What Northern states can learn from Lagos
Economic experts assert that none of the states in the North, except Kano, is economically self-sustaining, especially with the current reduced funding from federal revenue sources. Only Kano recently passed the solvency state, according to analysts. Only Kano is capable of generating relatively sufficient Internally Generated Revenue (IGR) to finance its wage bills and some development projects.
Other states’ monthly IGR cannot even pay 50 percent of their monthly wage bills. Kano no doubt has an advantage. It is the commercial capital of Northern Nigeria and is the second most populous city in Nigeria, and by this status, attracts significant federal allocations. But even Kano is half as viable as it should have been, if only it sustained the economic tempo of the 1980s.
Until the coming of the oil economy, Kano was the major centre for the production and export of agricultural products like hides and skins, peanuts, leather, textiles, grains and cotton. In terms of industrialization, Kano and Kaduna used to have a significant number of industrial
outfits making them truly vibrant in those days.
The Central Bank of Nigeria (CBN) governor, Mr. Godwin Emefiele while meeting with the Cotton, Textiles and Garments Industry manufacturers recently, said the textile industry alone once supported over one million direct and indirect jobs from over 150 factories, most of them in Kano and Kaduna in the 80’s. Expert opinion
Mr. Rislanudeen Muhammad, the Senior Fellow and Monetary Policy Lead at the Institute for Fiscal Studies, Nigeria (NIFS), said over 50,000 small and medium industries had died over the past 20 years in Kano and Kaduna alone. Bompai, Challawa and Sharada in Kano and Kaduna South industrial estates are now ghosts of their old selves, he noted.
He said: “After independence in 1960, the economy of Northern Nigeria started on a trajectory of sound, selfsustainable development with massive investment in agriculture and forward integration to manufacturing, both large scale and in the area of micro-economy.”
According to him, there were strong efforts towards strengthening institutions for development of education and human capital. Unfortunately, the so called ‘Dutch Disease’ that caught up with most oil exporting economies did more harm to the Northern Nigerian economy as the parasitic style of governance took root.
“Agriculture, which used to be the mainstay of the Northern Nigerian economy, was relegated to the background and with the oil price decline shock in the early 1980’s, manufacturing industrial estates, especially in Kano and Kaduna, began to become ghosts of their old selves. Unemployment began to creep up and what development economists call street economy, underemployment, as well as crime, began to become endemic all over. Oil economy made the technocrats lazy and heavily reliant on monthly FAAC allocation,” he noted.
This loss can be largely attributed to bad policies, corruption and everything between. Now, the North is living in the stark reality of poor revenue base and a biting recession, largely induced by the fall in oil price and drop in oil production due to
attacks on oil facilities in the Niger Delta. There is no IGR to hedge the drop in revenue.
But rather than the North throwing their hands up in despair, experts say if deliberate economic planning laced with sufficient political will is deployed, the Northern states can still rise above the poor financial base to a financial powerhouse like Lagos. Mr. Muhammad, an analyst at NIFS, said the North should invest heavily in education and agriculture to get its people out of poverty. Security too is critical, he said.
“With a conducive atmosphere for peace, investors can be attracted to areas of agribusiness, infrastructure, mining and development of small-scale industries. Northern states should harness the abundant opportunities in those areas and begin to think of life away from monthly handouts from oil. If agriculture and mining opportunities are taken seriously, that will improve the lives of the people, reduce poverty, unemployment and crime and revenue generated from the new vibrant economy can be deployed to other critical sectors like health, education and infrastructure. This requires visionary leadership and I believe it can be done,” he said.
Agema Gloria, the Head of Programs, Global Awareness for Development Initiative, said the Northern states should consciously adopt standard best practices, curb the environmental/natural hazards through adaptation measures for the frontline states. Morocco and Israel are good examples of a conscious effort to invest heavily in rural development programmes through large scale commercial mechanized farming of any produce indigenous to a particular state with value chain processing, she said.
She also noted that the power sector must be addressed to ensure stable growth and progress. “In this case, renewable energy must be adopted, particularly solar and wind energy. It is a clean, cost effective and reliable source of energy,” she added. Transportation nation
“It is important to link the northern states through the railway system. I can also imagine the benefits of cargo airports,” she noted.
Also commenting, Mr. Kasimu Garba Kurfi, the Managing Director/CEO of Lagos-based Apt Securities and Funds Limited, said the North cannot achieve much without the requisite expertise.
“You simply can’t give what you do not have. So most Northern states are suffering from capacity gap. How many of the governors have appointed commissioners in their areas of expertise? For instance, the Commissioner for Finance in Katisna State studied Physics. What’s the correlation and how do you expect sound financial advice from a physicist?” he asked.
According to him, when Tinubu started his reforms in Lagos, he even employed an ex-bank managing director and most of his commissioners where experts in their respective offices. He noted that the North’s IGR capability is too poor to garner resources for meaningful development.
“Kano generates about N2billion monthly from IGR. That was because the then Governor Rabiu Musa Kwankwaso moved it from N500 million. Now Governor Ganduje has moved it from N1bn to N2bn but Kano can do more with its size and population,” he said.
According to him, most of the states in the North generate less than N500million monthly from taxes. He noted that a lot of taxes are not paid in the North, unlike Lagos that collects taxes on virtually everything. He advised the Northern states to deploy technology in revenue drive and revenue collection, adding that land issues must be computerized like Abuja.
“The Northern states shouldn’t just sit and wait for federal allocation. When I was growing up, we paid taxes on a lot of things. We paid for a bicycle license, every cow, goat, sheep, etc. was taxed. Now the states don’t even know the number of herds of cow in their states, let alone tax them. The value chains on agriculture are not tapped in the North. A lot of farm produce still gets wasted because of the absence of processing facilities, let alone export. The North must tap the value chains on agricultural produce. Also, dry season farming is critical. The North must invest in farming all year round,” he said.
“It’s also critical that the North maintains synergy with other states without agricultural value chain. For instance, the Middle Belt states produce a lot of tuber crops but not enough of grains compared to the South. The states can leverage on each other’s’ competencies like what Kebbi and Lagos states have done. Though collaboration is good, certain times, you need to do it alone as that breeds competition which is healthy for growth,” he said.
According to Kurfi, the North also needs to invest in financial institutions that can give them access to more credit to do business, especially agribusiness. The investment expert also said the region must mine its solid minerals. “Most of the Middle Belt and North-East states have solid mineral deposits in commercial quantities, how many of the states are tapping into them? Those are huge resources, yet untapped,” he added.
Basil Jev, a retired Global Oil and Gas consultant from Wuese, Gaav, Benue State, said there is no country that thrives well in an atmosphere of uncertainty to life and property.
“For the huge potentials of the northern region to be fully realized, we need a safe environment to live, work and carry out entrepreneurial activities without the fear of businesses getting destroyed overnight by hoodlums parading either as political thugs, religious fanatics, herdsmen or misguided insurgents claiming land rights. If this is assured, the people’s creativity and ingenuity can express itself more abundantly and attract more investments and therefore create better jobs in a sustainable manner. Take a look at Lagos State, probably the only space in Nigeria not seriously threatened by a high insecurity index. And they have been growing steadily since 1960. People need peace and security to think creatively and act creatively with conviction for a long sustainable future” he said.
Dr. Son Gyoh, a development expert based in Ireland, said as many that would do solid minerals or agriculture business, they should think collaborative initiatives in the face of capital crunch. They should think collaboration to improve security that can provide conditions for investment, he noted.
“For those strong in solid minerals, a joint approach that can attract investment/R&D should be spelt out. For agric, they should think of production process and storage as integrated chain and think pilot export scheme. A renewable energy agro-policy should guide this collaboration to attract donors and foreign grant opportunities. River Basin authorities should reform and reposition for observable impact and selection of managers competitively. Also, a timeframe for achieving various steps to these should be laid out with follow-up reviews,” he said.
“The Emir of Kano, Alhaji Sanusi Lamido Sanusi should be invited to give them a good talk on strategies to achieve synergy and leverage. But there must be a shift from the patronage of ‘elite houses’ or tribes should be replaced with the hunt for highly skilled professionals and consummate businessmen,” he added.