturing by Sub-regions of Nigeria (N Million) . . . . . . . . . . . Total Employment in Manufacturing Industries by Sub-regions of Nigeria . . . . . . . . . . Employees Wages in Manufacturing Industries by Sub-regions of Nigeria (N Million) . . . . ix Page 133 137 160 161 162 163 164 165 166 167 LIST OF FIGURES Figure Essential components of development . . . . . Structure of world trade by broad commodity groups as percentage of total trade (1970 and 1980) o o o o o o o o o o o o o o o o o o o a Research and development expenditures as percentage of GNP by regions and economic groupings (1970 and 1980) . . . . . . . . . . Research, Development Scientists and Engineers in Developed and Developing Countries—~Percent Distribution (1970 and 1980) . . . . . . . . Page 96 168 169 CHAPTER ONE INTRODUCTION Purpose of the Study The purpose of this study is to investigate the impact of public (i.e. government) capital expenditures on the development of the manufacturing sector of Sub—Saharan African (SSA) states. The Public Development Administration (P.D.A.) has been viewed as a key factor in facilitating the development of SSA states (Nti, 1978: Hyden, 1983). In the role as facilitator, the primary functions of P.D.A. are to: 1. Integrate and conduct development processes such as: development planning, plans implementation, and evaluation; and 2. Guide, induce, manage, and coordinate different systems, such as government ministries, departments, corporations, and local organizations associated with development processes in SSA states. Although the structural orientation (i.e. centralized and/or decentralized system) of P.D.A. is equally important In facilitating the development of SSA states, the focus of this study is on the functions of the P.D.A. of Nigeria. A more detailed definition and conceptual clarification of terms and functions of P.D.A. is presented in the literature review in chapter two. The term "SSA States," as used in this study, refers to formerly colonized Sub-Saharan African countries which attained political independence since the 19505 (World Bank, 1981). These countries are commonly included among "third world countries," "underdeveloped countries," or "developing countries." The Scope and Nature of the Problem The_Scope of the Problem The problems associated with the undegggvelopment of SSA states are innumerable and difficult to discuss In a single study of this scope, since they are rooted in political, economic, technical, cultural, and the social history of the SSA states themselves. The Nature of the Problem While the position of industrialized countries, with regards to development, has continued to improve in a geometric progression, the development of SSA states after independence, has either improved only in arithmetic progression, remained the same or declined. This situation has been documented by Bates (1981): Shaw and Aluko (1985): Ghai and Radwan (1983): and Fransman (1982). After more than 25 years of independence a number of critical factors still dominate several of the SSA states. These include: a lack of technological break throughs, low productivity in the agricultural and manufacturing sectors, massive poverty and starvation, the inequitable distribution of resources, and the lack of the basic necessities of life. In this light, this study seeks to contribute to the literature searching for methods to facilitate the rapid development of SSA states. According to Hyden (1983): Controversial questions have to be raised concerning the nature of the African economy, the role of the [government] state in development, accountability of public officials, contribUtions by the private and voluntary sectors, building local organizational, technological, and management capacity, and the way donors and technical assistants can assist these efforts. All these have a bearing on what we _mean by development and how it can be promoted and managed (Hyden, 1983:xiv). To paraphrase Emezi (1979:10), the development of SSA states raises questions that focus on technological (manpower) capabilities and the ways in which we can create administrative structures, functions, and managerial capabilities that can cope with issues of policy-making, goal-determination, policy choices and policy attainment. In his words: . . . Two interrelated sets of problems in contemporary African politics and government [include] . . . the concern for development at: (1) the national (state) and rural level, and (2) administering development at these levels (Emezi, 1979:11). This study will examine two key .problems associated with growth and distributional equity of the manufacturing sector, widely recognized as government development policy objectives in SSA states. This examination will investigate the problems associated with the slow development of Nigeria, and for that matter other similar SSA states, and recommend possible solutions to the problem. A crucial factor in the development process of SSA states is the Public Development Administration (P.D.A.). The extent to which P.D.A. is effective in manipulating the machinery of development is an important key to the development. As noted by Fransman (1982:9), significant government intervention and radical changes within SSA states themselves will be required in order to bring about the necessary planned build—up of capital and intermediate goods industries. Government intervention involves planning, programs implementation, research, budgeting and financing of programs, management, etc. Nti (1978) and others have recommended changes in P.D.A. centered on the creation and/or re-orientation and study of the role (structure and functions) of P.D.A. to facilitate the development of SSA states. The Assumptions of the Study The problems associated with the slow development in SSA states are assumed to be related to: l. Flaws associated with the centralized nature of the P.D.A., of SSA states, and the associated ineffectiveness in performing development tasks. 2. Flaws in the development policies of SSA states, stemming from the inappropriate allocation viz., public capital expenditure, to promote local research and development efforts. 3. Inappropriate development models and/or strategies. Policy Objectives To investigate the above assumptions, two key P.D.A. development policy objectives of the SSA states were evaluated: (1) the policy designed to increase the growth of productivity of the manufacturing sector of SSA states, and (2) the policy designed to achieve an equitable distribution of resources, particularly, the profit from the growth of the manufacturing sector in the SSA states. Significance of the Stggy The success achieved in the implementation of development plan policies must be apprised periodically so that necessary recommended adjustments can be made. This study involves an intensive evaluation of the extent to which the P.D.A. of Nigeria has achieved its development policy objectives. Development policies are rarely evaluated in many SSA states to determine their effectiveness, but this study evaluates in depth the development policies of an SSA state. Idrissa (1981) noted that, the evaluation of the success of policies and programs is a missing element in SSA states, but is important to assure that they actually meet the needs of the society. Evaluation also offers the opportunity to change the strategies that are failing to facilitate the development of SSA states, and/or to reinforce development strategies that are very effective. To effectively address the policy objectives of development mentioned above, the manufacturing sector of Nigeria was used as a case study. Reasons for Using Nigeria as a Case Study Nigeria was selected as a case study because it is typical of the SSA states. ,Like many of the developing countries, Nigeria exports large amounts of raw materials (including crude petroleum), has a rapidly growing population, and a significant proportion of them are poor. Nigeria is now in a stage of pre-industrial "take-off": the economy is (with the exception of oil) predominantly agricultural, with low productivity in both the agricultural and manufacturing sectors; the government is unstable; resources are poorly distributed: and the country lacks technological and managerial expertise. Reasons for Studying_the Manufacturing_§ector The modern manufacturing sector, as in most of the SSA states, is acknowledged to be an important (and critical) element of economic development. As noted by Fransman (1982): Industrialization is [unequivocally] a necessary condition for rising productivity and standards of living and this is true regardless of the ’political hue’ of SSA states (Fransman, l982:3). As a result, the governments of SSA states have established policies to stimulate growth of the manufacturing industrial sector in anticipation that they will impact social development (Abiodum, 1980, p. 115). The SSA states, in effect, perceive the manufacturing and industrial sectors to be the thrust of development and associate them with productivity, employment, and higher income. The experience of the industrial world is seen as living testimony to this assertion, and the strong claim of modern industrial manufacturing as a determinant of development. Questions to be Answered To investigate the two development policy objectives mentioned earlier, two questions were posed: 1. To what extent was the policy objective of growth of the manufacturing sector. stipulated In the central development plans of Nigeria, achieved? 2. To what extent was the policy objective of distrigytion equity of manufacturing activities across the regions of Nigeria achieved? The concepts underlined above are assumed to constitute development, while discussion of the difficulties in defining development is presented in the literature review in chapter two. Definition of Development Relatigg_to This Study The term development, as used throughout this study, is defined as comprising a combination of three components: 1. Increasing local technological capability. 2. Increasing productivity of the lmanufacturing sector as a conduit to economic growth. 3. Increasing equity in the distribution of the profits of the growth of the manufacturing sector. A schematic representation of these three components (Figure 1.1) with P.D.A. at the center with the ability to manipulate the other components is a key factor in facilitation. The problem confronting the P.D.A. of SSA states is the attainment and balance of the three components. The three components are inter-related and interdependent in the sense that local technological (2) Economic growth and increased productivity of Industries 9 (1) Local technological capability and management skills (3) Distributional equity of income and industries Figure 1.1 Essential Components of Development 10 capability and management skills are quite essential for promoting economic growth and distributional equity of the manufacturing sector. There is a "trade off" in the relationship between economic growth and distributional equity in the sense that: on the one hand, the access to factors of production is necessary to increase productivity: while, on the other hand, increased productivity is necessary in order to have enough to distribute (Mabogunje, 1973). Theories associated with distributional equity include equilibrium theories, location and allocation theories, etc. Those theories associated with economic growth include investment, expenditure, consumption, labor and industrial relations, and management. A popular theory of development associated with growth and distribution of resources is the "grOwth and trickle down" theory, whose underlying tenet, inherited from colonialism by SSA states, was to concentrate on economic growth, (i.e. growth in GNP, at the initial stages of development), with the expectation that the accumulated wealth will eventually "trickle down." Writers like Case and Niehoff (1976) have condemned both the growth and trickle down theories on the grounds that wealth tends to accumulate at the center without "trickling down," particularly in the absence of government intervention to redistribute the wealth. (The tendency for wealth to accumulate at the center rather than "trickle down" has been 11 referred to as the "backwash" effect resulting from economy of scale by Myrdal (1957).) It is not surprising, therefore, that Rogers (1976) and Sears (1977) advocated the involvement of P.D.A. in deveIOpment and the concomitant promotion of economic growth and equitable distribution of the profits from the growth. Sears (1977), for example, defined development as the acceleration of: (1) economic growth; (2) the reduction of inequitable distribution of resources (income, industries, etc.): and (3) the eradication of unemployment and poverty. In his later writings (Myrdal, 1968), he added (4) self- reliance and self-determinism, through the acquisition of local technological capability and industrialization. A crucial factor in the definition of development is the acquisition of technological and managerial expertise as a prerequisite for: 1. The growth and increased productivity of the agricultural and manufacturing sector: and 2. The ability to establish industries and development programs throughout the country to eradicate distributional inequity in industries, employment and income among regions. According to Sears (1977), development is said to occur when economic growth increases and when distributional inequity, unemployment, and poverty become less and less severe . The 12 definition of development in this study is also in line with the contemporary definition of development in the literature. For example, according to Teriba et al. (1981:5). industrial The studies in SSA states should design measures of deveIOpment which throw light on: degree to which growth is promoted, to whom the benefits are accruing, how far the process of economic growth is proceeding, and how well the scarce resources (capital) of the economy are being utilized to the benefits of the country and its citizens. An argument will be made in here to the effect that the functions of the P.D.A. of Nigeria have not been adequate to facilitate development. was The Objectives of the Study The objectives are twofold: 1. The first is to examine the extent to which the policy objectives of development outlined earlier were achieved by the P.D.A. of Nigeria. The second is to recommend a new strategy and/or policies, based on the results obtained from evaluating the first objective, for facilitating the development of SSA states. To determine the extent to which the P.D.A. of Nigeria facilitating the development of Nigeria, two key development related concepts and associated variables were evaluated. 13 Concepts and Variables Evaluated in the Study The two key concepts evaluated were: (1) growt , and (2) distributional equity of the manufacturing sector of Nigeria. 1. The variables associated with growth of the manufacturing sector were: 8. b. public_capital_expenditure, and total output (in naira), i.e., the value of the manufacturing sector in the GDP of Nigeria. Variables associated with distributional equity of the manufacturing sector included: a. distribution of public capital expenditure across the regions of Nigeria; distribution of manufacturing industrial establishments across the regions of Nigeria: distribution of output of the manufacturing sector across the regions of Nigeria; distribution of value added by the manufacturing sector across the regions of Nigeria; distribution of manufacturing sector employees across the regions of Nigeria; and 14 f. distribution of manufacturing sector employees wages across the regions of Nigeria. Qgganization of the StUdy The remainder of the study is divided into five chapters. Chapter two is devoted to the review of the related literature concerned with the role of P.D.A. as an agency charged with the function of development; related theories associated with some development models for SSA states such as UST, NET, and ST (See Pages 27—28) are also explored, in addition to the development approaches adopted in Nigeria over the years. The development of Nigeria has shifted emphasis from preoccupation with economic growth only prior to 1970, to include deliberate government intervention to promote distributional equity after 1970. Chapter three describes the procedures and methods used to evaluate the questions posed in the study. Specifically, the sources of data, the limitations of the data, and the techniques adopted to compute growth rates and distributional equity are discussed in this chapter. Chapter four is devoted to the presentation of data and its evaluation. The evaluation associated with economic growth and distributional equity of the modern manufacturing sector of Nigeria are performed in this chapter. 15 Chapter_five is devoted to discussion and explanation of the findings of the study. The findings associated with economic growth and distributional equity of six variables relevant to the modern manufacturing sector of Nigeria presented in chapter four are analyzed. Chapter six includes the summary, conclusions, recommendations for policy and strategy changes, and recommendations for further studies. CHAPTER TWO A REVIEW OF RELATED LITERATURE AND THEORETICAL CONSIDERATION Chapter Focus The focus of this chapter is: (1) to provide a conceptual clarification of the role of the P.D.A. as an organization charged with the function of achieving the development policy objectives stipulated in the national development plans of Nigeria: and (2) to explore related theories associated with the development of the manufacturing sector of SSA states. Chapter Organization Specifically, the chapter will examine in tandem: 1. A brief historical statement about the involvement of the P.D.A. in the modern manufacturing sector and development of Nigeria; 2. The necessity for the P.D.A.’s involvement in promoting the development of Nigeria: 3. A conceptual and theoretical clarification of the role of P.D.A. in facilitating the development of SSA states; 4. The origin of planning in Nigeria; 16 17 5. A statement about the policy objectives of development stipulated in the national development plans of Nigeria; and 6. The contribution of earlier studies and this study to the subject of the development of Nigeria. A Brief Historical Statement About the Involvement of the P.D.A. in the Modern Manufacturing_$ector and Development of Nigeria The British adopted a system of indirect rule that involved a combination of British administrators and Nigerian rulers but under this colonialist system, the function of the Nigerian rulers was primarily limited to maintaining law and order and collecting taxes, (Nti. 1978:19) rather than to development tasks. The British interest was with commerce and not with permanent residence in Nigeria, so they were not concerned with developing the country. At independence, Nigeria was relatively underdeveloped and this led to the intervention of the P.D.A. and the creation of agencies such as the National Economic Planning Committee, to facilitate the development of Nigeria. After the independence of Nigeria, the power and responsibility for development was transferred to elitist groups with backgrounds in Western education and neo- classical economic ideologies. Therefore, the role of the P.D.A. of Nigeria transcended maintenance of law and order 18 and tax collection, to include proprietory and development- related functions. Garkvich (1985) identified three typical functions of any government, small or large, as comprising: regulatory functions -- pertaining to ordinances. taxing and other local aspects; prOprietory functions -- pertaining to the delivery of services and programs: development functions -- pertaining to the determination of policy relative to the regulatory functions and proprietory functions and action. In more general terms, we can classify the functions of the P.D.A. of Nigeria under: (a) regulatory functions, (b) delivery functions, and (c) stimulation functions. ngulatory functions: Includes law enforcement, the maintenance of law and order and ensuring social justice and local control. For example, the regulatory functions ensure that: loans get to the target grOup, loans are repaid, distributional equity is promoted, growth rate of the population is monitored, proper location and allocation of the nation's wealth is ensured, monopoly regulation, and any other negative socio-economic externalities (i.e. over- pOpulation, corruption, pollution, etc.) are eradicated. Delivery functions: Involves the establishment. production and provision of: (1) capital goods, such as machines, tools, and equipments: (2) facilities, such as the necessary infrastructure: (3) services, such as financial aid and loans; (4) extension services, such as training, 19 technical assistance, etc.: and (5) research to design and invent new products, and to innovate and improve on old products. Stimulation functions: The P.D.A. functions to induce and stimulate the human potential to promote: increased productivity through research, local technological acquisition and technological know-how through extension services, practical work and experiential learning; technical assistance to proprietors, managers and workers: the provision of technical and managerial training; the provision of incentives to motivate hard work. In playing this role, the P.D.A. agency attempts to bring about desired changes in the attitudes towards work, and the adoption of new and better production techniques. Since one of the primary functions of the P.D.A. is to induce change, its efforts must be directed at organizing, mobilizing, educating, training, and/or developing the target of change (Nti, 1968). In addition, it must be designed to stimulate the development of the manufacturing sector of Nigeria just as India's engineering consultancy firms (Lall, 1984) are doing. In India the development agencies comprise both consultancy and task force agencies ranging from the National Research Development Corporation, (a metallurgical engineering, technical and management consultancy). to Indian export organizations. According to Lall (I984): 20 India has a large number of organizations offering consultancy services from equipment manufacturers, product manufacturers and specialized industrial consultants to general engineering cum-economic consultants (Lall, 1984:544-59). The decentralized structure, funding commitment. consultancy and task force functions, and the government's role in promoting local technological capabilities and competence have earned India the reputation of being a technologically self—reliant country that exports technology to SSA states (Lall, I984). The public development agencies in many SSA states, such as Nigeria, do not offer training to private enterprises due perhaps to governmental neglect or the lack of funds. The Nigerian P.D.A. organizations, unlike the Indian P.D.A.s, are under—funded and un-coordinated. For example, the National Research Development Corporation of India is the commercial arm of government known as the "Council of Scientific and Industrial Research and Development Network" and comprises 34 national laboratories and is spending an enormous amount of money on both research and development (Lall, 1984). India also stresses production technology. management, and strong local technological acquisition through experiential learning. As noted by Lall (1984): The strength of Indian enterprises lies in production technology and management with strong local technological acquisition—learning by doing. . . . heavy emphasis on self-reliance in the pro- duction of capital goods has forced the growth of 21 industries and indigenous technological capability along lines it may not otherwise have followed (Lall, 1984:559). But unlike India, the P.D.A. of Nigeria is neither structurally nor functionally oriented to provide services such as consultancy, training, technological adaptation, and learning by doing. There are minimal indigenous industrial bases or "task forces" in Nigeria responsible for the manufacture of modern industrial capital goods and research and development. These rarely perform the function of stimulating indigenous industries with instruction, training, indoctrination, advice, motivation, innovation and change, education, information, enlightenment, edification, or direction. The effective implementation of planned projects and programs require training, technological‘ acquisition, investment capital, technological know-how, and/or skills deveIOpment in such areas as entrepreneurship and business management techniques. Although these functions are entrusted to the P.D.A. of Nigeria, most of these functions are not performed in Nigeria or in many SSA states because of the preoccupation with heavy capital-intensive import substitution industrialization. For example, as noted by Eziakor (1983), after independence. the thinking of early development planners and policy makers in SSA states focused, basically, on Marxian socialist and/or neo— 22 classical economic development models with roots in heavy capital-intensive import substitution industrialization. As observed by Fransman (1982:339—340): State intervention generally favored large-scale foreign enterprises and increase dependency on the structure of incentive tends to favor low value added, assembly-type activities . . . . In the absence of oil, the process of import substitution would have been stifled by severe external imbalances and by inflationary pressures from the agricultural sector. As noted by Were (1983): Apart from a handful of cases where the Socialist system has been tried, the overwhelming majority of independent Africa states have attempted to achieve their development objectives within the wider framework of the capitalist economic which they inherited at independence (Were, 1983:6). The inappropriateness of the socialist and capitalist development models and/or development strategies is reflected in low or declining economic growth among SSA states. This economic stagnation and decline of real per capita income among sub-sahara African states was noted by Shaw and Aluko (1985:3). On the whole, even the economic growth experience in oil exporting SSA states such as Nigeria was not accompanied by a widespread improvement in the living standard of the great mass of the rural population (Ghai & Radwan, 1983). The economic growth was accompanied by the uneven distribution of the benefits (Shaw, I982:3) and although Nigeria experienced an overall 23 economic growth (growth in per capita GNP) as a result of oil, there was an absolute decline of agricultural production in both the 19605 and the 19705. In terms of the general picture, ~as noted by Ghai and Radwan (1983), between 1960-1978 countries like Botswana, the Ivory Coast, Kenya, Malawi and Nigeria, recorded an annual growth rate of income per head in excess of two percent. By global standards, this was a very low growth rate and SSA states like Mozambigue and Zambia only had an annual growth rate of zero to two percent or experienced a moderate growth while the overall economic growth of SSA states like Ghana and Somalia, with a zero to negative growth rate in income per head, experienced a stagnation or decline (Ghai 8 Radwan, 1983:3). The problems associated with rural poverty and distributional inequity, for example, are assumed to be based in poor terms of trade, urban bourgeoisie and poor policies with a biased expenditure in favor of urban activities. As noted by Ghai and Radwan (1983:23), the concentration of public expenditure on social and economic infrastructure in urban centers laid the foundation for inequality between urban-rural areas, and rural impoverishment. The dismal economic situation of many SSA states is often referred to as a "crisis" Adedeji (1977), Barker (1984), and the World Bank (1981). Based on established 24 trends, Adedeji (1977) prognosed a troubled future for the whole African continent. The April, 1980 OAU Summit in Lagos was an attempt to lay the groundwork for African Economic Community by the year 2000 (Shaw, 1982:5-8), in response to the economic crisis of Africa. The major topic of the Economic Community for Africa (ECA) centered on: a restructuring of global economic order, self—reliance, and Africa's economic cooperation. In the same light, Adedeji (1977) argued that a restructuring of the global economic order will only bring about marginal benefits, if at all, unless there is a corresponding restructuring of the economic order at the continental and states levels in Africa. In reference to the gloomy statistics of Africa’s future, Adedeji noted that, they should generate a predisposition to engage in a fundamental re—examination and re-direction of Africa's economic development strategy. Dependency on the industrialized world, he noted, was responsible for the inability of Africa's leaders and development agents to respond effectively to the problems of underdevelopment and advocated a plan of action (Lagos Plan of Action, O.A.U., 1980) based on greater self-reliance, and economic cooperation among African states (Shaw, 1982:2). Both external and internal problems have been blamed for the poor economic performance and underdevelopment of SSA states. For example, Shaw (1982) asserted that the 25 attainment of basic human needs and/or power in SSA states is difficult to achieve because "it involves difficult choices for and considerable resistance from both internal and external forces" (Shaw, 1982:4). With respect to external problems, Shaw contended that the underdevelopment of SSA states and the inability of SSA states to sustain themselves with food is a result of their incorporation into the world system. According to Shaw (1982): Africa’s involvement in the international division of labor means that it produces primary products for exports and imports basic commodities (p. 4) . . . continued incorporation within the world system had led to neither growth nor redistribution for the majority of Africa's states and people (Shaw, 1982:7). Regarding the internal problems, Shaw also noted (p. 2) that, Africa "cannot yet determine its present role or direction of development, let alone its future progress" or path while Were (I983:6) contends that, "Africa has been independent long enough to be judged in her own right by her own performance." Poor leadership, dishonest officials, lack of social discipline, corruption, economic mismanagement, and exploitation of public responsibilities for individual gain are the contributing reasons for the underdevelopment of SSA states (Were, 1983: Myrdal, 1972). According to Were (1983): 26 . . . Africa leadership is a major, perhaps the principal, contributory factor for independent Africa socioeconomic backwardness in the period since independence. In this particular respect, there is no visible distinction between the socialist and capitalist African system (Were. 1983:6). ' As noted by Myrdal (1972), the underdeveloped countries perceived as "soft states" have: Deficiencies in their legislation, providing loopholes, and in particular, in law observance and enforcement leading to widespread arbitrariness. Public officials on all levels disregard rules and directives which they should follow. Often they act in collusion with powerful persons and groups of persons whose conduct they should negate (Myrdal, 1972:116). All these deficiencies contribute to a weak development effort. Theories Associated with_Models of Development of SSA States Several models and theories have been associated with the development of SSA states and Kassam and Mustafa (1982) identified three such theories: (1) the Underdevelopment School of Theorists (UST): (2) the Neo-Classical Economic Theories (NET); and (3) the Socialist Theories (ST) to which can be added (4) the Mixed-Economic Theories (MET). l. The Underdevelopment School of Theorists (UST) The tenets of UST assumes that underdeveloped countries should plan for development, that indeed they should be helped to succeed by the developed countries; and that if 27 aid is realistic, developed countries should cheaply provide underdeveloped countries with technical assistance and capital with low (below 3%) interest rates (Myrdal, 1972:76- 79). Viewed from a different perspective, the UST focuses on the "center and periphery" theory and is based on the principle of comparative advantage and dependency (Fransman, 1982: Shaw, 1982). According to the Opinion held by this author and other writers like Shaw (1982), and Oni and Onimode (1975), the inability to set up a capital goods manufacturing industrial base in SSA states is because of: a. The monopoly of technology held by the giant transnational corporations: b. The provision of "package-deal" technology, based on the transplantation of capital intensive plants and management contracts rather than technological "know-how." c. Unequal terms of trade and the associated foreign exchange deficit and/or exploitation stemming from the incorporation of SSA states into the world economic system to function as cheap primary commodities producers in exchange for expensive finished commodities from the developed world. The development literature on SSA states is replete with claims of dependency as the culprit of the 28 underdevelopment of SSA states. It is argued that dependency based on import substitution industrialization is what is preventing SSA states from accumulating the necessary capital and technological "know—how" to achieve the take-off into sustained capitalist development (Shaw, 1982). According to opponents of import substitution industrialization of SSA states: Import substitution industries has led to a growing dependence on a largely imported capital intensive technology and has thus not created extensive employment opportunities or indigenous technological development: the process’has been heavily dependent on foreign capital and has emphasized the establishment of consumer goods industries at the expense of investment on capital goods industries; it has led to what many would regard as an undersirable redistribution of Income; and in general it has failed to generate a sustained process of economic growth (Fransman. 1982:91. * As a result, several writers, for example, Oni and Onimode (1975), have, in light with UST, proposed that: The only way out is for third world countries to disengage from the world capitalist system and to opt for self—centered socialist development (Kassam 8 Mustafa, 1982:17). Proponents of import substitution industrialization argue that without import substitution industrialization, SSA states would not have been able to attain their present level of industrialization and that capital accumulation 29 cannot be understood by an examination of dependency alone but must include a look at the structure of indigenous social classes, production forces, and indigenous class power based on the accumulation of capital achieved prior to and after independence (Fransman, 1982:5—8). In essence, while the proponents of UST opt for import substitution industrialization (ISI), opponents of UST define development in terms of self-autonomy, self-reliance, self-determinism. or self—centered economy. The position held by the proponents of UST is that, unless checked, the predatory character of indigenous social class, i.e. the elitist group, vis-a-vis the periphery or the poor in SSA states, is also exploitative. 2. Neo—Classical Economic Theories_(NET) The theories of the neo—classical eConomic growth ideology were inherited from the west by SSA states at least during the early stage of independence. The approach to the development of Nigeria, up through the early 19705 was patterned after the neo-classical economic model. This model was based on economic growth first and equity second (Groe, 1984). Using this model, disparity was thought to provide incentives for hard work and competition and economic growth was seen as the basic strategy for bringing about the development of Nigeria. Hence, heavy, capital- intensive import substitution industrialization and 30 sophisticated technologies stemming from the industrial revolution of Euro-America were seen as a primary rationale for the socioeconomic development of Nigeria (Eziakor. 1983). This approach is referred to by Baltran (1974:11) as the "classical materialistic" model of national development: while Kassam and Mustafa (1982:13-19) refer to the group of theories using this approach as the "orthodox bourgeois economic theories (OBET)" and summarize the main theories of development according to OBET as comprising the allocation of scarce resources based on the laws of supply and demand, and private ownership of property (laissez—faire or free play of market forces). Under the OBET: the theory of growth views the ratio between savings and investment (capital accumulation and expenditure) as determinants: the factors of production (land, labor, capital, technology) establishes the objective conditions for the generation of income and profit: and injection of capital (external loans in the case of SSA states' investment) is required to bring about development. The principal drawbacks of the neo—classical economic growth model as argued from the perspective of SSA states, and include: a. The duality of the economy, that is, the rich vis— a-vis the poor as a result of distributional inequity emanating from the continuous 31 accumulation of wealth at the center, rather than a "trickle down" effect: and b. The spiralling interest rates and debt burdens constituting capital outflows at the end of the economic cycle instead of profit to be reinvested to expand the economy (Kassam 8 Mustafa, 1982). The principal advantages of the neo-classical model are: (1) rapid growth in GNP: (2) hidden incentives resulting from private ownership of the factors of production; and (3) quantitative empiricism or well- developed empirically verifiable theories. In the SSA states. prior to independence and during the early independence periods, it was believed that the industrialization of SSA states could be brought about through the infusion of public expenditure bolstered by foreign aid for use in constructing ‘the physical infrastructure or foundation for industrial "take off," and distributional equity (Ruddle & Rondinelli, 1983:7). Foreign loans and the export of natural resources were relied on to generate a flow of foreign capital needed for investment in the industrial sector (Ruddle & Rondinelli, 1983:7) but the role of external loans in the promotion of the industrial "take off" of developing countries has been criticized and often viewed with mixed feeling in the literature. It is argued, for example. that although foreign loans help to increase agricultural production and 32 social services in developing countries and viewed positively, they are also associated with wide income disparities since funds often go into projects that benefit the rich rather than the poor (Myrdal, 1972:98—127). According to Ruddle and Rondinelli (1983:10), "studies have found that foreign aid in the form of loans had little direct impact on increasing the levels of GNP in less developed countries" and foreign loans, especially loans tied to the procurement of the goods of the donors, prevent the recipients from developing their local technological capability (Fransman, I982). Tied loans often prevent the governments of developing countries from using the funds for high—priority needs‘ such as investing in a local capital goods manufacturing industrial base (Oni 8 Onimode, 1975). The lack of industrial "take off" in SSA states can also be attributed to the onerous debt associated with tied loans and loans with high interest rates. The debt prevents capital formation for technological breakthrough and industrial "take-off" and for these reasons, during the 19805, many developing countries, such as Nigeria, started to de—emphasize the outward-looking approach, based on foreign loans, as an important component in their development process (Shaw, 1982). For example, while supporting the concept of foreign aid, Friedman (In Bienen and Diejomoah, 1981:10) challenged the proposition that foreign source of capital (loans) was the key to economic 33 development. Economic deveIOpment, he contended, "is. a process of changing old ways of doing things, of venturing into the unknown, or taking risk" (Bienen 8 Diejomoah. 1981). Leaders like Nyerere (1979) of Tanzania have also argued that emphasis in the development of developing countries should be redirected at acquiring local technological capability rather than on acquiring money. In essence, the preoccupation of governments of SSA states should be with acquiring technical assistance to promote the acquisition of local technological capability. The importance of foreign loans in the development process has been seriously questioned by Olaloku (1979) who states that recent studies of growth and distributional equity of industries have greatly removed emphasis from physical (loans) capital while giving pre-eminence to human capital. In the same vein, the belief here is that investment in human capital should be considered a sine qua non to the development of the manufacturing sector of developing countries. Evidently, Nigeria has not come to grips with this notion because it continues to emphasize heavy, capital—intensive import substitution industrialization. and the importation of heavy, capital- intensive and sophisticated machines. These are accorded precedence despite the differences in technological, economic, social and political problems associated with such 34 technologies and between developing countries and the industrialized countries. The explanation of these problems centers on the fact that after independence it was believed that the outward- looking approach (misconstrued as an inward-looking approach among SSA states) was thought to promote economic growth and modernize developing countries (Ruddle 8 Rondinelli, 1983). or that developing countries could develop by transplanting the industries of the industrialized world into their countries (Rogers, 1976; Seer, 1977) without knowledge of the technology. In developing countries attention was not given to the deveIOpment of local technological skills, local capital goods manufacturing industries, research, administrative and workers organizations, leadership, and distributional equity. Planners simply believed that deveIOping countries could be developed by transplanting heavy, capital—intensive technology from the industrialized countries to developing countries, and/or that the benefits of economic growth would trickle-down to the masses through automatic market mechanisms (Ruddle 8 Rondinelli, 1983: Gore, 1984: Myrdal, 1957: Hirschman, 1966). The approach to development in SSA states focused on heavy investment in capital-intensive manufacturing industries and growth centers to increase output and the demand for manufactured industrial goods. Among the 35 proponents of this growth centers approach were Perroux’s (I955) propulsive growth centers, Hirschman’s (I958) polarization and trickling down effects, Friedman’s (1966) core and periphery model, and Myrdal's (1957) backwash and spread effects. According to Abiodum (1981), Perroux contends that growth does not appear everywhere at the same time, but it 'becomes manifest at sectors and poles of growth with varying intensity and spreads to different channels with variable terminal effects on the whole of the economy. While Hirschman (1958). on the other hand, holds that disequilibrium is concomitant with growth itself, Kuznets (1966) maintains that polarization is a characteristic of early stages of development. During the earlier periods after indepedence, less conCern was devoted to distributional equity since the mechanism to ispread economic growth was thoOght to be automatic and as industrial output grew. it was asserted that: It would generate more employment and high income which in turn would raise the level of demand for both agricultural and industrial goods, increase savings, allow for expanded capital formation, and generate new investment (Ruddle 8 Rondinelli, 1983:7). The focus on economic growth assumed that the distributional equality would naturally follow, so economic 36 growth and the trickle—down theory dominated the economic scene of SSA states during this period (Rogers, 1976). During the latter half of the 19605, it became increasingly clear that the economic growth and- trickle-down theory resulted in (1) a backwash effect or in the concentration of income in the hands of a few elite groups; (2) a lack of local technological capability; and (3) the lack of capital goods on a manufacturing basis. The Civil War in Nigeria (from 1967 to 1970) was a direct result of the failure of the approach to equitably distribute the nation’s resources among the regions of the country and to bring about development. Mabogunje (1981) notes that the war was fomented by various concerns related to ethnic dominance, inequality in the political arena, and distribution of the national wealth. The flaws in this approach are reflected in its failure to bring about the development of SSA states. Basically, the neo-classical approach to development is based on heavy import substitution industrialization and the associated dependence on foreign goods and loans to finance projects: discourages local efforts to raise development funds: and to promote local manpower development, industries, technological know—how and breakthroughs and research (Fransman, I982). 37 3. The Socialist Theories (ST) During the latter half of the 19705. some aspects of Marxian socialist doctrines associated with equitable distribution of resource (income, indUstries, etc.), began to gain recognition in Nigeria. The reasons for this resulted from the failure of: The early (neo-classical economic growth) model of development to generate the expected increases in rate of growth and development of many SSA states. It was also observed that rather then bridge the gap between the rich and the poor, this model of development appeared to ignore the equity concerns associated with growth and development . . . . Even where there were recorded increases in GDP, there were no observable improvement in the welfare and livelihood of the poor majority in newly independent SSA states (Eziakor. 1983:18). The early emphasis of development in Nigeria centered on: (1) heavy, import substitution industrialization, and (2) the nee-classical (economic growth; then distribution) approach to development. Later the approach shifted to include Marxian Socialist (distribution and economic growth) approach to development, but the system has always been a mixed-economy (both public and private ownership of the factors of production). As noted by Rogers (1976), and Ruddle and Rondinelli (1983), throughout the late 19705. a dominant paradigm (neo- classical economic growth theories associated with quantitative empiricism) grew out of the industrial 38 revolution of Europe and the United States and ruled intellectual definitions and discussion of development, guided national development planning, programming, and budgeting in SSA states: this paradigm focused on economic growth or growth in the G.D.P. After independence, some SSA states (for example, Tanzania) adopted the socialist approach to development centered also on "modern" import, substitution industrialization. The term "modern" is used here to distinguish foreign induced industries from the traditional industries and production techniques since modern industries are usually very sophisticated and heavily capital intensive, import substitution industries. The idea of import substitution industrialization in SSA states is very recent starting during the 19405, after the end of the Second World War. During this period, parent industries overseas sought new markets and profits and decided to locate raw material processing industries near sources of cheap labor and raw materials to save labor and transportation costs. Industrial plants (machines, equipment, and tools in their finished form), contractors, and expatriates were transported into SSA states to perform these operations. This type of "project transplantation" misconstrued as "technological transfer" was welcomed by SSA states, without questioning its drawbacks since it appeared to offer the SSA 39 states: (1) the opportunity to manufacture locally, hitherto, imported goods, (2) the allusion of industrialization, and (3) a means for improving foreign exchange deficits. However, the built-in dependency on capital goods, machines and parts, loans, and intermediate raw materials from abroad gave rise to huge foreign exchange deficits (Progress Report, Second and Third National Development Plan, 1970—80) and, in addition, the citizens were unfamiliar with the technology. the management, or the operation of machinery associated with the technology. For example, some of the machinery associated with the efficient and effective operation of the technology requires: partnerships, large corporations, assembly lines with mass production, advertising, large markets, non-frugality, mass consumption, profits, investment and reinvestment, loans, stable interest rates, growth and expansion, research, applied sciences and technology, etc. The majority of these concepts are foreign to the average Nigerian, (or for that matter, the average citizen) in most of the SSA states. For example: in Table 2.1, partnerships are shown to be the lowest form of ownership (8.2%) in Nigeria, far below sole ownership (20.6%), and government ownership of firms (71.2%). 40 Table 2.1. Distribution of firms in Nigeria by forms of ownership. Ownership Form Number Percent Private sole proprietors 158 20.6 Private partnership 63 8.2 Government 566 71.2 Total 766 100.0 Source: Adapted from Teriba et al. (1981:87) from the Federal Office of Statistics, 1979. In the 19705, an alternative paradigm (stemming from Marxian socialism theories) began to dominate the development of SSA states (Rogers, 1976): now the concern in. alternative development approaches were focused onf the elimination of poverty, inequity, unemployment, and meeting basic human needs. The primary reason for seeking an alternative development approach was due to the fact that the "old" approach promoted only economic growth and not distributional equity which was also seen as an important component of development. Bryant and White (1982) note that, no matter how developed an economy is, if only a small segment of the population benefits from development, the country is not developed. 41 The distinguishing features and doctrines underlying ST are: (1) public ownership and control of the factors of production: (2) the reduction in class struggle and fierce competition: and (3) egalitarian society or distributional equity. However, the ideologies of ST are utopian, given the presence of a ruling class, and given that by their nature they constitute drawbacks inherent in disincentive to work hard in government enterprises. In Nigeria, by the beginning of the 19705 following the Civil War, the emphasis on the outward-looking approach, based on heavy, import substitution indutrailization was not having the expected wide-ranging effects on the levels and conditions of living of the majority of the regions and ethnic groups (Mabogunje, 1981). The creation of states in Nigeria (12 states in 1967, 7 In 1975, and 2 more in 1987) was seen as an avenue for equalizing and promoting rapid and equitable development throughout the country. As Onyejekwe (1981) noted, the creation of semi-autonomous states in Nigeria was encouraged to reduce the hegemony of the stronger and wealthier majority groups and regions and their domination of parliament seats vis-a-vis minority backward groups and regions. The question of industrial distribution also became an issue of concern and for this reasons the architects of development planning and policy making began to pursue 42 strategies of both economic growth and distributional equity through fiscal budget allocation to regions. Ruddle and Rondinelli (1983) note a dissatisfaction with the pace and direction of economic growth and the severe problems of social inequity led planners to re-examine strategies that emphasized: captial-intensive development and the export of primary products: and to seek alternative development approach based on equitable distribution of resources. Mabogunje (1977) argues that the question of justice cannot be considered or resolved independently of the prevailing mechanisms governing productivity and distribution. Samonte (1979) argues that any development strategy that is not based on this notion and conceptual framework is sure to be self-defeating and if resources are distributed equitably in a country and augmented with an appropriate mix of educational opportunities-—re5earch, local technical skills and access to the means of production--an investment in the poor can produce benefits in the form of higher productivity and self-reliance. According to Mabogunje (1977), in order to have enough of the national "cake" (GDP) to share, one must also be concerned with how to bake the cake. This points to the dual importance of economic growth and distributional equity which is linked to indigenous technological capacity and investment capital. 43 Fortunately, the availability of investment capital did not pose a problem in Nigeria during the 19705 because of the oil boom which shifted the emphasis from agricultural exports to crude oil exports. Money from this boom was used to invest in import substitution industries (Third National Development Plan, 1975), although (as argued in chapter five, pages 136-139), investment in local research and indigenous technological development was neglected. Apparently, the realization and recognition of the importance of local research and technology in improving industrial output, and self—reliance has eluded Nigeria. 4. Mixed-Economic Theories (MET) MET is comprehensive in the sense that it incorporates all three groups of theories previously discussed, given the underdevelopment of SSA states: the nature of their ownership of the factors of production (both private and public): and that MET welcomes planning as an enlightened approach to facilitating development. MET favors economic growth, social justice, the decentralization of the P.D.A., the democratic participation of citizens to promote development, provision of basic human needs, the undertaking of integrated regional and community development, animation rurale, self-reliance, and self—determinism. Presently, the economic environment in SSA states is basically a mixed economy and this is true even in socialist 44 African states which tolerate some form of private ownership of the factors of production. This treatise advocates a mixed economy reasoning that while the neo—classical economic growth theories are important, development should also embrace the Marxian socialist theories. The center of development must be on acquiring leverage for the poor, through the location and re-allocation of the nation's wealth, and the decentralization of public development administrative power to the local polity. Nti (1978:21) notes that rather than delegate duties, quite often senior administrators in Nigeria are saddled with development tasks that might be conveniently performed at the lower level. According to Slater (1975), real development is recorded in countries that have been able to decentralize their economy. The Necessity_for P.D.A. Involvement to Facilitate the Development of SSA States It is evident from Table 2.1 (page 40) that the majority of the modern manufacturing firms in Nigeria (over 70%) are government firms. As a result of low partnership in the private sector of Nigeria, this sector is dominated by small, family-size firms with minimal investments or profits to reinvest. Under these conditions, it is difficult to invest in research to achieve technological breakthroughs and large scale projects or to expand. 45 The Reasons for P.D.A. Involvement to Facilitate the Development of SSA States There are several reasons for the large proportion of government ownership of enterprises in Nigeria. Some of the reasons are related to: the low capital formation in the private sector, lack of know—how, risk aversion, illiteracy, and lack of capital in the private sector (Progress Report, Second and Third National Development Plans, Nigeria, 1970— 80). It is my opinion that because of low capital formation in the private sector and low literacy rates, the (governments) P.D.A. of SSA states must function as initiators, funders, managers, and/or sellers and renters of industrial projects to private entrepreneurs. This is the crux of technical assistance in an underdeveloped economy with a technologically deficient private sector since, if left alone the private sector cannot start such projects. [Because] development does not just happen but entails some deliberate policies that are sustained by those in power, [government should intervene] . . . . The idea of development stems from the vision of society in terms of planned intervention, which stresses the utilization of knowledge and technology to help solve the problems of society (Christenson 8 Robinson, 1980:5-6). Given the ubiquitous illiteracy, risk aversion, lack of capital, ignorance, and lack of "know-how" among the masses in the private sector of SSA states, it rests on the P.D.A. 46 to induce development (Emezi, 1979: Nti, 1978). In this regard, national development plans become the mechanism through which the governments of SSA states, embarked upon the facilitation of more rapid and equitable development. The formulation and implementation of development plan policies call for the active involvement of the P.D.A., and according to Hirschmann (1958), the best development strategy is for the P.D.A. to set up pressures which elicit and mobilize the larger amount of human and natural resources to influence development: a view ascribed to by many writers concerned with the development of SSA states. The plethora of reasons for the P.D.A. intervention in the development of SSA states are discussed below under the stage of their development, and the poor distributional equity of resources. The Stage of Development_of SSA States Several SSA states are still in the pre-industrial stage of development with: economies predominantly based on agricultural and/or crude mineral exploitation; a majority of their populace is illiterate; markets poorly structured and inefficient. In short, SSA states have yet to be developed. Myrdal (1957) argues that the reliance on the free working of the market or of the private sector alone in backward regions acts against the development of the regions due to several obstacles, such as: a high illiteracy rate; 47 ignorance: a lack of infrastructure: inadequate access to information and communication; the high cost of transporting goods, and other transaction costs: the lack of the free flow of goods; and poverty. The free Operation of the market, (i.e. the free play of the market) works better when the obstacles mentioned above are minimized. The presence of these obstacles in SSA states favor "backwash" effects and inhibit the "spread" effects (Myrdal, 1957), therefore, laisez—faire is not seen as a better alternative for the rapid development of SSA states. Myrdal (1957) asserts that the free play of the market forces in a poor country will work powerfully to create regional inequalities and to widen those which already exist, while preventing regional equilibrium. In line with Myrdal, Friedmann (1966) rejects the view that the invisible hand of the market will ensure the attainment of spatial equilibrium without the P.D.A. involvement. The Poor Distributional Equity of Resources The general development perspective adopted in this study assumes that development cannot be viewed purely in terms of economic terms, economic growth, or concentration of economic activities in urban centers, but must be considered also in the equitable distribution of resources. The question of how equilibrium could be attained continues to remain obscure to economic planners and developers alike. 48 This problem is based on the trade-offs between economic growth and equality: in other words, equality and economic growth are difficult to simultaneously promote. Another dilemma confronting SSA states centers on how to promote the growth of the manufacturing sectors as conduits to socio-economic growth and distribution of resources, when there is a lack of technologically skilled personnel and limited resources in the SSA states. The precarious nature of this situation stems from the fact that resource accumulation (or capital formation) is assumed to be necessary for investment to promote economic growth, but the limited resources in SSA states limits capital formation, especially in the private sector, and pressures the government to increase recurrent and consumption expenditures rather than capital formation. Without government intervention, it is difficult to envision the development of SSA states and efforts undertaken by the SSA states to resolve the situation have focused on direct government intervention. Several writers support direct government intervention as an appropriate strategy for promoting local manpower development, self- reliance, growth in manufacturing, and equitable distribution of profit from the growth. According to Odufalu (1983): 49 In order to bring about some social optimum, there is a strong economic justification for government to intervene in the economy either through regulation, controls, taxes, and subsidies and/or direct public consumption and investment expenditures (in Bienen 8 Diejomaoh, 1981:455). Abiodum (1980) assert, for example, "that regional inequality in the level of both social and economic activities tend to persist unless deliberate efforts are made by P.D.A. to reverse the trend" (Abiodum, 1980:114) because wealth frequently fails to "trickle down" on its own, (as a result of either sheer greed, economy of scale and/or other flaws [monopoly, profit motives, etc.]) in an unregulated market, this calls for intervention by the P.D.A. to regulate these anomalies and facilitate development. The question is: What is the role of the P.D.A. or to what extent has the P.D.A. of Nigeria succeeded in achieving the development policy objectives stipulated in Nigerian national development plans? To provide a better understanding of the role of the P.D.A. in facilitating the development of SSA states such as Nigeria. each term is defined separately. 50 A_Theoretical Definition and_Conceptual Clarification of the Concept "P.D.A." and the Role_of_P.D.A._in_Facilitating the Development of SSA States Public: The term "public", as used in this study, is synonymous with government, a political organization, institution, a body of high ranking officials administering the affairs of a nation or a political unit. The word "government" is derived from the Latin word meaning "to steer" (1drissa, 1982) implying that the national government officials are entrusted with the power and authority to steer (or plan) the course of the country. The organizational or institutional organization of governments include: a legislature which makes laws; the executive which enforce and administer laws; and the judiciary which interpret the laws by deciding cases and controversies. The functions of the executive branch of governments of SSA states evolved from regulatory functions (maintaining law and order, promoting justice, providing defense, and ensuring the welfare of citizens) to include the functions associated with development. The P.D.A. must respond to increased citizens' demands for social services and manufactured goods. As an institution, a government has set rules and an established administrative structure. The branch of the government responsible for development is commonly referred to as a "development administration" to 51 distinguish it from a public administration. To provide a better perspective of "development administration," a conceptual clarification and definition of the terms is in order. Development: Ideally, development is a progressive and dynamic process fluctuating according to what is needed, what is possible, what is expected, what is desired, and what is feasible at a particular time. Development is also a subjective and relative term meaning that the term has many meanings, is normative, and is based on value judgement. For example, development is a term commonly used loosely and synonymously with modernization, economic growth, and industrialization but, in fact, development involves all of the above and more. In development, modernization is an accelerated tempo of change in a society which previously was economically stagnant and socially tradition-bound. Development involves not only economic change, but social change: fundamental attitudinal changes; changes in perceptions, and the expectations of the target of the change. The word development is used both as an adjective and a noun. As an adjective: development administration and developing countries: and when used as a noun, development takes another form, such as: industrial development, 52 community development, rural development, economic development. resource development, regional development, and national development. These uses complicate the task of defining development, since all u5es mean something different. For example, administrative development might mean the creation or reconstitution of an administrative system, while socioeconomic development is a change in the condition of people in a given region (Gant, 1979). As a result of the normative nature of the term "development," it is difficult to specify a general definition of development. Development has been defined as a series of stages by which a given people progress from a lower to a higher level of human development as quickly and cheaply as possible (1drissa, 1982:10). Or: Development involves progression, movement, and advancement toward something better. It is improvement in the material and non-material aspects of life . . . . It involves action, reaction, productive work at the community level, the creation or strengthening of the necessary foundation for higher changes in the economy; investment in social services. science and technological acquisition, mobilization and involvement of citizens, and the creation of administrative organization capable of attaining development policies (Emezi, 1979:1-10). Both definitions leave room for interpretation. In fact, development can only be defined on the basis of a particular purpose and an objective function, although the 53 concept "development" is usually used in the social sciences with minimal definition to provide an understanding of the context under which it is used. The same vagueness and problems ocCur in the indicators used to measure development. The national per capita income and GNP are frequently used to determine the relative levels of development among countries, but the GNP does not depict the living conditions of the poor masses, nor does it depict their needs or production problems. Some writers (e.g. Myrdal, 1972), have observed that economic growth alone does not constitute development and Nigeria is a case in point, with massive unemployment, malnutrition, sickness. illiteracy, ethnic group friction. political instability, and other social problems and tensions in the presence of rising GDP from oil. Eziakor (1983) observes that, even in the Ppresence of rising trends of GNP and per capita income, the welfare and quality of life of the masses may continue to deteriorate. According to Maboqunje (1979), the concept of development is ambiguous and in the literature, he continued, the primary role of economic forces in bringing about the development of a society has often been taken as axiomatic, so that development and economic development have come to be regarded as synonymous, although the development concept is a far more complex issue than its oxiomatic definition. To understand the concept of development 54 requires an indepth study of all the associated ramifications. The definition of development can be envisaged as relative, as economic growth, as social growth, as political growth, or as a process. In the relative sense, e.g., socio-economic development entails comparing demographic statistics (Smith, 1979), such as death rates, infant mortality, per capita income, employment and levels of unemployment, income distribution, etc., between social groupings within or between nations. According to Gant (1979:7), "the relative condition of development is comparative and ever changing." This means that development process is continuing in both the developed and developing countries (Estman, 1974). The difference is in the degree of development pace. For example, development may be slow if it is not based on solid lgggl technology. In terms of relativity, the pace of development of SSA states vis—a—vis developed countries is so insignificant in many SSA states and declining in others that it has been referred to as a crisis by Shaw (1982): World Bank, (1981). This calls for a reassessment of P.D.A. strategies and a recommendation of new strategies to facilitate the development process of SSA states. Administration: The term administration means to direct, care for, and manage the affairs of people (Avasthi 8 Mahashwari, l966:4). 55 It might be of interest to distinguish between Public Administration (P.A.) and P.D.A.: two separate but related concepts. According to Bryant and White (1982), P.D.A. differs from its parent field P.A. in that the P.D.A. is set aside exclusively to facilitate development. Unlike P.A. whose primary function is nation building, the primary function of P.D.A. is development. This requires special skills, approaches and knowledge to perform development tasks, provide extension services, and implement development plans and projects. The concept of the P.D.A. came into being in the 19505 to represent those aspects of the P.A. and those changes in P.A. which were needed to carry out the policies, projects, and programs to improve social and economic conditions (Gant, 1979). External funding agencies insisted on dealing with a well structured and organized development administrative system of the recipient countries. As the functions of P.A. shifted from maintaining law and order, and collecting taxes, to development plans (four, five, etc. year development plans), and projects implementation, it was necessary to adjust the P.A. bureaucracy to include development functions (Nti, 1978). To effectively handle these new functions, the concept "P.D.A." came into existence. A distinction is made between the P.D.A. and the P.A. based on their differing functions and purposes. The 56 functions of the P.D.A. include: specific policies relating to the development of programs and projects; specific development goals and objectives; specific skills, approaches, knowledge, and creativity: effective and efficient programs: extension services; appropriate technology, research, planning, training, reforms, tax revenue collection, etc. The functions of P.A., however, include: foreign and national policies and particularly the coordination of local agencies, such as ministries. Basically, the purpose of P.D.A. centers on integrated development; while P.A. centers on building the institutions of P.D.A. (Blase, 1973). Institution building refers to the process of developing new agencies or organizations (such as P.D.A.) or reconstituting existing (P.D.A.) organizations, fully equipped to carry out development programs. The role of the P.D.A. in facilitating the development of SSA states can. therefore, be viewed from the perspective of its: (1) functions, and (2) structure. The new or reconstituted P.D.A. should be structurally and functionally designed to perform planning, programming, budgeting, leadership, guidance, and coordination of development processes (Nti, I978; Blase. 1973). 57 I. The Functions_of_the_P.D.A. A review of various functions of P.D.A. centers on integrated development. Integrated development has been defined and/or perceived by Strehten (1977), Samonte (1977), Idrissa (1982). and others as being composed of: - Diversified programs and projects; — Involvement by both government and the private sector: - Aiding people's awareness and adoption of improved appropriate technology: - Increasing the employment, productivity, and income opportunities; - The active participation of citizens in the social, political and economic life of the nation: - The collective actions (work) of individuals: - A well-structured, organized, and decentralized P.D.A. cadre: - A strong administrative commitment to support and promote politically the education, health, industrial complex. increase employment Opportunities: and assure equity in the distribution of wealth; - Efficient acquisition and delivery system to alleviate poverty: - Development of problem-solving approach involving the concerned population in the process of decision making: - The liberation of the spirit and energy of the local populace so they can realize their full potential to 58 develop, organize, and govern themselves. and control their affairs to attain a higher quality of life; - The mobilization of human and material resources; and — The provision of a minimum standard of living, which includes the provision of a profitable employment opportunity, nutrition, health, education, clean water, transportation, electricity, roads, sewage, and simple household goods. The non—material basic needs include: the encouragement of grass roots citizens to participate in decision making and development duties, self—help in identifying development programs and self- reliance. The relevance of P.D.A. in SSA states cannot be overemphasized since it is through the P.D.A. that the government carries out its development policies. P.D.A. is designed, therefore to carry out development programs, and not just to enforce or to implement laws, rules, and regulations. The rational is that in SSA states, the P.D.A. is responsible for initiating and stimulating development even in the private sector (Eaton, 1972:21-34). These responsibilities must be based on an acceptable pattern of purpose which implies acceptable development policies by citizens. These policies involve citizen participation in the process of plan formulation and implementation: a bottom-up approach with citizens' control 59 rather than a top—down approach with the supervision and directing approach. 2. The Structure of the P.D.A. The structure of the P.D.A. is equally important in facilitating the development of SSA states and it might be of interest to treat the subject briefly here. Nti (1978:26) notes that decentralization of the P.D.A. can ensure improvement in action, accountability, and management of development processes. This decentralization, he continues, can also check the abuses of power which are facilitated by the over-centralization of power by deveIOping a pluralistic society. Decentralization of the P.D.A. facilitates the local participation in the preparation and implementation of development plan policies, and thus ensures a better distribution of a nation's resources. The key phrase is "action," and "organized action" implying that the structural organization and functions of the P.D.A. of Nigeria must be designed to carry out development tasks. To effectively accomplish development, the structure of the P.D.A. must be decentralized rather than centralized and each level of the decentralization must be charged with planning, programming, budgeting and financing of programs with a minimum of reliance on external resources (Gant, I979). 60 The strategy adopted to facilitate the development of most SSA states has focused on centralized development planning and administration (Emezi, 1979). A5 Emezi (1977:10) notes: [There is] overcentralization of authority, powers, equipment, and stores at headquarters located some 50—100 miles or more away from rural communities being served. Planning incorporates programming and budgeting (Axinn, 1978), or the allocation of new investments into the development of local manpower (technological capacity) and planned programs, according to stipulated criteria or development policy objectives. According to Nti (1978:20), planning is a two-way process, with the bottom feeding the top and the top deciding the priority. In line with writers like Axinn (1978) and Nti (1978), it can be argued that effective planning involves: recognition of the need for action; investigation and analysis; proposals for action, decision- making and resource allocation consistent with the planning decision. The extent to which the goals of any development program will be achieved tends to be directly related to the extent to which various social, economic, and cultural factors are taken into consideration in planning programs: this has not been the case in Nigeria. 61 The Origin and Case of Planning in Nigeria The concept of planned development was unheard of in Nigeria until the mid—19405 when the acceptance of public responsibility for economic development in Nigeria emerged from a ten-year development plan (1946—56 extended to 1962) and a development grant proposed by Britain toward the end of its colonialism to prepare Nigeria for self-government (Rimmer, in Bienen 8 Diejomaoh, 1981). The grant was based on an extension of a new philosophy with the sole objective of establishing alliance after independence. The terms of the grant were seen in Nigeria as an opportunity to: mobilize its assets; develop the country's infrastructure; develop the private sector; promote secondary industries; organize internal markets; and regulate production to stabilize prices (earnings) from export commodities (Ten Year Development Plan, 1946). 4 The ten-year plan (with a budget of 50 million pounds) was to be financed partly by grants from the colonial development and welfare funds and partly by revenues (about 78%) raised by the Nigerian government (Rimmer, 1981). Planning was the sole responsibility of the federal government but rather than allocate the funds to develop endogenous industries, the funds were allocated to provide social services in major cities, especially Lagos, the federal capital of Nigeria, and to pay the salaries of civil servants (Rimmer, 1981). The plan was revised in 1955 (1955—60 plan extended to 1962) to include regional (West, Midwest. North and East) governments but the development merely shifted from the federal capital of Lagos to regional capitals of Enugu. Ibadan, Benin, Kano, Kaduna and a few port cities like Port Harcourt, Onitsha, Calabar, and Aba. Development planning, to a greater extent, completely neglected the rural areas which produced the bulk of the export cash-crops for the badly needed capital and foreign exchange. The policy objectives of the Plan (1945-62) focused on providing basic social services such as communication, education, health, water supplies and infrastructure in the federal and regional capitals (Federal Republic of Nigeria, Guidelines to the Second National Development Plan (1979—74). The first national development plan (1962—72) following independence was not significantly different from the pre— independent plans (1945-60) and was primarily focused on the allocation of funds to ministries to pay salaries, to provide social services in urban areas, to purchase foreign machines and tools, and to hire foreign expatriates. The preoccupation of the government was to promote economic growth through: savings, foreign exchange receipts, monetary expansion, trade, and public spending (Rimmer, 1981). Allocation focused on the funds allocated for government functions and consumption expenditures and the planning during this period was basically centralized and 63 centered on promoting economic growth (Emezi, 1979). This strategy involved heavy allocation to capital intensive projects, the dependence on finished products imported from abroad, and the neglect of local technology and research. The focus continued to be a rapid increase in the productivity of the industrial sector as a conduit to rapid economic growth (Stolper, 1966). Industrialization was perceived as the panacea to bring about rapid socio—economic and industrial development and targets were centered on surpassing the hitherto, dismally low average economic growth rate of four percent (Federal Government Development Programs, 1962). It was realized that only through a high growth rate in the economy would it be possible to raise the country's average level of living, to increase employment, and to improve education and health standards. The "question of how to increase production was not perceived to be factually separate from the questions of who was to benefit; the stakes were too high" (Rimmer, 1981). During this period, planning was based on foreign loans, as a means of financing economic progress (Ruddle 8 Rondinelli, 1983) and the country's development was charged to government agencies such as the National Economic Planning Board, the marketing boards, the regional production development boards, loan development boards, and other similar bodies and corporations (Revised Plan, 1955). 64 Colonial grants were a source of funds for internal loans, furnished partly by surpluses from the sale of export raw materials. As observed by Rimmer (1981), marketing board revenues increased from 14.2 million pounds in 1946-47 to 81.3 million pounds in 1957-58, and out of the 81.3 million pounds raised between 1957-58, more than sixty-two percent was contributed by export and import duties, products sales tax charged on agricultural export crops, mining royalties from tin, coal, columbite, corporate profits tax, and other export trade. This trend continued until the oil era in the 19705. To control resources and income, and wield power, (Bates, 1981:4-6), the National Economic Planning Committee (N.E.P.C.), (an integral part of the P.D.A. of Nigeria), was heavily centralized and politicized (Emezi, 1979) and the federal government was entrusted with absolute power over strategic national resources, specifically oil exploitation and other revenue sources such as import taxes. in order to harness the development processes (Rimmer, 1981). In addition, the separation of development planning and politics was difficult "because development was understood to be the main business of government" (Rimmer, 1981). Following the end of the civil war (1967—70), the Second National Development Plan (1970—74) was instituted with the primary objective to reconstruct and rehabilitate the ruined areas. At the beginning of the plan, the 65 resources available for development in Nigeria suddenly and unexpectedly increased as a result of increased oil extraction and higher oil prices (Rimmer, 1981). Approximately a two-fold increase in oil prices, as shown in Table 2.2, contributed over 90% of the total annual export value to the GNP of Nigeria and on the average, over 80% of the total revenue was obtained from petroleum profit tax, and mining royalties (Rimmer, 1981). With this newly found oil wealth, the emphasis of the Third Plan (1975—80). shifted from agricultural production to oil exploration and ambitious projects. Given the huge oil wealth, bold development policy objectives were sought, and for the first time in Nigeria, finances did not constitute an obstacle to development: the only obstacle now was executive capacity. Rimmer (1981) notes, the Third Plan (1975—80) was very ambitious, large, and more comprehensive with a total investment (published in September 1974) envisaged to be N 10.7 billion with N 4.3 billion of this to come from the public sector. By 1975, the plan projected a total investment at N 30 billion, of which the share of the public sector, after allowing for slippage (resulting from shortage of executive capacity) would be N 20 billion or two—thirds of the total investment. The planned budget was revised in 1976 to N 26 (Guideline for the Third Plan, 1975—80). This magnification and 66 Table 2.2 Contribution of oil export to GNP and to balance of payments (1966—76): Oil companies payments to the Nigerian government. As 1 of Values Year Nillion ' of all Exports 1966' 86.0 46.7 1970' 253.2 49.6 1975' 5,192.9 96.8 Source: “Central Bank of Nigeria, Annual Reports, in Bienen & Diejomaoh, 1981. amplification of ambition during the oil boom was described as "euphoria" by Schalz in 1977. Flaws in planning usually prevent the implementation of good policy objectives formulated in development plans and the Third National Plan had its share. For eXample, one of the policy objectives behind the Third National Plan was to use the oil revenue to develop the productive capacity of the economy and thus to achieve self-sustaining growth in the shortest possible time (Guidelines to Fourth National Development Plan, 1981-85). To achieve this growth at the earliest possible time, the oil revenue was used to purchase gigantic machines, viz., sophisticated, capital intensive industrial machinery and to hire foreign contractors to carry out projects, such as skyscrapers, hydroelectric power plants, road and ports, and heavy constructions: 67 expenditures inappropriate for the country given the low level of local technology in the country. During the Fourth Development Plan (1981—85), it became clear that a solid development foundation had not been achieved and oil was fast becoming a depleted resource due to the fact the oil money was used to purchase finished products from abroad rather than to establish a strong industrial base locally. According to the Guidelines to the Fourth National Development Plan (1981-85), the tariff rates that existed before 1980 tended to encourage the importation of manufactured goods and to discourage research into manufacturing the goods locally. It was proposed that in the Fourth Plan period, fiscal and monetary policies would be designed to achieve increased production and distributional equity of domestic industry. in summary, the policy objectives (of Nigerian development plans may be classified under: (1) economic growth: (2) equitable distribution of resources: and (3) acquisition of technological capability and industrialization. But what is a policy? The term policy is often used loosely in the literature. The term is commonly associated with prefixes such as institutional policies, government policies, economic policies, industrial policies, agricultural policies, and so forth. This notwithstanding, the term is still very oblique. This term is used in the literature 68 without a concise definition of the context and purpose for which is is used. In judicial parlance, the word policy is used in relation to regulation, laws, rules, and control while in political science, economics, and sociology, the term is used in relation to administration, responsibility, management, organization and behavioral processes. Economics has given special meaning to the term as applied to the school of economics thought, designated as "economic policy." The term "policy" is both a noun (e.g. public policy) and an adjective (e.g. policy analysis, political development) and again, all this makes the search for a precise definition of policy very difficult. Idrissa (1982:13) conceived of political development as: The capability of a political system' to act effectively to mobilize people and to build institutional and democratic framework within which development programs can be conceived, implemented, and evaluated. Public Development Policies (P.D.P.) Webster (1976) defined policy as a principal plan or scheme for doing something. Using Webster's (1969) definition, the P.D.P. may be defined as an organized (definite) course or method of action selected by a government from among alternatives to guide and determine present and future decisions; a specific decision or set of decisions designed to carry out such a chosen course of 69 action; a projected program consisting of desired objective and the means to achieve them. With these definitions in mind, the desired goals and functions of the P.D.A. of Nigeria is to achieve the policy objectives of development stipulated in Nigerian development plans. Public policy and policy analysis may be distinguished as follows: public policy involves decisions directed towards defined goals: goals are measured by performance, therefore, public policy constitutes government decisions directed at solving public problems, and in this regard, policies are equated with action and not symbols. Symbolic policies are policies with no real goals or actions taken to execute them. Frequently development policies are stipulated in Nigeria without a follow-up action to implement them and are labeled in this study as "symbolic policies" and is a call for "policy analysis." Policy analysis: is a tool used to guide, value or evaluate government actions. Policy analysis as defined in the literature is an applied science that uses a multitude of methods from different disciplines to investigate the outcomes of specific government response to problems. It focuses on resolving policy problems, examining the cause and source of the problems, tries to explicate the range of alternatives and recommendations to the problems, and suggest that all actions on the part of the governmental 70 authorities should be measured to assess goal attainment, or to provide value-free analysis for social problems. In summary, P.D.P. (policies) are directed toward achieving development and for a policy to be called a development_policy, it must convey policy objectives directed toward attaining development. The task here, then, is to examine the extent to which the development policy objectives prescribed in the development plans of Nigeria are being met. Contribution of Past Studies and the Present Study to the Subject of Development of the Modern Manufacturing:§ector of Nigeria Contribution of Past Stgdjes In line with past studies, this study examines the structure of the manufacturing sector. Past studies examine modern import substitution manufacturing center on: the structure of manufacturing, and the problems associated with the establishment, growth, concentration, income distribution, and the distribution of the activities of the manufacturing sector. A few examples include: "Problems of Industrial Planning and Management in Nigeria" (Onyemelukwe, I966); "The Establishment of Manufacturing in Nigeria" (Sokolski, I965): "The Wealth of Nigeria" (Stapleton, 1967); "Planning Without Facts" (Stolper, 1966); "The Political Economy of Income Distribution in Nigeria" (Bienen & Diejomoah, 1981): "Nigerian Capitalism" (Schatz, 1977); and 71 "The Structure of Manufacturing Industry in Nigeria" (Teriba et al., 1981). Contribution of the Present Study The nearest study to this one, in the sense that it deals with the impact of public capital expenditure in Nigeria, is by Odufalu (in Bienen 8 Diejomaoh, 1981). Whereas, Odufalu’s study focuses on income distribution, recurring expenditure, employment, and inter-sectoral capital expenditure, this study focuses on the impact of public capital expenditures on growth and distributional equity of the profit in manufacturing. The work by Teriba et al. (1981) focuses on indigenization and the structure of public and private ownership and control of industries in Nigeria, while the work here is on the impact of public capital expenditure on the development of the, manufacturing sector and the functions, and role of the P.D.A. in the development of the manufacturing sector of Nigeria as a conduit for facilitating socio-economic growth. CHAPTER THREE PROCEDURE AND METHODOLOGY The Aim of the Chapter This chapter explores the procedures and methods for evaluating the policy objectives of: (1) growth, and (2) distributional equity of the manufacturing sector of Nigeria. In addition, it examines and reviews the sources of data, the questions evaluated, and the procedures and methodology used to evaluate the questions. The Sources of Data The data utilized in this study were gathered from secondary sources, i.e., from existing official records and previous studies with contributions from: Schatzl (I973); Zartman (I983): Tims (1974): West Africa (August, 1979); Bienen a Diejomoah (1981); First, Second, Third and Fourth National Development Plans and Progress Reports (1945-1985): and Federal Office of Statistics, Annual Abstracts (1970— 73). All industries considered in the above sources were those with more than ten employees found in The Federal Registrar of Industries. Limitations. Limitations of the evaluation in this study stem from general dearth of adequate data in the desired 72 73 form. Several writers, for example, Teriba et al. (1981) expressed discontent concerning the lack of data in Nigeria and/or the way in which the data was gathered. The reasons for the discontent were the fact that data were gathered to accommodate diverse rather than specific interests related to the problems confronting Nigeria. Questions Evaluated The questions posed for evaluation centered on the extent to which the policy objectives of: (1) growth of the manufacturing sector, and (2) the distributional equity of six variables associated with the manufacturing sector were achieved. The machinery for the development of SSA states focuses on planning at the natonal government level for programming, budgeting, expenditure, and distributional equity. Since planning involves the allocation and location of capital expenditures to develop programs/projects, the strategy of development adopted by the national governments of SSA states such as Nigeria have developed a series of four—to— five year national development plans, and planned fiscal budget (consisting of recurring expenditures and capital expenditures) allocations to state and federal governments parastatal. The concern here is with the capital expenditures, i.e., with the impact of public capital expenditure on the growth of the manufacturing sector, and 74 equitable distribution of six variables associated with the modern manufacturing sector of Nigeria. Procedure and Methodology To effectively address the questions posed for the study, they will be reviewed in tandem with the procedure and method for evaluating the first question and sub- question, before dealing with the procedure and method for evaluating the second question posed for the study. The Procedure and Method for Evaluating_the First Question and Sub—Question Posed for the Study Specifically, the first question posed is: To what extent was the policy objective to achieve growth of the manufacturing sector stipulated in the national development plans of Nigeria attained? The key concept evaluated in question one is growth of the manufacturing sector. Operational Definition of Growth Growth (usually expressed as a percent, viz., growth rate) is an increment in form, number, or size from a minimal state to an expanded state of being (e.g. an expansion of the manufacturing sector of SSA states from the processing of primary goods to the production of heavy capital goods, or an increase in value 75 added of the manufacturing sector from, say, 10 units to 20 units is an indication of growth. Comgutation of Growth R§§§_ang:Average Annggl Rates of Change ~ Barclay (1958:28) provides two methods of measuring growth rate and the average annual rate of growth. One method is to find the difference between two figures obtained at two different dates (an absolute number) from which "an annual rate of change during the intervening period (a relative number)" is obtained. The second method is "to reckon the rate of change from the records of individual attributes such as output, GDP, capital formation, etc., as they occur. The technique used here to compute the percentage of total growth rate or average annual growth rate was adapted from Barclay (I958). The percentage of total growth is computed using the formula: F2 r = ( -- -1) x 100 F1 where: fl = the figure at the initial date F2 = the figure at the later date r = "percent change" or "degree of growth." 76 This simple ratio or index can be added and divided by the number of years computed to obtain an average annual percent change. According to Barclay (1958:22-30): The simple ratio of change is fully adequate as an index and no further steps are needed. Particularly, when percentages of change are being compared among several subdivisions of the same [universe] and they are all computed from the same [universe at two or more similar time periods], the ratios are already comparable in this form, and nothing is gained by transforming them. A similar but more convenient formula for computing the average annual percentage rate of change (U.N. Demographic Yearbook, 1978) is provided in Appendix E. Pearson Product Moment Correlation Coefficient To evaluate the impact of public capital expenditure on the value of the manufacturing sector in the GDP of Nigeria, a Pearson Product Moment Correlation was. used. The application of this correlation involves two variables: (a) public capital expenditure, and (b) value of the manufacturing sector to the GDP of Nigeria. (a) Public_Capital Expenditure: as previously mentioned, is part of a planned budget allocation or capital investment in non-consumptive goods, develOpment projects, or income generating investments. (b) Contribution_of_Manufacturing_to_the_GDP_of_Nigeria The GOP is the total production and services of economic activities, in monetary terms, over one year, in a country. 77 ngputation of Pearson Product Moment Correlation Coefficient The formula used in this study to compute Pearson Product Moment Correlation Coefficient is given as: r = Sxy/ Sx Sy where: Sxy = (x-x) (y-§)/n:1 Sx = f: (x - saz/n-I 5y = f z (y - Ynz/n-i A similar alternative but more convenient formula for computing r is as follows: x y - n x y \/ (2x2 — n‘>’<2) (2)/2 - n92) r: This formula is less vulnerable to computatiOnal errors and takes less time (Kenneth 8 Glass, 1978:124). Computed value of r for this study is provided in Appendix A. The Pearson Product Moment Correlation Coefficient (r) is a viable measure of the direction and strength of associations. The direction of the coefficient of association range from -I to +1. Specifically, -1 implies perfect negative or an inverse relationship: i.e., as one measure (public capital expenditure) increases, the other measure (growth or value of manufacturing in GDP) decreases. 78 A coefficient of +1 implied perfect positive correlation, i.e., as one measure increase, the other measure also increases. The strength of association may be tested, for example, using the 95 percent (0( = .05) confidence level. Values of zero indicate no systematic association between the two measures. Intermediate values of r are interpreted in terms of relative magnitudes between +1 and -I. The percentage of the dependent variable explained by the independent variable is represented by r2. The Procedure and Method for Evaluating the Second Question Posed fo:_the Study The question of the impact of public capital expenditure on equitable distribution of six variables associated with the manufacturing sector across the regions of Nigeria is examined here. The assumption is that since public capital expenditure is non-consumptive, it is used to generate products, employment, and income through investments in industrial activities. The question of equitable distribution involves the extent to which the policy objective to achieve equitable distribution of six variables of the manufacturing sector of Nigeria are attained. The key concept evaluated here is distrigutional eguity. 79 Operational_Definition_of_pistributional_Equlty Distribution may be defined as a measure of the degree of spread or shares, while equity involves fairness, or the relative share of things. Two types of equity are identified as: (1) arithmetic equity, and (2) proportional equity. Arithmetic equity means that every individual gets the same share, while proportional equity means that the shares are weighted based on a particular circumstance, i.e., the population of regions, the backwardness of regions, and revenues generated among regions. In actuality, proportional equity is more practical than arithmetic equity and is used to determine the degree of fairness. Distributional justice or equity has received increased attention in recent years in the development literature, and is identified as an important aspect of development and of a civilized society (Bryant & White, 1982). The practice and conceptualization of distributional equity is not without problems, however, for what may be considered just and fair by one group of individuals may be considered unjust and unfair by another group of individuals. The problem is perjorated by the fact that people are naturally different in terms of aspirations, age, sex, geographic location, health, birth rights or inheritance, and so forth. The achievement of distributional equity requires a method of measuring inequality to provide a benchmark for 80 resource redistribution. This is not an easy task because of the intricacies and dilemma associated with the concept of "equity." As noted by Smith (1977): To achieve equality in results may require inequality in resource allocation, whether the objects are people or places. Equal allocation of resources can produce inequalities in living standards. This suggests two alternative views to equality: (1) perfect equality of treatment (i.e., arithmetic equality). involving the same quantity of benefits and penalties going to all, and (2) proportional equality of treatment based on given circumstances where the circumstances justifies differential treatment (Smith, 1977:133). Smith (1977) provided us with a method of computing both the arithmetic equality and proportional equality. The formula for computing arithmetic equality is: S.=§(forallj=1,2....n) Sj is, for example, the output of manufacturing in a j region measured with either an interval or ratio indicator. i = the average output of manufacturing in all the regions. n = the number of regions. Sj = i implies perfect equality, i.e. each region receives or produces the same average output. 81 where: 51;; , then the difference between SJ and x is a measure of the level of inequality. Proportional equality would be: SJ = PxD (for all J = 1, 2 . . . . n). In the proportional equity case, it is assumed that there are differential weights or circumstances 0 attached to the region, so that the share must now be proportional to P multiplied by D (P x D) (Smith, 1977:134). This is schematically illustrated in Table 3.1 for the computeration of gini coefficients. 82 Table 3.1 Computation of arithmetic and proportional equality: Hypothetical Illustration. Arithmetic Equality Proportional Equality Region Pop. 1 distri- 1 distri- Diff— Wt. 1 distri— Differ- bution of bution of erence (D) bution ence attribute popula- propor- (+ or —) y tion y * 'y—yp*' (0) tion to y — PxD p (PxD) North 15 10 5 1 5 10 South 30 20 10 2 20 10 East 30 3O 0 I 15 15 West 25 40 15 1 60 35 Total 30 70 Arithmetic Equality Proportional Equality G=I/2'Z’S-yp* =15 G=1/2zis-Pxol=35 Note: Higher weight (0) are assigned to depressed regions to upgrade their status. Computation_of Distributional_Equity In order to equitably allocate resources, we must devise a method of measuring inequality. The methods used to assess inequality range from mere observation of ranked information to the use of more complex techniques such as gini coefficients and location quotients. 83 Computgtions of Gini Coefficient (G) The formula for computing G from percentages is: G =1/2 2'si - Sj’.‘ Where: si = the proportion of an attribute (e.g. income) in region j. SJ” = the proportion of the population of the region. That is, the absolute value of the difference between each region's proportion of income from its proportion of population are calculated, summed, and halfed to obtain G. The coefficient G has a range from 0 to 100. The larger the value, the more the inequality. Gini may also be calculated from raw scores using the formula: 100yj lOOPJ G =1/2>:\ .. Yt Pt Where: YJ = the attribute (e.g. income) accruing to region j Yt = the total income of all the regions Pj = population in region j Pt = total population of all the regions. 84 Computation of Location Quotient (LQ) Location quotient is computed using the formula: amount of x in a state gmggnt of x in a country L0 = state_population the whole country’s population where: x = the variable or attribute of interest under investigation. In general, location quotients greater than 1.00 indicate that a region has more than its relative national share of a given attribute per its share of population. Location quotients of 1.00 imply equal share; and location quotients less than 1.00 imply that the region has less than its share. A discussion of how the gini coefficient and LO are used in this study is presented in chapter four. Suffice to state here that these indicators are used to assess the degree of disparities (among the original 12 regions of Nigeria created in 1967) of six variables associated with the manufacturing sector and the extent to which the gap is closing over the years. The application of Pearson Correlation Coefficient, growth rate, gini coefficient and location quotient are also carried out in chapter four. CHAPTER FOUR EVALUATION Empirical Questions and Data Presentation This chapter addresses the first question and sub— question concerned with growth, before addressing the second question dealing with distributional equity. The aim is to evaluate the impact of public capital expenditures on: (1) the (growth) contribution of the manufacturing sector to GDP, and (2) distributional equity across the regions of Nigeria of six variables associated with the manufacturing sector. For illustrative purpose, the percentage contribution of value of manufacturing and craft (compared to the other sectors) in the GDP of Nigeria is shown in Table 4.1. Question one: To what extent was public capital expenditures related to the growth (increase the contribution) of manufacturing and craft in the GDP of Nigeria? Based on the findings of past studies, we may hypothesize a positive relationship between public capital expenditures and the growth of the value (contribution) of manufacturing in the GDP of Nigeria. This means that increased capital expenditure are associated with the growth 85 86 Table 4.1 Sectors contribution to the gross domestic product of Nigeria (selected years 1960-1980) (percent of total). Selected Years (I) Sector 19601 19651 1970‘ 19751 19802 Agriculture/ forest/livestock 61.9 54.9 48.8 24.5 19.0 Mining/crude petroleum 1.1 4.8 10.1 31.9 37.5 Manufacture/ craft 6.2 6.2 7.2 7.4 6.9 Electricity/water 0.5 0.6 0.7 0.4 0.7 Building/ construction 3.7 5.2 5.1 9.4 9.0 Distribution 11.1 14.0 12.7 10.0 7.3 Transport/ communication 5.3 4.4 2.8 3.2 3.2 General government 4.9 3.5 6.5 7.0 9.1 Social Services: Education —-— 2.9 2.9 2.7 4.4 Health 16.3 0.7 0.8 1.0 1.4 Other services -—- 2.6 2.4 1.6 1.5 Total 100.0 100.0 100.0 100.0 100.0 Sources: 1Figures for 1960-1975 were adopted from Bienen and Diejomaoh (1981, p. 93) with data from Federal Office of Statistics, Lagos. 2Figures for 1980 were adopted from Second National Development Plan 1970-74, pp. 22, 48, based on 1974—75 constant prices. 87 of the value of the manufacturing sector in the GDP of Nigeria. Several studies, e.g. Olaloku (1979), show a high positive correlation between capital expenditure and increased productivity of the manufacturing sector. The finding of a computation of Pearson Product.Moment Correlation (See Appendix A) between public capital expenditure and growth of the manufacturing sector of Nigeria is shown in Table 4.2. This finding confirms the hypothesis stated above, which posits a positive relationship between public capital expenditures and growth of the manufacturing sector of Nigeria. The implication of the significantly high positive correlation coefficient (r = .8) is that, increased capital expenditures are associated with growth of manufacturing and craft in the GDP of Nigeria from 1962 to 1964. The reasons for the positive correlation between public capital expenditures and growth of the manufacturing sector of Nigeria are not difficult to find. Since they are associated with huge oil revenues which provided the capital: (1) to invest in import substitution industrialization, (2) to hire expatriate skilled manpower, and (3) to import the capital goods and raw materials utilized in production. Further discussion of this assertion is presented in chapter four. The growth of the manufacturing sector is a result of increased fiscal revenues, capital formation, and 88 Table 4.2 Correlation between public capital expenditure and value of manufacturing and craft in GDP (1962-1974). Pearson Product Moment Correlation Coefficient Significance (r) r2 (a: 0.05) Correlation between public capital expendi- ture and value of manufacturing .8 .64 Yes Source: Compiled by the author from Appendix A. consumption stemming in oil revenues. For instance, as noted by Bienen and Diejomoah (1981), there was a 22.9 percent increase in investment associated with increased capital formation from oil, in the 19705, compared to 6.5 percent prior to 1970. There is also a higher percentage (13.4 percent) increase in the consumption of manufactured goods in the country during the 19705 as a result of increased revenues from oil (Bienen 8 Diejomoah, 1981). By 1975, the amount of public capital expenditure in all the regions of Nigeria more than doubled the amount of public capital expenditure (in 1968) prior to 1970. The increase in public capital expenditure corresponded with the increase in revenues from the sale of crude petroleum (Bienen 8 Diejomoah, 1981). 89 As shown in Table 4.3, oil revenue as a percentage of total federal government revenue, rose from 8.8 percent in 1969 to 82.1 percent in 1974, and declined slightly to 79.3 percent in 1976, as a result of the phenomenal demand and rise in oil prices during the 19705. The reflection of the growth in oil revenue in capital investment was noted by Teriba et al. (1981:23): Before independence less than N 10 million per annum was invested in manufacturing activities . . . with a newly won freedom and a new awareness of Nigerian potentialities, investment in manufacturing shot up to a little less than N 60 million per annum in 1964. By 1975 with the oil boom, capital investment in manufacturing activities increased more than five-fold and was apparent in growth in manufacturing activities shown in Table 4.4. A breakdown of the periods into 1960-1965 (prior to the Nigerian Civil War), 1966-1969 (during the war), and 1970-1975 (after the war), showed a slightly higher growth rate of 15 percent for manufacturing between 1960-1965 compared to 14.5 percent in 1970-1975. The trends showed a slight decline which may be attributed to the Nigerian Civil War. 90 Table 4.3 Federal government’s oil revenues as percentage of total current revenue (1969-1976). Federal revenue Total federal Oil Revenue from oil revenue as 1 of total Year (N Millions) (N Millions) federal revenue (1) (2) (3) (4) 1969 33.4 378.4 8.8 1970 166.4 633.2 26.3 1971 510.2 1,169.0 43.6 1972 764.3 1,404.8 54.4 1973 1,016.0 1,695.3 59.9 1974 3,726.7 4,537.0 82.1 1975 4,271.5 5,514.7 77.5 1976 5,365.2 6,765.9 79.3 Source: Central Bank of Nigeria, Annual Reports (1979). 91 Table 4.4 Sectoral growth rates in the Nigerian economy in constant prices (in percent). Sector Period 1960-1965 1966-1969 1970—1975 Agriculture 2 -1 -1 Oil and mining 38 8 12 Manufacturing 15 6 14.5 Building and construction 10 l 21 Source: Adapted from Watts (1983, p. 470), data from Federal Office of Statistics, National Account of Nigeria (1960/61 - 1975/76), Lagos. According to Table 4.4, the rate of growth of the manufacturing sector was disrupted during the Civil War between 1966 and 1969, but immediately after the war, the growth rate quickly picked up close to pre—war level. A_sub-question_to_question_one_js: To what extent did the huge oil wealth boost the (growth) contribution of the manufacturing sector to the GDP of Nigeria? To evaluate this question, the contribution of the manufacturing sector in the GDP of Nigeria over the years was assessed in addition to reference to past studies relating to the contribution of the manufacturing sector to the GDP of Nigeria and other countries. 92 In Table 4.5, the contribution of manufacturing to the GNP of Nigeria is seen to rise from 3.6 percent in 1960 to 9.5 percent in 1970, but decline to 4.7 percent by 1975 as a result of domination of GNP by oil. The contribution of the manufacturing sector to the GDP of Nigeria was seen earlier in Table 4.1 and although the figures in Table 4.1 differ from those in Table 4.5, both tables point to a decline in the growth of the manufacturing sector. Table 4.1 shows that, the contribution of the manufacturing sector to the GDP of Nigeria rose from 6.2 percent in 1960, to 7.4 percent in 1975, but declined to 6.9 percent by 1980. As noted by Teriba et al. (1981:22), the current contribution of less than eight percent manufacturing in the GDP of Nigeria compares unfavorably with the 15—20 percent share attained in many countries at a similar stage of economic development. A more detailed breakdown and analysis of the manufacturing sector is in order. According to Table 4.6, the percentage of value added in textile, footware, and leather products rose form 15 percent in 1965 to 20.5 percent in 1971 and declined to 15.0 percent in 1972. Only the percentage of value added in petroleum, coal, and chemical products experienced an increase from 7.0 percent in 1965 to 10.7 percent in 1972. Generally, the percentage of value added in all the manufacturing sector of Nigeria, 93 Table 4.5 The contribution of manufacturing industries to gross national product. Year (1) (2) (3) Total GDP Value of 1 of manufac- (N Million) manufacturing turing and and crafts crafts in (N Million) GDP (1) 1960 2244.6 80.6 3.6 1961 2373.4 88.2 3.7 1962 2630.8 93.4 3.6 1963 2806.4 151.8 5.8 1964 2914.0 157.8 5.6 1965 3080.6 164.8 5.6 1966 3210.0 192.2 6.2 1967 3051.8 196.0 6.1 1968 3140.8 231.2 7.6 1969 2278.2 270.4 8.6 Average prior to 1970 2837.85 176.13 5.99 1970 3485.8 311.0 9.5 1971 9442.1 475.1 - 5.1 1972 11177.9 460.3 4.1 1973 11993.1 570.1 4.8 1974 13135.5 626.5 4.8 1975 14410.1 683.9 4.7 Average after 1970 12031.74 563.18 4.77 Average (1960-1975) 7434.79 369.65 5.35 Source: Compiled from Olayide (1976, p. 54), Economic Survey of Nigeria (1960-1975), Data from Federal Office of Statistics, Annual Abstracts of Statistics, Lagos, Nigeria; Second National Development Plan (1970-1974), Lagos, Nigeria, 1970; Third National Development Plan, 1975-1980, Lagos, Nigeria, I975. 94 Table 4.6 Percentage of value added in Nigerian manufacturing prior to 1970 and after 1970 by various sectors. Sector Prior to 1970 After 1970 1965 1968 1971 1972 Food, soft drinks, alcoholic beverage, tobacco 57.3 44.1 37.1 34.3 Textile, footwear, leather products 15.0 19.4 20.5 15.0 Sawmilling, wood products, furniture, paper, printing 7.6 5.7 6.4 7.2 Petroleum, coal, chemical products 7.0 10.5 10.3 10.7 Rubber(type). plastic products 5.3 5.1 4.1 3.6 Pottery, glass, cement, bricks, tile products 5.0 0.1 2.8 3.0 Basic metal, hardware, utensils, etc. 0.1 --- 0.9 0.5 Transport equipment (ship building and repair automobile body) 1.5 1.9 0.3 --- Others 1.5 13.3 17.6 26.0 Total 100.0 100.0 100.0 100.0 Source: Adapted and modified from Olayide (1976, 60, 62) data from Federal National Development Plan (1975-1979). Office of Statistics and Third 95 except the petroleum sector and basic metals, experienced a decline. The percentage of value added in basic metal experienced a slight growth from 0.1 percent in 1965 to 0.5 percent in 1972, but the overall percentage of value added in basic metal continued to be very low. The phenomenal low contribution of manufacturing, especially basic metals to the GDP of developing countries in general, is vividly illustrated in Figure 4.1. In Figure 4.1, machinery and equipment constituted 35.1 percent of the economy of developed countries in 1970 and 34.7 percent in 1980, compared to the 2.6 percent in 1970 and 4.9 percent in 1980 for developing countries. A detailed analysis of Figure 4.1 is self-explanatory. This situation is worse for a majority of African countries, especially sub-sahara African countries. For example, according to Fransman (1982:1—2), the poor performance of African countries (6.91 of manufacturing value added in 1960 and 8.61 by 1975) compared unfavorably to developed market economy’s 751 of manufacturing value added in 1960 and 63.71 in 1975. The average share of Africa's exports of manufacturing declined from 1.121 in 1970/71 to 0.601 in 1975/76. From 1970 to 1976, Africa's share in third world industrial production dropped from 9.41 to 8.21. "Africa was the only country group to record a fall in industrial manufacturing over this time period" (Fransman, 1982:1). 96 Developed Countries -— 1970 Developing Countries — 1970 Beverages and Tobacco Equipment Figure 4.1 Structure of world trade by broad commodity groups as percentage of total trade (1970 and 1980). Source: Statistical Yearbook, 1982, pp. 169 and (iii). 97 To conclude, the discussion presented above points to the slow development of African states such as Nigeria, and the necessity of P.D.A. intervention to facilitate the development of SSA states. Question Two To what extent did (the oil supported) public capital expenditures achieve distributional equity of manufacturing activities across the regions of Nigeria? Based on the greater emphasis placed on distributional equity in Nigerian development plans after the war in 1970, it can be hypothesized that distributional equity of manufacturing activities across the regions of Nigeria was greater after 1970 than prior to 1970. The data used to evaluate this hypothesis began in 1968 when data was available and from the newly created 12 regions in 1967 in Nigeria. Available studies prior to 1968 showed a greater concentration of industrial activities in the southern regions than in the northern regions of Nigeria. As shown in Table 4.7, using the four old regions (Western, Mid-Western, Northern, and Eastern Regions) of Nigeria as units, and employment and output as indicators, Teriba et al. (1981:71) pointed out that from 1962-1965, over 72 percent of the industrial employment and 77 percent of the industrial output were in the south, even though it accounted for only 46.5 percent of Nigeria's population. 98 Table 4.7 Percent distributional pattern of Nigerian manufacturing industries. Region Employment Indicator 1962 1963 1964 1965 Southern: Total 75.7 75.7 77.7 72.9 Northern: Total 24.3 24.3 22.3 27.1 Output Indicator 1962 1963 1964 1965 Southern: Total 77.7 80.4 78.7 78.7 Northern: Total 22.3 19.6 21.3 21.3 Source: Adapted from Teriba et al. (1981, p. 71) with data from Federal Office of Statistics, Industrial Survey (1962-1965). 99 Other than political rivalry among regions to control the nation’s wealth, the lopsided distribution of natural resources (chiefly oil in the south), and the poor distribution of the nation’s resources during this period fomented the Nigerian civil war that lasted from 1967 to 1970, and triggered the creation of states in Nigeria. After the war in 1970, a new allocation formula was designed to promote distributional equity of resources among the regions of Nigeria and became a key policy objective of government after the war. The question of whether this objective was achieved or not is the subject under investigation here. Gini coefficients and location quotients were utilized to evaluate distributional equity. Gini coefficients may be analyzed: 1. By comparing the coefficients of two regions on a particular attribute (cross-regional analysis); 2. By comparing the coefficients of one region on a particular attribute over two time periods (trend analysis); or 3. As an absolute measure on a scale of zero to 100 with figures below 50 representing more equity, in our case, the success of P.D.A. in attaining the policy objective of distributional equity: and figures above 50 representing high inequity or the failure of P.D.A. in attaining the policy 100 objective of distributional equity. This is the rational behind the evaluation of question two. To determine the success or failure of the P.D.A. policy objective to achieve distributional equity across the regions of Nigeria, six variables associated with the manufacturing sector, outlined below, were evaluated. They include: 1. Total public capital expenditure in million of naira. 2. Total number of manufacturing establishments. 3. Total output of manufacturing in million of naira. 4. Total value added in manufacturing in millions of naira. 5. Total number of employees in manufacturing. 6. Total wages of manufacturing employees in millions of naira. The location quotient technique, as defined in chapter three, was utilized to assess the extent of distributional inequity, across the regions of Nigeria, of the above six variables. Unlike gini coefficients, location quotients (L.Q.) provide more detailed evaluation and indexes for individual regions. Gini coefficients are designed to provide a single index of inequality for a combination of regions, rather than for individual regions. Location quotients are more suitable indexes for comparing proportions of inequality 101 among regions because they provide measures for individual regions. The advantages of gini coefficients and location quotients measures are that they are standardized measures based on the population of individual regions. This means that the distribution of a given attribute is relative to a region’s population. Caution must be exercised in generalizing the data presented in this section. This is because they are based on computations for the years between 1968 and 1969 (prior to 1970) and between 1970 and 1975 (after 1970). 1. Gini coefficients for public capital expenditure across the regions of Nigeria. Gini coefficients for six variables associated with the manufacturing sector of Nigeria are shown in Table 4.8. A gini coefficient of 27 was found for public capital expenditure prior to 1970 and after 1970. This coefficient is lower than 50, a relatively low disparity in the distribution of public capital expenditure across the regions of Nigeria. The same gini coefficient (G = 27) was also found for the period after 1970, indicating a stable trend in public capital expenditure over the years across the regions of Nigeria. Based on these findings, it was concluded that, with respect to the distributional equity of public capital expenditure, this policy objective was to some extent a success. This success may be attributed to 102 Table 4.8 Gini Coefficients for individual variables of the manufacturing sector of Nigeria (prior to 1970 and after 1970) based on the original 12 states of Nigeria created in 1967. Variables Gini Coefficients (G) Prior to 1970 After 1970 Public capital expenditure 27 27 Manufacturing establishments 84 30 (number) Manufacturing output 69 74 (total amount) Manufacturing value added 64 82 (total amount) Manufacturing employees 53 63 (number) Manufacturing wages and salaries 60 46 (in N) Source: Compiled by the author with data from the same sources as Appendix B and C-1 to C-6. the new allocation formula, but much remains to be accomplished. Further evaluation of the distribution of public capital expenditure among the regions of Nigeria with the use of location quotients is presented below. Location Quotient for Public Capital Expenditure Among the Regjons of Nigeria The location quotient for public capital expenditure among the regions of Nigeria is shown in Table 4.9. Data 103 Table 4.9 Location Quotients: Distribution of public capital expenditure by regions. Rank Regions Prior to 1970' Regions After 1970*“ High*'* Mid-West 3.78 Rivers 2.31 North-West 2.73 Kwara 2.21 Rivers 2.17 South East 1.77 West 1.16 Mid-West 1.43 Lagos 1.04 Lagos 1.04 East Central 0.70 North Central 0.98 Low'** North Central 0.55 North-West 0.81 North-East 0.54 Benue Plateau 0.80 Kwara -—— East Central 0.68 Benue Plateau --- West 0.49 Kano -—- North-East 0.47 South-East ——— Kano 0.42 'Expenditure in 1986 and 1969. HExpenditure in 1971 and 1972. *'*The categories "high" and "low" throughout this section are abritrary, based on an even division of twelve regions and ranked data from high to low. Source: Compiled by the author with raw data from Appendix B and Appendix C-I. for the location quotient prior to 1970 is incomplete, but the LO after 1970, range from 2.31 for Rivers to 0.42 for Kano, a ratio of about 1:6. In comparison to the other five variables associated with the manufacturing sector, disparity among the regions of Nigeria, in public capital expenditure was less and this finding was consistent with the low gini coefficient found in Table 4.8 and points to some success in attaining the 104 policy objective to achieve the goal of equitable distribution of public capital expenditure. 2. Gini Coefficients for a number of manufacturing industrial establishments across the regions of Nigeria. In Table 4.8, disparities are shown across the regions of Nigeria in number of manufacturing establishments to be very high (Q = 84) prior to 1970 compared to (g = 30) after 1970. Based on these findings, we can conclude that disparities across the regions of Nigeria, in a number of manufacturing establishments, were greater prior to 1970 than after 1970. The conclusion was that the policy objective to achieve distributional equity in manufacturing establishments was to a certain extent a success. A more detailed evaluation of the number of manufacturing establishments among the regions of Nigeria with the use of location quotients follows. Location qgotients for_a number of manufacturing establishments among_the regions of Nigeria As shown in Table 4.10, prior to 1970 variation in manufacturing establishments among the regions of Nigeria ranged from a LQ of 17.91 for Lagos, to a LQ of 0.35 for North-West, a ratio of over 1:50. During the period after 1970, the ratio decreased dramatically to 1:29. This pointed to high but reducing disparity among the regions of Nigeria after 1970, with respect to the number of 105 Table 4.10 Location Quotient: Distribution of number of manufacturing establishments by regions. Location Quotient Rank Regions Prior to 1970* Regions After 1970H High Lagos 17.91 Lagos 4.08 East Central 0.82 Mid-West 1.50 Rivers 0.82 East-Central 1.17 Kwara 0.82 South—East 1.17 North Central 0.82 West 0.89 South—East -—- Kwara 0.81 Low Benue Plateau -—- Benue Plateau 0.80 Kano ——— Rivers 0.60 West 0.35 North Central 0.57 North—East 0.35 North-West 0.44 North-West —-- Kano 0.37 Mid-West 0.00 North—East 0.14 “Establishments between 1968 and 1969. HEstablishments between 1970 and 1975. Source: manufacturing establishments. location quotient greater than one. location relative in the country was below their relative share of population. The establishments states manufacturing Compiled by the author with raw data from Appendix B and Appendix C— 2. quotients since each state started competing for the number of after industries lower share of their total manufacturing In addition, one 9 Most of the regions had 1970 was related to the only Lagos had a implying that the establishments reasons for the closing gap in number of manufacturing creation it could attract into its state. 106 3. Gini Coefficients for output in manufacturing across the regions of Nigeria The gini coefficients for output in manufacturing represented in Table 4.8 shows a lower coefficient (9 = 69) prior to 1970 and a higher coefficient (9 = 74) after 1970. Based on these findings, it is concluded that disparities across the regions of Nigeria in manufacturingyoutput were greater after 1970 than prior to 1970. Also, both gini coefficients for output in manufacturing (prior to 1970 and after 1970) are greater than 50, indicating high inequalities across the regions of Nigeria in the distribution of manufacturing output. It also points to the lack of success in achieving this goal. A more detailed evaluation of the distribution of output among the regions of Nigeria is presented below with the use of location quotients. Location Quotients for Output in Manufacturing Amggg_the Regions of Nigeria The location quotients (LQ) for output in the manufacturing sector of Nigeria is shown in Table 4.11 and Lagos predominates. The L0 for output of the manufacturing sector of Nigeria prior to 1970 ranged from 18.98 for Lagos to 0.03 for South-East, a ratio of 1:633. While the LO after 1970 ranged from 14.08 for Lagos to 0.01 for North- East, a ratio of 1:1408. The findings are consistent with earlier findings in the use of gini coefficients. The 107 Table 4.11 Location Quotients: Distribution of output in manufacturing by regions. Location Quotient Rank Regions Prior to 1970* Regions After 1970H High Lagos 18.98 Lagos 14.08 Kwara 0.66 Kwara 1.49 North-Central 0.66 North-Central 1.47 Kano 0.54 Kano 0.57 East-Central 0.42 East-Central 0.30 Mid-West 0.37 Mid-West 0.27 Low West 0.35 Rivers 0.24 Benue Plateau 0.07 Benue Plateau 0.18 North-West 0.05 South-East 0.14 Rivers 0.05 West 0.10 North—East 0.04 North-West 0.05 South-East 0.03 North-East 0.01 “Output between 1968 and 1970. *“Output between 1971 and 1975. Source: Compiled by the author with raw data from Appendix B and Appendix C-3. conclusion is that variations among regions in output manufacturing are greater after 1970 than prior to 1970. shown in Table 4.12, other than Lagos and one or two other regions, the LO for a majority of the regions are less than one. The percentage distribution of manufacturing output across the regions of Nigeria is shown in 4.12. According to Table 4.12, of the manufacturing output in the whole from 1969 to 1975, over 50 percent of Nigeria 108 .9.19 .Qa .m.l9 ..0 ...9N. .d ..99.. cQOEOHm.9 bcm cmcw.9 EOLm bmuamb< “oocsom ..559.1959...mooumo.vc. 0.50:009 mu.um.umu9 mo mo.mmo .meUmu Ucm ..9—N . .959.. .Numcom EOLm numb cu.) LOcuam ecu >0 Um..QEOUx 9.99. 9.99. 9.99. 9.99. 9.99. 9.99. 99.99. 99.99. .mu05 5.9 9.9 N.9 v.9 9.9 5.9 5v.9 9..9 ummzlcucoz m.m 9.9 9.5 9.5 5.5 N.9 95.9 ..,9 ummz 9.9 9.9 9.9 9.9 9.9 ..9 vm.9 99.9 vmmmlcuaow 9.. 9.. N.. N.m 9.N 9.. 99.. 9..9 mLm>_m 9.9 9.9 9.9 9.9 9.9 5.9 . 95.9 mv.. quMIcuLoz 9.9. 9.5 5.9 9.9 ..N. 5.9. 99.9 99.9 .mLucmolcuLoz ..9 9.9 9.N 9.N 9.9 9.m 99.N .m.9 ummzlb.t v.m 9.. N.N 9.N 9.N 9.. 99.. 99.9 mcmzx 9.9 ..5 v.9 ..9 9.9 9.9 99.5 99.9. ocmx 5.9 9.v 9.9 ..9 9.m 9.9 V9.9 ~9.9 .moucmulummw 5.. 9.9 m.N 5.N 9.9 9.m 99.. 9N.5 :mmum_a 03:09 9.99 9.v9 N.99 v.99 9.99 N.99 99.99 vm.5m momma 959. <59. 959. N59. .59. 959. .999. .999. .u. unauso co.9mm ..951999.. mco.9mL >0 Lovomm 9c.L:uommacmE on» 90 usouso .muou mo ucmotma N_.v 6.9m. 109 concentrated in Lagos. The range is from 58.3 (average) for Lagos to 0.45 (average) for North West, a ratio of about 1:130. 4. Gini coefficients for value added in mgnufgcturing across_the_regions of_Nigeria. The gini coefficient for value added in manufacturing depicted in Table 4.8 shows a lower coefficient (9 = 64) prior to 1970 and a higher coefficient (9 = 82) after 1970. It can be concluded that the distributional inequity, across the regions of Nigeria, of value added in manufacturing is greater after 1970 than prior to 1970. Also, both gini coefficients of value added in manufacturing (prior to 1970 and after 1970) are greater than 50, indicating high inequality across the regions of Nigeria in the distribution of value added in the manufacturing sector of Nigeria. It also points to the failure to achieve the -goal. A more detailed evaluation of the distribution of value added among the regions of Nigeria is presented below with the use of location quotients. Location Quotients for Value Added in Manufacturing Amongythe Reglgns of Nigeria Location Quotients (LQ) for value added in manufacturing is shown in Table 4.13. The location quotients prior to 1970 range from 14.86 for Lagos to 0.47 for North Central, a ratio of over 1:297, showing a wide disparity. The L0 after 1970 ranged from 16.53 for Lagos to 110 Table 4.13 Location Quotient: Distribution of value added in manufacturing by regions. Rank Region Value Added Region Value Added Between Between 1968—1971 1972-1975 High Lagos 14.86 Lagos 16.53 West 1.54 Kwara 1.97 Mid-West 1.38 North—Central 0.53 Benue Plateau 0.54 Mid-West 0.40 North Central 0.49 Benue Plateau 0.38 Kano 0.22 East-Central 0.38 Low South-East 0.19 Kano 0.27 North—East 0.18 South-East 0.21 Rivers 0.17 Rivers 0.08 North-West 0.16 North-West 0.07 Kwara 0.12 North—East 0.02 East-Central 0.01 West 0.01 Source: Compiled by the author with raw data from 0.01 for West, Appendix B and C-4. a ratio of over 1:1600, disparity. On the whole, among the regions manufacturing than objective among the prior to 1970. period in question. of Nigeria, sector were very high, This to close the gap of value added in indicates it is concluded that that the also showing a wide A variations in value added of the and higher after 1970 policy manufacturing regions of Nigeria is not attained during the 111 5. Gini Coefficient§_for a number of manufacturing employees:gcros§ the regjon§_of Nigeria. As it is shown in Table 4.8, diSparities across the regions of Nigeria in the number of manufacturing employees was very high (Q = 53) prior to 1970 compared to (g = 63) after 1970. Both coefficients (prior to 1970 and after 1970) are greater than 50, indicating a high degree of ineguality across the regions of Nigeria, in number of manufacturing employees and the failure to achieve this goal. A more detailed evaluation of the number of manufacturing employees among the regions of Nigeria is presented below with the use of location quotients. Location Quotients for a Numger of Manufacturing Emgloyees Among the Regions of Nigeria Location quotients for the number of manufacturing employees among the regions of Nigeria is shown in Table 4.14. Data for the period prior to 1970 are incomplete, but data for the period after 1970 showed that the range is from 6.82 for Lagos to 0.03 for South-East, a ratio of about 1:227 and the variation among the regions of Nigeria, in the number of manufacturing employees, is very wide. Table 4.14 also shows that during the period after 1970 only three regions have LQ greater than one, while all the other regions have LQ less than one. These findings are consistent with the finding with the gini coefficients. It also points to the lack of success to achieve this goal. 112 Table 4.14 Location Quotients: Distribution of number of employees in manufacturing by regions. Rank Region Prior to 1970* Region After 1970*“ High Lagos 15.27 Lagos 6.82 North-Central 3.44 South-East 5.53 Kwara 0.96 North-Central 1.01 North-West 0.79 Kwara 0.95 Mid—West 0.25 Mid-West 0.85 West 0.25 Rivers 0.64 Low North-East 0.06 Kano 0.44 Benue Plateau —-- East-Central 0.24 East—Central —-— Benue Plateau 0.20 Kano --— West 0.17 Rivers ——- North-West 0.13 South—East ——- North-East 0.03 Source: Compiled by the author with data from employees and after shares employees are Generally, Appendix B and Appendix C-5. of these their populations. in manufacturing employees in Lagos. manufacturing the Additional the 1970) are regions' evidence employment location less than less than what 19805 due to the concentration of points quotients for one , total number manufacturing in a majority of the regions (both prior to indicating that the of manufacturing it should be with respect to This situation has not changed very much industries to huge disparities among the regions of Nigeria provided in Table 4.15 and Table 4.16. As portrayed Table 4.16, from 1969 to 1975, over 40 percent of the 113 Table 4.15 Percent of total employment in the manufacturing sector of Nigeria by region. Region Employment (1) 1968 1969 1970 1971 1972 1973 1974 1975 Lagos 35.3 46.38 45.2 46.8 43.6 47.7 48.7 42.1 Benue Plateau 0.91 2.12 2.0 2.2 1.9 2.2 2.3 2.0 East-Central 10.98 --— 1.5 5.8 7.0 6.1 4.2 6.3 Kano 9.86 11.94 8.8 6.3 6.3 7.4 7.1 7.8 Kwara 1.57 1.94 3.7 3.7 3.0 3.0 1.9 3.1 Mid-West 10.51 7.94 10.3 5.9 6.5 6.2 7.6 6.9 North-Central 12.12 17.41 14.0 13.1 13.1 10.8 11.8 10.2 North-East 1.43 1.42 1.0 0.8 1.1 1.1 1.0 0.7 Rivers 6.27 --- 0.9 1.0 2.2 1.4 1.2 3.1 South-East 1.86 --— 1.0 3.3 5.1 4.3 5.2 9.6 West 8.53 8.20 9.9 9.6 8.8 8.2 7.3 5.4 North-West 0.19 2.65 1.7 1.5 1.4 1.4 1.7 1.8 Total 100.00 100.00 100.0 100.0 100.0 100.0 100.0 100.0 Sources: Computations for 1970-1975 were adapted from Bienen and Diemomoah (1981, p. Computation for 1968-1969 by the author with data from Schatzl (1973, p. 214); Nigeria: Federal Office of Statistics Economic 1970—75). Indicators (1973-77), Vol. 9-13, pp. 9-15. 120) with data from industrial survey (Lagos: Office of Statistics. Federal .momms ..V5o_\m5m_9 mo_um_umum mo mo_cuo .mtmumc 50L; mumc co comma .V5 .o ..99.. ..m we wo.cm5 seem bmusoeou “mucsom .9c_bc:oL on can 99. >.uumxm o» a: one we: >mE .mwO5 114 111 99.9 9..9 5v.9 5..v 99.9 ummz1cucoz 111 111 m... 95.. mm.9 99.v. mcmzx 111 m... 55.N 59.m 5N.9. m9.9 .mcucmulcuLoz 111 m9.9 99.m 9..m 99.9N 99.9 ocmx 111 9.... 99.N m9... m.. 99.9 :mwum.a macmm 9..m m9.9 mm.9 99.9 5..N 59.9 amou1cucoz "ccmcpcoz 111 mm.9 m9.5 ..m m9.9 59.m ummmlcusom 111 m9.9. mm.9_ 9.9 9N.9. m9.m. .mcuc091umm9 9.9 m9.9. 99.9. 99.9 9..9 9.9 mLo>.m 111 m9.9 55..~ m9.9m m9.~ 5... ummx1b.z 9.9 9.5 mm.~ 59.9. mm.. mv.5. ummz 9.vm 9.Vm m9.9m 5v.9m mm.9~ m9.5m moon; "ccmcusom muUJUOLa xcoz .mumE1coz 9c.uc.La mbooo OuomDOP maomcm_.mum_t .muo: nocum .o.umm_a .Lmama mepmoa .ocoo.< eoLm .mumz .Lmbbsm muosboLa Ucw mommcm>09 mco.9mm Umumo.LDMe ..moo boo: m_.uxm5 book .>me.comz Esm.oLumu ...Ezm9 .mumz o.mmm ..V59.1m59.. mLOuoom 0cm mco_9mc >n ucmE>o_QEm _O.Lumsbc_ 9c.L:uumwscmE _mu0u mo mcmcm mmmucmocma 9..v m_bm5 115 manufacturing employees in the entire country are concentrated in Lagos, ranging from 44. 5 (average) for Lagos to 1.1 (average) for North-Eastern region, a ratio of about 1:40. There is also a disparity between the other regions, excluding Lagos: although the gap is narrower, it was still remarkable. For example, the percentage of manufacturing employees in North—Central (second to Lagos) were 12.8 (average) compared to 1.1 (average) for North- Eastern region, a ratio of about 1:12. Using employment as an indicator and the sectors and regions of Nigeria as units, Table 4.17 shows the percentage distribution of the manufacturing sector employment across the regions of Nigeria. Lagos dominates all the other regions with the greatest percentage of employees in all the manufacturing sector of Nigeria. Second to Lagos were: Wee; in the manufacture of food, beverages, alcohol and tobacco products. 5929, in the manufacture of textile, wearing apparel and leather products. Mid-West in the manufacture of wood products, furniture, paper and printing materials, and petroleum products closely followed by Rivers. Rivers in the manufacture of basic metals, fabricated metals, and machinery. The heavy concentration of manufacturing employment in Lagos is due to the fact that: 116 Table 4.17 Distributionn of total gainful employment (both traditional and modern sector). Sector Total Gainful Employment 1965 1970 1975 Agriculture 71.7 69.8 64.0 Mining (0.1 0.2 0.4 Manufacturing 9.6 12.2 16.8 Construction 12.9 12.6 12.2 Electricity/gas 0.8 0.7 0.6 Distribution/trading 3.9 3.9 5.0 Transport/communication 0.6 0.6 0.9 Other services 0.2 0.0 0.1 Total 100.0 100.0 100.0 Source: Adapted from Bienen and Diejomoah (1981, p. 95), data from Second and Third National Development Plans (Lagos, Central Planning Board, and National Manpower Board. 1. Lagos is a federal capital or a administrative headquarters, and a national policy making and decisions. 2. Lagos is a commercial town and attracts businesses from all over the country. 3. Lagos has an international airport, foreign expatriates. colonial center and attracts 117 4. Lagos has a principal seaport and is accessible to imports. As mentioned earlier in this study, Nigeria is still an agricultural country. As shown in Table 4.17, in 1965, the agricultural sector provides over 70 percent employment in the country. By 1975, the figure declined to 64 percent and this situation has not changed much during the 19805. The agricultural sector still offers employment to more than 60 percent of the Nigerian population and Table 4.17 shows that employment in the manufacturing sector of Nigeria rose from 10 percent in 1965 to 17 percent in 1975. Much of the manufacturing industry employment, shown in Table 4.16, is concentrated in the processing of import substitution products, viz., food, textile, wood, with less than two percent employment in mining and metallugical work. 6. Gini Coefficients for wages of manufacturing employees across the regions of Nigeria. Disparities in employees' wages, shown earlier in Table 4.8, is greater (9 = 60) prior to 1970 than (9 = 46) after 1970. The Gini coefficient (9 = 60) prior to 1970 is also greater than 50, while the coefficient after 1970 (g = 46) is less than 50. Based on these findings, it is concluded that with respect to employees' wages, distributional inequity, across the regions of Nigeria, of the manufacturing sector, is greater prior to 1970 than after 118 1970. This is consistent with Kuznets postulate that inequality in income tends to be greatest in the early stages of economic growth. It is concluded also that, in terms of manufacturing employees wages, the policy objective to achieve distribution equity is, to a certain extent, a success but much still remains to be done. A more detailed evaluation of the distribution of manufacturing employees’ wages among the regions of Nigeria is provided below with the use of location quotients. Location Quotients for Employees Wages Among the Regions of NLgeria Variations between regions in manufacturing employees’ wages is shown in Table 4.18. The range between the region with the highest manufacturing employees’ wages and the region with the lowest manufacturing employees’ wages prior to 1970, respectively, shows Lagos with 10.40 and South-East with 0.01, a ratio of over 1:1040: during the period after 1970, the ratio narrowed to 1:82. Based on these findings, it is concluded that although distributional inequities among the regions of Nigeria, with respect to employees wages, are greater prior to 1970 than after 1970, the gap is closing and a number of regions had location quotients greater than one during the periods prior to 1970 and after 1970, implying that the national share of the total wages of their employees is greater than what it should have been. Table 4.18 Location Quotients: 119 of manufacturing employees by regions. Distribution of the wages Rank Region Prior to 1970* Region After 1970*” High Lagos 10.40 Lagos 4.91 Rivers 6.90 North-Central 2.38 North-Central 1.74 Kwara 1.36 Kwara 1.48 Rivers 1.34 Mid-West 0.78 South-East 1.13 Kano 0.59 Kano 0.79 Low West 0.43 Mid-West 0.79 East-Central 0.36 East—Central 0.57 North-East 0.07 Benue Plateau 0.57 Benue Plateau 0.03 North—West 0.23 North-West 0.02 West 0.21 South—East 0.01 North-East 0.06 “Employees wages between 1968 and 1970. HEmployees wages between 1971 and 1975. Source: Compiled by the author with raw data from Appendix B and C-6. The reasons for this is due to public sector (Wage Review Commission) control of manufacturing industrial wages in Nigeria. Wage disparities in Nigeria, especially prior to 1970, may be accounted for by the disproportionate allocation of wage increases associated with the recommendations of the Wage Review Commission of Nigeria. To conclude, based on the gini coefficients presented in Table 4.8, the conclusion is that, with respect to the number of manufacturing establishments and employees wages, distributional inequities across the regions of Nigeria are 120 greater prior to 1970 than after 1970. This same conclusion does not hold for output, value added, and the number of manufacturing employees. Distributional inequities across the regions of Nigeria, with respect.to these variables, are very high both during the periods prior to 1970 and after 1970, and even higher during the period after 1970 indicating the lack of success in achieving these policy objectives. A detailed evaluation of the variables using location quotients points to wide variations among the regions of Nigeria in the distribution of all the six variables. The reason for these findings may be attributed to the adoption of poor development strategies and is the subject of chapter five. CHAPTER FIVE ANALYSIS Analysis of the Findings of Chapter Four In line with the previous two chapters, this chapter also deals first with growth of the manufacturing sector, and then with distributional equity of six variables associated with the manufacturing sector. Reasons for the Observed Low Growth of the Manufacturing_Sector of Nigeria In question one, chapter four, a high correlation (r = .8) was found between public capital expenditure and growth of the manufacturing sector, indicating that increased public expenditure is associated with increased growth of the manufacturing sector of Nigeria. Further evaluation of a sub-question to question one revealed that despite the huge oil wealth, the growth of the value of the manufacturing sector in the GDP of Nigeria was well below that of some of the other countries. The growth of public capital expenditure and of the manufacturing sector of Nigeria was attributed to the huge oil wealth in the country and to the dependence on: import substitution industries, imported capital goods, raw materials, and foreign expatriates, rather than on self- 121 122 reliance, local technical and managerial skills, and local research and development. The low contribution of the manufacturing sector in the GDP of Nigeria is the primary reason for underdevelopment and calls for the P.D.A. to facilitate Nigeria's development. The slow development pace of the manufacturing sector in the presence of oil wealth may be attributed to the lack of technological and managerial skills in the country and is a key reason for the dependence of the manufacturing sector on foreign firms, capital goods, raw materials, and expatriates for industrial production, to the neglect of local research and development by the government of Nigeria. The Over-Emphasis on Heavy Capital Intensive Import Substitution Industries To reduce the foreign exchange deficit the government of Nigeria embarked on heavy, capital-intensive import substitution industrialization to locally produce the formerly imported consumer goods. Sophisticated, heavy industries are adopted despite the differences in culture between the developed world and Nigeria and the low level of technological capability to operate the industries. Differences such as unskilled manpower, limited indigenous technological know-how, and high illiteracy in Nigeria vis- a-vis the vagaries of development capital are not taken into consideration. 123 A pivotal reason for the poor performance of the manufacturing sector of Nigeria is that the differences in cultures, values, and aspirations among the peoples of the developed countries and Nigeria are not taken into consideration in the importation of technology. As noted by Eziakor (1983), despite the obvious scarcity of capital and local high-level manpower in Nigeria, the "gospel" of economic growth ("bigger is better") continues to be enthusiastically embraced and spread by Western-trained development planners and accepted without questions by the Nigerian decision/policy makers. It is obvious that some economic growth is recorded in Nigeria but this growth is not comparable to the growth recorded by developed countries or some of the developing countries of Asia and Latin America. The observed growth rate of the manufacturing sector of Nigeria, documented in chapter four, may be attributed to foreign imports and import substitution industrialization but the growth is low and restricted to the processing of agricultural products. However, growth alone does not constitute development since development also involves the equitable distribution of resources and local technological capability. As a result of the deficient technological capability and lack of emphasis in promoting local technological capability in the country, development depended on: (1) foreign firms, (2) foreign expatriates, (3) foreign capital 124 goods, and (4) foreign intermediate raw materials. These may have contributed to the slow growth rate of the manufacturing sector of Nigeria. 1. Dependence on Foreign Firms As shown in Table 5.1, a greater proportion of the firms in Nigeria are either owned by foreigners or jointly owned with foreigners. Joint ownership involves expatriates on the technical side and Nigerians on the sale and public relations side (Teriba et al., 1981, p. 87) and as a consequence the business is owned and controlled by foreigners with a tendency for the management, controlling shares, and decision-making to remain in foreign hands even in the presence of qualified Nigerians (Teriba et al., 1981). Even when local managers are hired, they tend to perform non-technical functions and are often simply hired to fulfill government mandates. The Nigerian government mandate requiring foreign firms to hire a certain proportion of local managers results in hiring local managers given titles without responsibilities or authority. The most recent study on the role of the Nigerian managers showed that the involvement of Nigerian managers in industrial manufacturing was highest in general administration and finance, and lowest in production, technical jobs, marketing, sales functions . . . and key decision making positions (Teriba et al., 1981:101). 125 Table 5.1 Ownership of industries in Nigeria by selected establishments. Industries Ownership of Establishment Joint Number of 1001 Venture 1001 Establish- Foreign Foreign/ Niger— ments Owned Nigerian ian Biscuit 3 1 2 --— Mattress 5 1 1 3 Bicycle assembly 4 4 --— —-— Beer 6 4 I 1 Cement 5 1 4 ——- Furniture and fixture 10 8 1 1 Metal fabrication 21 9 ll 1 Motor vehicle assembly 5 4 1 --— Paints and varnishes 6 5 1 ——— Perfumes/cosmetics 3 3 ——- -—- Paper products 3 3 ——— ——- Pharmaceutical 6 6 --- -—— Radio 8 TV set assembly 3 l 2 -—- Soft drink bottling 9 5 1 3 Shoes 8 4 4 ——- Textiles 10 --— 9 1 Tire production 11 2 3 6 Tobacco 6 5 1 --- Boat buildup 4 ——— ——- 4 Soap 6 6 ——— --- Timber 19 4 2 13 Total 153 76 44 33 Source: Chi and Onimode (1975, p. 20), adapted from Edorien, E. (1968, p. 201). Linkages direct foreign investment and Nigerian's Economic Development (Nigerian Journal of Economic and Social Studies, Vol. 10, No. 2, July 1968). 126 The slow economic growth, and declining growth of the manufacturing sector of Nigeria may be attributed to the domination of these sectors by foreign firms. This is explained by the fact that foreign firms send profits out of the country rather than reinvesting them in research. The P.D.A. of Nigeria has not been effective in promoting local research and industries to encourage experiential learning among Nigerian managers and technicians. Experiential learning (or "learning by doing") through local industries is an important component of a country's development and the inability of local industries to provide this "learning by doing" give rise to the deficient technological/managerial skills and the low productivity of the manufacturing sector experienced in Nigeria. 2. Depengence on foreign expatriates An examination of Table 5.2 shows that 67 percent of the contract for major projects in Nigeria are handled by foreign contractors, while 32 percent of the contracts‘ are joint venture, and only 1 percent of the contracts are handled by indigenous contractors. These figures reflect the low technological manpower in Nigeria and the neglect of local contractors and an over-emphasis on foreign contractors and foreign technology. The projects contracted to foreign expatriates are highly SOphisticated, capital—intensive projects and for 127 Table 5.2 Distribution of selected major construction and development projects in Nigeria as of 1985. Firms Amount ( NM)“ Percentage Foreign contractors N 13,247.7 67 Nigerian and foreign contractors (joint venture) N 6,410.0 32 Nigerian (indigenous) contractors only N 92.5 01 Total 19,750.2 100 “Note: Not all the contract amounts were specified and/or negotiation of estimate in progress. Source: Compiled by the author from African Economic Digest (AED, 1985, p. 98-103). this reason the operation is not efficient in a country with low technical and managerial manpower. ,The inefficient production of the plants stems from the lack of spare parts .and the length of time it takes to obtain technicians and to import the spare parts, repair the machines when they break down, and re-start the production processes. In addition, there is a problem of the lack of managerial skills and technical skills to take over when the expatriates are no longer available. The low production of the manufacturing sector of Nigeria is explained by the nature of the SOphisticated projects which the foreign contractor was 128 familiar with but which is too complex for efficient operation by an average Nigerian. 3. Dependence on Foreign Capital Goods As shown in Table 5.3, prior to 1970 about 15 percent of the total expenditure on imports is in agricultural products; 5 percent in mineral products; and 80 percent in industrial products. The percentage of import of agricultural products decreased slightly from 15 percent in 1960 to 13 percent in 1974; the imports of mineral products decreased slightly from 5 percent in 1960 to 3 percent in 1974; but the percentage of import of industrial products increased from 80 percent in 1960 to 84 percent in 1974. Most of the industrial imports are capital goods (machines, transport) and raw materials. Table 5.3 showed that the importation of foreign industrial products is very high (80 percent) prior to 1970 and even higher, i.e. increasing (84 percent) after 1970 rather than decreasing. This stems from the lack of industries able to produce capital goods in Nigeria; the dependence on the outside world for such goods: the high cost of the goods, the limited availability of the goods; and the associated low productivity of the manufacturing sector of Nigeria. Additional support for Nigeria's increasing independence on the outside world for capital goods is provided in Table 5.4. A further breakdown of the import 129 Table 5.3 A comparison of the proportion of expenditure on the importation of products by three categories of the economic sector. Commodity Proportions Imports Prior Imports After to 1970 1970 (1960) (1974) Agricultural products .15 .13 Mineral products .05 .03 Industrial products .80 .84 Total 1.00 1.00 Sources: Compiled by the author from raw data provided in: (1) Federal Offices of Statistics, Annual Abstract of Statistics (1979), Lagos: (2) Central Bank of Nigeria, Annual Report and Statements of Accounts (1965); (3) Second National Development Plan, 1970-1974, First Progress Report, p. 14. 130 Table 5.4 Percentage composition of Nigerian imports 1954-1975. Import Items 1956 1964 1969 1971 1972 1973 1975 Food 10.18 9.93 8.48 7.91 9.67 10.31 7.5 Drink and tobacco 3.68 1.60 0.57 0.45 0.44 0.42 0.6 Mineral fuels/ lubricant 1.28 1.38 5.86 1.69 2.09 2.23 2.2 Crude materials 4.81 7.39 2.53 2.02 0.99 1.07 3.0 Animal/vegetable oils 0.02 0.05 0.12 0.09 0.11 0.10 0.2 Chemicals 4.82 6.60 11.14 11.48 10.34 10.70 9.1 Manufacturing goods 44.57 35.63 29.93 29.76 27.00 26.02 28.5 Machinery/trans- port equipment 19.92 26.15 30.77 38.81 39.53 40.87 42.0 Miscellaneous mfg. goods 8.90 9.85 6.74 5.90 8.39 7.97 6.7 Miscellaneous transactions 1.82 1.42 3.85 1.82 1.39 0.31 0.3 Total 100.00 100.00 100.00 100.00 100.00 100.00 100.0 Source: Adapted from: Teriba et al. (1981, p. 21), data from Federal Office of Statistics (1966-1978) Lagos. Economic Indicators 131 content of the Nigerian industrial sector showed, as highlighted in Table 5.4, a disproportionately high and increasing percentage importation of capital goods, viz., finished industrial machinery and transport equipment. The dependence of the manufacturing sector of Nigeria on foreign capital goods and raw materials; the inadequacy of the products stemming in foreign exchange deficits: and delays associated with importing these essential materials and products results in a lack of full-capacity utilization and a low productivity of the manufacturing sector of Nigeria. 4. erengence on Foreign Intermediate Raw Materials As shown in Table 5.5, a study of 53 firms in Nigeria by Olahoku et al. (1979) shows that about 15 percent of the firms depend on outside sources for less than 10 percent of their raw materials: 32 percent of the firms depend on outside sources for 10-40 percent of their raw materials, and a higher percentage (52 percent) of the firms depended on external sources for a greater percentage (over 40 percent) of their raw materials. A detailed breakdown of the dependence of Nigerian firms on external raw materials is provided in Tables 5.6 and 5.7. With reference to Table 5.6, wood products account for 13.4 percent or the lowest percentage of imported raw materials inputs, while fabricated metallic products and 132 Table 5.5 Extent of dependence of import substitution manufacturing industries on imported raw material. Number of Industries Number of 1 of Total Importing FirmS‘ Firms Less than 101 raw materials 8 15 10-401 raw materials 17 32 Over 401 raw materials 28 52 Source: Federal Republic of Nigeria. Third National Development Plan (1975—1978), in Olaloku et al. (1979). ‘ Table 5.6 Distribution of firms by industry and proportion of foreign raw materials to total raw materials used. Industry Total 1 Food products 19.2 Textile/leather products 48.1 Wood products 13.4 Paper/printing 58.0 Mining/mineral 23.9 Mon-metallic products 52.9 Metallic products 69.9 Source: Adapted from Teriba et al. (1981, p. 49), cited in references. Table 5.7 Import content of the intermediate inputs of Nigerian industries. Intermediate Percentage Total Input Import of Industry (N '000) (N (000) Total Input Agriculture 6141.6 4141.2 67.4 Livestock/ forest/fish 12197.6 9687.0 79.4 Agriculture processing 89230.8 4270.6 4.8 Textile 6782.6 1239.4 18.3 Clothing 31147.6 9135.8 29.3 Drink/tobacco 9990.0 7560.4 75.7 Food 31078.6 6954.6 22.4 Metal mining 2037.6 795.6 39.0 Non-metal mining 7758.8 6228.4 80.3 Chemicals 4200.6 1653.4 39.4 Transport 48435.6 23735.6 49.0 Utilities 4552.4 1476.8 32.4 Trade 11852.2 1640.0 13.8 Construction 104692.0 41346.0 39.5 Services 24652.0 6423.2 26.1 Transport equipment 7520.8 5119.0 68.1 Non-metallic metal products 2911.8 1250.8 43.0 Metal manufacturing 12544.2 9014.2 71.9 Wood/leather/etc. 21760.6 6954.2 32.0 Miscellaneous manufacturing 2248.2 1473.8 65.6 Total 441735.1 150099.8 34.0 Source: Adapted from Teriba et al. (1981, 70), data from Third National Development Plan (1975-80, p. 148). 134 machinery accounts for 69.9 percent, or the highest percentage of imported raw materials. Nigeria, although a predominantly agricultural economy, imports agricultural materials and as shown in Table 5.7, the agricultural import content of intermediate input is about 67.4 percent. The reasons for this percentage results from the fact that many Nigerian industries are import-substitute industries or final-stage industries involving assembly and packaging, and thus depend heavily on foreign raw materials. As shown in Table 5.7, the import- content of the manufacturing sector of Nigeria is very high and on the average, about 67.4 percent of the total value of the required intermediate material input of the agricultural sector manufacturing is imported, while technological groups such as basic industrial chemicals, glass products and made- up textiles, the import-component of raw materials is about 90 percent (Teriba et al., 1981, p. 23): this in part accounts for the low value added of Nigerian manufacturing industries, stemming in foreign exchange deficits. Usually, agricultural raw materials are exported in a raw form for processing overseas and re—imported in an intermediate or finished form to feed the final—stages, import-substitution industries in Nigeria. The reasons for this are based in the lack of technological know-how and/or the basic industries needed to carry out the full-scale operations, from start to finish, in Nigeria. The high cost 135 associated with purchasing adequate foreign capital goods and raw materials is, therefore, one of the reasons for the general low output and value added experienced in the manufacturing sector of Nigeria. To conclude, it is apparent from this discussion that the growth of the manufacturing sector of Nigeria depends more on foreign imports than on local technological capacity. According to Teriba et al. (1981:22): Alongside the [oil] boom experienced in post indepebdence Nigeria, there has been a major shift in the orientation of the manufacturing sector from the external to the domestic. However, this orientational shift has not necessarily been accompanied by any major breakthrough in technology. This lack of technological breakthrough is reflected in the low output and value added of the manufacturing sector of Nigeria where the emphasis is on heavy capital intensive import substitution industrialization (Fransman, 1982), rather than low cost, labor intensive, small—scale cottage industrialization, local research and development, and the enhancement of local technological capability. The huge oil wealth in the country is utilized to import foreign products such as capital goods and raw materials, and to hire foreign expatriates to perform industrial manufacturing. In this way, the deficient technical and managerial skills in the country (Nti, 1978:1113 Emezi, 1979:9) are over-shadowed and the research 136 and development components left in the hands of foreign contractors and foreign firms, however, recalling the key components in the definition of development in this study includes 122g; technological and managerial skills to conduct research, and to promote the growth and equitable distribution of the profit from the growth of the manufacturing sector of Nigeria. The slow development pace of the manufacturing sector of Nigeria, is the result of the deficient technological and managerial skills in the country, investments in heavy capital intensive import substitution industrialization, and the associated dependence on foreign imports, and as noted in the following section, neglect of lgggl research and development by the P.D.A. of Nigeria. The Neglect of Local Research by the P.D.A. .of Nigeria By using planned public capital expenditure as an indicator and local and import substitution industrial sectors as units, the amount of emphasis placed on local research and development is assessed. In Table 5.8, approximately 90 percent of the revised planned allocation and 95 percent of actual allocation to research and development is allotted to import substitution related industries: while only 10 percent of the revised planned allocation to research and development; and 5 percent of 137 Table 5.8 National Development Plan Allocation-~Revised and actual allocation to research and development by sectors (1970-1971) Revised planned Actual allocation allocation Sector (1 of total) (1 of total) Import Substitution Industries: Agriculture, forestry, fisheries, livestock 43 71 Mining (petroleum refineries) 6 3 General industries 41 21 Sub-Total 90 95 Indigenous Industries: Iron and steel industry (geological survey) 9 Aid to small-scale indigenous industries 1 5 Sub-Total 10 5 Total 100 100 Negligible. Source: Compiled by the author with data from Second National Development Plan, First Progress Report (1970-1974), Appendix 8, Pp. 121-128. Footnotes Relating to Table 5.8. I. Investments in small scale businesses were mostly directed at construction of industrial layout, and provision of small-scale loans rather than research. I38 2. Investment in general industries were associated with feasibility studies, purchase of equipments, and so forth. 3. Investments in agriculture included surveys and feasibility studies, purchase of capital goods (tractors, equipment, etc.), purchase of land, limited research centered on maintaining the agricultural research committees. 4. Investments in iron and steel industry were the first steps to a capital goods industrial base in Nigeria, but indigenous research effort is absent. Most of the work is performed by foreign firms and foreign contractors. Many foreign firms and contractors have been contracted to carry out feasibility studies. Some iron rolling mills have been established. actual allocation is allotted to local industries. Most of the money that goes into import substitution industries is used to purchase capital goods and raw materials, rather than to promote local research for the development of the the products locally. It is apparent that the proportion of public capital allocations to promote research and development is greater in import-substitution related industries than in local related industries, and that the money is not used for research. A detailed analysis of the footnotes to Table 5.8 shows that allocations to research and development in Nigeria are centered on importing the products. Local research is not emphasized to produce capital goods locally. 139 According to Table 5.8, the highest percentage of total revised plan allocation (43 percent) is in agriculture; second to agriculture is general industries with 41 percent; while small-scale indigenous industries accounts for the lowest (1 percent) percent. When combined with iron and steel industry, with the argument that both are associated with the attainment of indigenous technology. the percentage of total allocation (101) is still very low when compared to 43 percent for agriculture and 41 percent for other import substitution related general industries. It may also be argued that some of the allocations in agriculture and general industries involves local industries, but generally, as prescribed in the footnotes relating to Table 5.8, the emphasis is on purchasing finished equipments, and raw material from outside the country rather than on carrying out actual research involving design, invention, production, and/or the manufacture of the capital goods in Nigeria. This same picture is shown in relation to actual allocation where the percentage of total allocation to agricultural research and development is 71 percent: actual allocation to small-scale indigenous industries is five percent; and actual allocation to iron and steel research and development is negligible. The lack of emphasis on research and development in Nigeria is also noted by Teriba et al. (1981:48). They contend that the heavy reliance on foreign raw materials 140 import could be replaced by domestic substitutes, if the firms concerned had initiated research into developing and using domestic raw materials. Distributional Inequity Among the Regions of Nigeria in Manufacturing:Activities The distributional inequity among the regions of Nigeria of the manufacturing sector, documented in chapter four, can be attributed to such poorly designed development strategies as: 1. The continuous concentration of investment in bequeathed colonial administrative centers, chiefly, Lagos and a few other cities. 2. The domination of the manufacturing sector of Nigeria by foreign investors who prefer to locate industries in large commercial towns where profit can be made. 3. The limited local technological and government incentives in the country to establish new industries in the hinterland of Nigeria outside large cities. Most of these attributes have already been discussed, therefore, efforts will concentrate on other directions. In chapter four, it is found that disparities across the regions of Nigeria, in public capital expenditures are in relative terms low and identical prior to 1970 and after 1970. With respect to the number of manufacturing 141 establishments, disparities among the regions of Nigeria are less prior to 1970 than after 1970 and the same is applicable for employees wagg_. Trends, here, point to a reduction in disparities over the years among the regions of Nigeria but much remains to be accomplished, given that the gap is still wide. A number of reasons are associated with the impressive performance observed among the regions of Nigeria: public capital expenditures; the number of new manufacturing establishments; and employees wages, all relate to the creation of sub-regions (states) in Nigeria, the limited decentralization and relegation of power to the states, and the associated new allocation formula. However, huge and increasing disparities are found among the regions of Nigeria with respect to output, value added, and number of manufacturing employees. 'Variation Among Regions_in Public_Capital_Expenditure and Employees Wages Amogg the Regions of Nigeria The disparity, observed in chapter four, in public capital expenditure among the regions of Nigeria may be accounted for to a certain extent by flaws in the P.D.A. fiscal budget allocation formula, which was designed to attain distributional equity in manufacturing activities across the regions of Nigeria. The distribution of the nation’s wealth is centered on a new allocation formula which is based on four factors: I42 1. The contribution made by individual states to the national purse (although this by itself is a source of inequity for poorer regions); 2. The region's needs (although how to determine these needs is not indicated): 3. The population of a region (although there is generally no accurate census figures in the country): and finally, 4. The available manpower to carry out development projects in a region (although many regions lack the technical manpower to carry out develOpment). In general, the bias in favor of coastal regions, with respect to investment in manufacturing, contributes enormously to the observed disparities in Nigeria.. Variation Among_3egions in_Employee Wagee The disparity in employees' wages in Nigeria, especially prior to 1970, may be accounted for by the disproportionate recommendations of wage increases by wage investigation commissions. The most recent recommendation for wage increases, by the wage review commission in 1972, was under the Chairmanship of Chief Udoji, commonly known as "Udoji Award." The recommended wage increases comprised wage increases of almost one—third for Lagos; one-quarter for the former eastern and northern regions; and less than 143 one-tenth for the former western and midwestern regions where wages were already high (Rimmer, 1981). In addition to the inter-regional manufacturing employees wage disparity caused by wage revision commissions, a large wage disparity, associated with inter- sectoral and intra— regional grouping are also a problem. For example, wages of top level officials are considerably higher than wages of workers at the lower echelon and wages of workers in the petroleum industry are higher than wages of workers in agriculture related industries. The commission’s wage increase recommendations only impacted the formal sector: while the private, informal sector wages are determined not by government, but by the free play of the market. A study by Bienen and Diejomoah (1981) documents wide disparities between the wages of farmers and traders; and between the wages of these groups of persons and the wages of formal sector workers in that order. Variation AmongyRegjons in Manufacturing Establishments Several factors are responsible for the high disparity in manufacturing establishments across the regions of Nigeria, especially prior to 1970 and key among them is the low investment performance of the private sector outside Lagos. The guidelines to the Third National Development Plan (1975-1980) attribute the disparity in manufacturing establishments in the country, especially prior to 1970, to 144 the low (less than ten percent of the GDP) private sector investments. Generally, the lack of local technological know—how to start up new projects is a limiting factor and as documented earlier, most ‘of the manufacturing establishments in the modern sector are either solely or jointly owned with foreign expatriates and, therefore, the new establishments are determined by the expatriates based in cities rather than in the rural areas. Another important factor is associated with lack of local technology to establish a full line of manufacturing industries throughout the country. Where most of the modern manufacturing firms are foreign owned, the firms are usually concentrated in preferred colonial administrative and commercial centers such as Lagos, Port Harcourt, near the Sea Coast, and near very few major large cities in the hinterland, as a result of dependence on imported materials. I The general risk—aversion in the country, dependency, and the notion that for a business to succeed, a foreign ex- patriate must be included, are important factors that contribute to the low and awkward investment or manufacturing establishments in Nigeria. Other factors or barriers to entry in manufacturing establishments include: 1. Lack of capital (money, machines, equipment, technological know-how). 145 2. Scarcity of raw material suppliers resulting from import delays. 3. Competition with foreign products and foreign establishments in the country. 4. Lack of information and management skills. 5. High initial cost. As noted by Teriba et al. (1981), the net effects of all these barriers stunted domestic enterprise and kept the ownership and control of the modern industrial sector largely in foreign hands. The variations in manufacturing establishments, found in chapter three, stems from the highly disproportionate concentration of manufacturing establishments in Lagos. It is shown that, in addition to public capital expenditure and the manufacturing employees wages, Lagos accounts for over 50 percent of the manufacturing establishments, output and value added in manufacturing, and number of employees of the entire manufacturing sector of Nigeria, a phenomenon described by geographers as primate city development prevalent in developing countries (Mobajunje, 1973), and stems in preferred administrative and commercial centers established by colonial rulers. 146 Variations Among_Regjons in Output ang:Value Added in Manufacturing Several reasons exist for the high variations among regions in output and value added in the manufacturing sector of Nigeria, after 1970 compared to prior to 1970 and are based in the concentration of manufacturing establishments in a few regions such as Lagos: and in limited manufacturing establishments due to the lack of managerial skills, and deficient technical expertise outside of Lagos. The wide variations and relatively low output in most of the regions are also explained by the fact that new import-substitution manufacturing establishments, chiefly food processing and assembly plants in newly created regions have not yet acquired economy of scale. The impressive performance of Lagos is associated with .the economy of scale, long established industries, and easy access to imported raw materials, expatriates and the fact that Lagos has the locational advantage as a seaport and federal capital. As Teriba et al. (1981:74) notes: Lagos is the chief port of Nigeria, imported inputs are readily available to the state in which it is located, and this accounts in part for the high proportion of Nigerian manufacturing industries situated in Lagos. 147 According to Teriba, Lagos exerts a locational pull due to its market size and easy access to expatriate skilled manpower and inputs. The poor performance of most of the other regions, in output and value added, is attributed to a lack of manufacturing industrial establishments, lack of access to the seaports, lack of access to raw materials, and the heavy cost involved in purchasing machines and transporting them from the seaport to the interior of Nigeria, while the favorable performance of Lagos and the other southern regions is attributed to their proximity to imported materials. The cost of purchasing and transporting capital goods and intermediate raw material from overseas to the hinterlands is considered the single most important reason for the low manufacturing establishments, low output, and low value added recorded by a majority of manufacturing industries in the hinterland of Nigeria. Variations Among_Begjons in Manufacturing:Employees In chapter three, it was shown that disparity among the regions of Nigeria, in the number of manufacturing employees, were greater prior to 1970 than after 1970. Wide ranges were also found indicating a wide variation among regions prior to 1970 than after 1970. Lagos predominates among the other regions as explained by the fact that, Lagos is a chief commercial and administrative center and thus exerts a labor pull from all 148 over Nigeria: the high degree of manufacturing activities in Lagos attracts workers from all over Nigeria. In general, though, the emphasis on heavy capital-intensive industries and the petroleum sector which provides employment to less than one percent of Nigerians results in extremely high unemployment. Although most of the industrial activities (over 70 percent) in Nigeria are small family-owned firms, the entrepreneurs of this sector often abandon their farms to seek the higher paying, but limited, industrial employment in large cities such as Lagos. This, notwithstanding the agricultural sector, continues to provide employment to over 60 percent of the population while the other sectors, chiefly government (military, civil servants) and the service industry, accounts for slightly over 20 percent of the labor force. Employment in the modern manufacturing sector of Nigeria is less than five percent and has very little impact on the GDP of Nigeria, or the socioeconomic development of the country. Due to the domination of the economic scene of Nigeria by statutory corporations which are capital intensive and concentrated in Lagos, the corporations offer limited employment opportunities to the surplus agricultural labor which migrates into cities and the hinterlands of Nigeria. Low wages and limited employment opportunities in the hinterlands of Nigeria cause most people to abandon the agricultural sector in search of better paying jobs in the 149 oil supported industrial sector in large cities. The oil industry, which contributes over 90 percent to GDP during the 19705 and 19805, is dominated by expatriates and offered employment to less than one percent Nigerians (Olaloku, 1978). The indulgence in capital intensive industries in a labor—intensive environment fails to provide employment for the teeming population and school leavers. While population growth and the number of school graduates soars, job creation does not keep pace with it; school dropouts and graduates are ill-trained and thus lack the skills and/or the necessary capital to explore new avenues of employment generating industrial establishments. The failure of the manufacturing sector to expand and to provide employment as the agricultural sector contracted also leaves Nigeria with high unemployment. In addition, massive retrenchment, in the manufacturing sector of Nigeria (AED, 1985), exacerbated the problem of unemployment in Nigeria and as noted by the Labor Congress, several companies recorded higher profits on low labor turnover (AED, 1985). CHAPTER SIX SUMMARY. CONCLUSION. AND RECOMMENDATIONS Summary This dissertation has investigated the impact of public capital expenditure on the development of the manufacturing sector of SSA states with a specific evaluation of the extent to which two development policy objectives, to: (1) stimulate growth of the manufacturing sector as a conduit to socio—economic growth; and (2) to promote an equitable distribution of the profit from the growth, were attained. These objectives were chosen for investigation since: 1. Contemporary definitions of development are now centered around them, and because 2. These objectives are recognized by SSA states, as constituting development. The underlying thesis centers on the problem of under— development, the slow pace to development, and the functions of the P.D.A. as a key factor in facilitating the development of SSA states. The remainder of this chapter is devoted to the conclusions, the recommendations for policy and strategy changes, and the recommendations for further studies. 150 151 Conclusions The conclusion arrived at here is that the relative low contribution of the manufacturing sector to the GDP of Nigeria constituted a failure 'to attain the policy objectives of development stipulated in the national development plans and in the discussion, several reasons were advanced to explain this. For example, due to the "develop quick" attitude adopted by early planners, and deficient executive manpower in the country, the tendency has been to invest in and import- heavy, capital—intensive projects which the foreign contractors and expatriates were familiar with, but which the average Nigerian was not. This was a key flaw that gave rise to the distributional inequity and low productivity of the manufacturing sector experienced in most of the regions of Nigeria outside Lagos. Oil royalties and taxes were utilized to fund heavy, capital—intensive government projects, rather than to promote low cost cottage industries consistent with the technological ability in the country, while investment in research and development to build up a local industrial base was not emphasized. Applied reseach was not accorded full recognition as a development tool in Nigeria since like many SSA states, Nigeria depended on research findings from the industrialized world which may not be applicable to the local conditions. The limited attention paid to the aspect of industrial research in Nigeria may be related to the lack 152 of ability to manufacture capital goods and raw materials locally. The low percentage of SSA states' GDP allocated to research, shown in Appendix D-I. compared unfavorably to that of industrialized countries. The importance of research and development, and the implication of research and development as a core ingredient of development was not appreciated. Most of the slow development of SSA states found in this study is accounted for by: - The low number of scientists (See Appendix D-2); - The low proportion of GNP allocated to research; — The small size of basic capital goods manufacturing industries; - The low production of machines and equipment within Nigeria; — The low productivity in the manufacturing sector; - Deficient technological capability‘ and management skills in SSA states; and - The poor distribution of the factors of production. Based on the minimal development progress recorded in this study, it is likely the P.D.A. of Nigeria is over- centralized. Further studies into the impact of a decentralized P.D.A. in the facilitation of the development of SSA states is highly recommended along with the establishment of research centers in various settings throughout the country. 153 Recommendations Based on the Findiggs of the Study The findings of this study are followed by recommendations for policy and/or strategy changes. The study found a high correlation (r = .8) between public capital expenditure and growth of the manufacturing sector of Nigeria with growth attributed to the spectacular growth of crude petroleum export. Further analysis showed that the contribution of the manufacturing sector to the GDP of Nigeria was declining and below that of developed and most developing countries while the petroleum sector accounted for the greatest portion of the GDP of Nigeria. During the study period, the entire focus shifted to petroleum and neglected somewhat the agriculture and manufacturing sectors, but given the vagaries of petroleum prices and the fact that petroleum is a non—renewable and exhaustible resource, it is recommended that effort should be shifted from petroleum to manufacturing as the major contribution in the GDP of Nigeria. The discussion suggested that the low contribution of the manufacturing sector to the GDP of Nigeria was due to not only the shift in emphasis to petroleum, but also to the adOption of a heavy, capital—intensive, import substitution strategy in the presence of deficient technological and managerial capability to efficiently operate the industries, in addition to: lack of spare parts and raw materials; and 154 deficient technological ability to conduct research and to promote the production of capital goods, spare parts, and raw materials locally. Deficient technical skills, risk aversion, and the associated high cost of starting local industries were probable reasons for indulgence in import substitution industrialization and dependence on foreign firms, capital goods, raw materials, and expatriates. The deficient technological and managerial capabilities in the country were circumvented by hiring foreign contractors to perform highly technical jobs in the country. This form of development is labeled in this study as "apocryphal" or "superficial" since it is associated with dependency and DEE with the local technological capacity to man the projects, especially when the expatriate is no longer available. Other than the high cost involved, dependency and the lack of "know how" to manage such projects may have also played a key role in the low output and value added recorded in the manufacturing sector of Nigeria. On the basis of this study, it is recommended that: 1. A new and/or reconstituted P.D.A. be set up and charged specifically with the functions of coordinating and performing development. 2. The government encourage local entrepreneurial partnership in the private sector so as to promote large corporations. The 155 new or reconsituted P.D.A. of Nigeria and other SSA states should invest the national wealth Basic small-scale local projects consistent with (and that will promote) local technological and managerial skills in the country, with provisions made to upgrade the projects to higher levels of sophistication through hard work, experiential learning or learning by doing, research, and probable serendipitous discoveries. In other words, investment should emphasize projects that can be easily adapted and innovated or modified to suit local conditions, rather than in heavy, capital—intensive and SOphisticated projects that are outside local knowledge. In research and development to design and produce capital goods and raw materials locally, given that the lack of emphasis on applied local research in the past may have contributed to the heavy dependence on foreign capital goods, and raw materials documented in the text. In the promotion of local manpower development, i.e., in the acquisition of local managerial and technological skills. 156 d. In creating and reconstituting the P.D.A. organization to provide extension services, consultancy, financial, and technical assistance services to the myriads of entrepreneurs throughout the country. e. In providing loans and incentives to proprietors to encourage new business ventures, to reduce the barriers to entry into business, to encourage hard work, to encourage expansion, to encourage research into new invention, to assist in the commercialization of the products, and to encourage surplus production for export. The general low output and value added of the manufacturing sector of Nigeria may be attributed to the under-utilization of the capacity of the manufacturing sector and the lack of capital goods and raw materials stemming from dependence on the outside world for the commodities. The huge foreign exchange deficits associated with importing products, and the accompanying import restrictions may have also been responsible for the low value added. It is recommended on the basis of this study that if SSA states desire a high output and value added in their manufacturing sector, they should de-emphasize the importation of capital goods and raw material and invest in extensive research to produce the goods locally. 157 The analysis also pointed out that the manufacturing sector of Nigeria was dominated by foreign investors who tend to have no psychological stake in the development of the country, since their motives and interests are profit oriented. On this basis, it is recommended that SSA states entice foreign investors to invest in the production of capital goods locally and should emphasize investment and research effort that will lead to local technological breakthrough. A detailed analysis of distributional equity of six variables associated with the manufacturing sector showed that: distributional inequity, across the regions of Nigeria, of public capital expenditure, manufacturing establishments, and employees wages was lower after 1970 than prior to 1970. The distributional inequity, across the regions of Nigeria, of number of manufacturing employees, output and value added was very high prior to 1970, and even higher after 1970. The disparities experienced across the regions of Nigeria, in manufacturing employees, output, and value added may be related to the adoption of heavy capital intensive industrialization stategy, the continuous concentration of investment in former colonial administrative centers such as Lagos and a few other large cities; and the centralization and concentration of industrial activities at these administrative centers. Although the focus of this study 158 was not directed towards the structure of the P.D.A. in facilitating the development of SSA states, it could be speculated, on the basis of the findings in this study and past studies, that a decentralized rather than a centralized P.D.A. would be more effective in facilitating the development of SSA states. Recommendations for Further Studies This study has been limited to inter-regional distribution of the indicators of performance of the manufacturing sector of Nigeria and further studies in the future involving all 21 regions, and/or intra-regional studies to establish the basis for distributional equity are now called for. Through further studies, depressed areas may be identified and redressed and provide a basis for equitable planned dispersion of industries. If national government policy objectives of distributional equity must be achieved, then a detailed intra-regional study is necessary to establish a basis for resource allocation and redistribution of wealth. The suggestion here is to periodically document and hence provide a better understanding of the progress, the needs, and the problems confronting developers; and to devise appropriate measures to solve the problems, especially problems associated with low production and lack of expansion of the manufacturing sector. 159 A more detailed study of the structure of the P.D.A. is highly recommended. Such a study might include a relative assessment of the degree of effectiveness of a centralized development administration compared to a decentralized development administration in: a. Facilitating the development of SSA states; b. Promoting the location and allocation of resources, capital expenditure, industries. etc.; c. Promoting growth and efficient management; d. Promoting public and private functions such as government and citizens' involvement in the development process; and in e. Delivering services. A study of manpower development through the initiation and establishment of research centers and capital goods, (electonrics, etc.) industries throughout the country is also highly recommended and suggested that universities, colleges of science and technology, private and government corporations and agencies be studied as probable settings for such research efforts. APPENDICES APPENDIX A PEARSON PRODUCT MOMENT CORRELATION APPENDIX A PEARSON PRODUCT MOMENT CORRELATION Table A.1 Correlation between public capital expenditure and value of manufacturing and crafts in GDP (1962-1974). Value of Manufac— Public Capital Expendi- turing and crafts Year ture (N Million) (N Million) 1962 4515 93.4 1963 10619 151.8 1964 9010 157.8 1965 11212 116.4 1966 9989 192.2 1967 13357 196.0 1968 23900 231.2 1969 17802 270.4 1970 8010 311.0 1971 31310 475.1 1972 54263 460.3 1973 122497 570.1 1974 62218 626.5 29130.9 296.3 Pearson Product Moment Correlation (r): r = .8 Source: Compiled by the author with raw data from: (1) Olayide (1976, p. 54); (2) Federal Office of Statistics Economic Indicators, Dec. 1966, Vol. 2 No. 12; October 1971, Vol. 7, No. 10, March 1975, Vol. 11. 160 APPENDIX B POPULATION OF NIGERIA APPENDIX B POPULATION OF NIGERIA Table 8.1 Population (Millions) of Nigeria by Sub-regions Region 1963 1973 Lagos 2.127 3.6 Western 10.032 17.0 Bendel 2.789 4.8 North Eastern 8.356 14.4 Benue Plateau 3.735 6.4 Kano 6.074 10.4 North Central 4.014 6.8 Kwara 1.275 2.2 North Western 5.628 9.6 Rivers 1.653 2.8 East Central 7.120 12.2 Cross River 2.867 4.8 Total 55.670 79.5 Source: West Africa (August 20, 1979.) 161 APPENDIX C PUBLIC CAPITAL EXPENDITURE AND INDICATORS OF PERFORMANCE OF THE MANUFACTURING SECTOR APPENDIX C-I PUBLIC CAPITAL EXPENDITURE Table C.1 Public Capital Expenditure by Sub-regions of Nigeria (1968/69 - 1971/72) ( N Million) Region Trends: Expenditure 1968/69 1969/70 1970/71 1971/72 Lagos 0.1 0.5 4.6 11.0 West 5.0 9.6 13.5 11.5 Bendel 3.8 6.2 9.2 12.8 North East 0.4 3.9 9.2 12.7 Benue Plateau 0.4 1.7 5.7 9.5 Kano 0.7 4.0 14.2 12.6 Kaduna 0.4 1.7 9.2 12.1 Kwara * * 5.5 8.6 North West 0.3 . 3.1 9.7 11.0 Rivers * * 12.0 15.3 East Central ' * 16.5 17.5 3 Cross River 11.0 12.4 14.2 Source: Tims (1974, P. 223) Nigeria: Options for Long Term Development (cited in references). I62 163 APPENDIX C-2 MANUFACTURING INDUSTRIAL ESTABLISHMENT Table C.2 Number of Manufacturing Industrial Establishments by Sub-regions of Nigeria (1968-1975) Region 1968 1970 1971 1975 Lagos 152 165 197 346 West 42 41 50 203 Mid-West 39 39 35 108 North East 11 10 10 30 Benue Plateau 9 9 16 68 Kano 44 4 50 89 North Central 25 27 20 59 Kwara 5 7 10 28 North West 4 4 9 52 Rivers 34 36 20 37 East Central 45 47 62 207 South-East 11 11 9 66 Sources: (1) Bienen and Diejomoah (1981, p. 255) (2) Federal Office of Statistics Economic Indicators, Dec. 1974, Vol. 10, No. 10-12. 164 APPENDIX C-3 OUTPUT IN MANUFACTURING Table C.3 Output in Manufacturing by Sub-regions of Nigeria (N Million) Region 1968 1970 1971 1975 Lagos 71.518 801.9 419.038 1713.896 Benue Plateau 13.785 18.7 14.528 43.524 East Central 16.883 71.2 3.147 95.131 Kano 25.984 85.0 3.868 155.130 Kwara 1.273 16.6 4.852 88.794 Mid-West 12.083 30.7 47.068 80.419 North- Central 16.283 64.2 20.844 276.982 North-East 2.748 8.4 10.272 11.714 Rivers 11.797 13.2 23.708 40.485 South-East 1.525 2.9 6.347 23.740 West 17.449 80.3 19.607 61.296 North-West 0.196 5.6 6.592 19.279 Sources: (1) Bienen and Diejomoah (1981, p. 255) (2) Schatzl (1973, p. 210). (3) Federal Office of Statistics Economic Indicators (1973-1977) Vols. 9-13, No. 10-12. pp. 9—15. 165 APPENDIX C-4 VALUED ADDED IN MANUFACTURING Table C.4 Value Added in Manufacturing by Sub-regions of Nigeria (N Million) Region 1968 1971 1972 1975 Lagos 30.225 100.806 134.524 779.466 Benue Plateau 0.479 4.949 4.807 31.410 East Central 7.225 7.182 12.817 53.407 Kano 7.046 9.976 22.859 53.339 Kwara 0.852 1.198 1.331 48.356 Mid-West 5.210 13.786 14.133 35.092 North— Central 9.068 4.704 48.771 87.457 North-East 0.458 3.874 3.038 5.326 Rivers 6.983 7.610 12.196 14.556 South-East 1.069 2.228 2.822 13.966 West 11.749 46.348 25.923 14.801 North—West 0.155 2.164 1.759 9.169 Sources: Federal Office of Statistics Economic Indicators (Dec. 1974), Vol. 10, No. 10-12; Schatzl (1973, p. 211) Cited in References. Table C.5 Total 166 APPENDIX C-S 8y Sub-regions of Nigeria TOTAL EMPLOYMENT IN MANUFACTURING Employment in Manufacturing Industries Region 1968 1969 1971 1975 Lagos 26117 43257 19025 105086 Benue Plateau 678 1974 449 5036 East Central 8123 --— 1682 12130 Kano 7286 11141 3233 19107 Kwara 1166 1808 251 7590 Mid-West 7775 7401 2658 16888 North- Central 8961 16239 628 24765 North—East 1057 1327 191 1782 Rivers 4638 --— 1327 7629 South—East 1374 --- 253 23521 West 6302 7644 2653 13054 North-West 144 2479 132 4399 Sources: Schatzl (1973, p. 214), Federal Office of Statistics Economic Indicators (Dec. 1974), Vol. 10, (1981. p. 255). 10—12; Bienen and Diejomoah Cited in References. 167 APPENDIX C-6 WAGES OF EMPLOYEES Table C.6 Employees Wages in Manufacturing Industries (N Million) By Sub-regions of Nigeria Region 1968 1970 1971 1975 Lagos 5984.5 7277.5 19528.0 46743.0 West 1121.6 1375.3 2260.0 7668.0 Mid-West 1559.3 1686.2 1022.0 15517.0 North East 107.2 140.1 128.0 1417.0 Benue Plateau 141.7 147.9 344.0 5927.0 Kano 999.8 1210.6 2292.0 14930.0 North-Centra11575.6 1984.8 650.0 25608.0 Kwara 146.0 256.7 84.0 4697.0 North West 54.9 49.4 56.0 3409.0 Rivers 1035.9 1703.2 830.0 6593.0 East Central 1429.3 1580.0 844.0 11613.0 South-East 203.8 204.3 94.0 8415.0 Sources: (1) Bienen and Diejomoah (1981, p. (2) Federal Office of Statistics Economic Indicators (1973-1977) Vols. 10-12. (3) Schatzl 9-15. (1973, p. 209) cited 9-139 NO. in references. APPENDIX D PERCENTAGE DISTRIBUTION OF ECONOMIC INDICATORS BY REGIONS APPENDIX D-l PERCENTAGE DISTRIBUTION OF ECONOMIC INDICATORS BY REGIONS Percent 01 GNP 5.0 1- __-_ 4.5 - 4.0 ~— 3.5 - 3.0 "- I“ 205 ...... ..... .......... ...... ..... ........... ...... ..... ------ ...... 2 O r. ‘5 “' ‘ '° "‘ iiifif'fi ..... ...... ..... .......... ..... .o ...... ..17 0,5 0.3:. 0.36 . I 7 7- I 7 115511 Developed Doveiopl. Airica N022. A1331; “a E11109. 06“”. Countries 0011111110 ' [AM A... Sun Figure 0.1 Research and Development Expenditures as Percentage of GNP by Regions and Economic Groupings (1970 and 1980). Source: United Nations Statistical Yearbook (1982), New York. 168 169 APPENDIX D-2 PERCENTAGE DISTRIBUTION OF ECONOMIC INDICATORS BY REGIONS 1970 1980 Developed Countries Developed Countries Developing Countries Developing Countries Figure 0.2 Research, Development Scientists and Engineers in Developed and Developing Countries--Percent Distribution (1970 and 1980). Source: United Nations Statistical Yearbook (1982), New York (p. viii). APPENDIX E COMPUTATION OF AVERAGE ANNUAL PERCENTAGE RATE OF CHANGE (r) APPENDIX E COMPUTATION OF AVERAGE ANNUAL PERCENTAGE RATE OF CHANGE (r) t f2 F 1 Where: fl = the figure at the initial date m 11 2 the fiture at the latter date fl 11 average annual growth rate ("1’ II the period of time (years) between f and f I 2 Source: U.N. Demographic Yearbook, 1977 and 1978. 170 BIBLIOGRAPHY BIBLIOGRAPHY Abiodum, 3.0. (1980). Aspects of the Spatial impact of development efforts: A case study of Nigeria, Tijdschrift Voor Econ en Soc. geografic, 72, Nr. 2. 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