kcjazz:

Basically, we don't have a way to transfer land assets in order to access capital. Part of solving the problem is to modernise our land registering system so that all this land in my village can be used as a collateral to gain capital. We do not have the legal framework for that YET leading to ambiguities as to who owns what. El Rufai tried it in Abuja and it could be done. This is what we have to borrow from the west before doing industrialisation.

Have you wondered why most conflicts in this country or even Africa are directly or indirectly related to land?

Hence this problem, banks will always ask for high amounts to enter the market to cover their risks. Barriers to entry will always be high. Even PDP presidential forms goes for 10 million naira

I see that someone is a disciple of De Soto   Have you read the book, the mystery of capital? The biggest barrier to development, industrialization and wealth creation in Nigeria and third world countries is the lack of property rights. That is the difference between poor third world countries and rich industrialized societies. In poor and socialist nations, ownership and control of all the wealth of the nation is vested in the state i.e land, oil, gas, minerals, water rights etc. In developed nations, all these assets are constitutionally vested in individual owners. It is these assets that private citizens use as security to access capital for economic activities.

A poor Okada rider in Nigeria may have inherited acres of farmland in the village but he has no legally recognizable ownership that he may use as security to access capital from a bank to set up a small or medium scale enterprise. As a matter of fact, the land is constitutionally vested in the state governor who holds it "in trust" for the people courtesy of the land Use Act.

That was one reason the founders of America made property rights a foundation for the new nation since they saw how all the economic assets of England was vested in the Crown. This made the royal family, its friends and cronies the wealthiest  people in the land while the vast majority of the English people were poor in Medieval times.

That is the exact same scenario happening in Nigeria and third world countries. The state, its rulers, friends and cronies of the rulers are stupendously wealthy while the vast majority of the people are poor. Why? Because whoever has access to the levers of power has access to the wealth (land, minerals, oil & gas, licenses etc) vested in the state. This is not so in wealthy developed nations

^^ great post. I think we are starting to identify the specific impediments to our development.

@pleep
Great post, great topic, great reading, one of the best intellectual discussions I have ever read on the 9ja project.
You basically said everything that was on my mind especially when you defended your position against AjanleKoko, the situations in South Africa and UAE was really remarkable, 9ja is really trying to be like UAE with its opopulation of 150million people, very true and indeed very funny,

It is never going to happen, we can never develop without industrializing first, some have said education first and others have said agric first,

With regards to educating first, Take nigeria for example, There is really no difference between the sections of the country that claim to be in most educated and the least educated, we have an educated set of people all living in squalor, making a mokery of education,

With regards to focusing on Agric first, I seriously fail to undersrtand the point of the persons making this argument,
are they saying that we should all go into subsistence farming, propably like 80% of the population??
are they aware that the most industrialised countried produce the highest amount of food with less than 1% population? when we talk of UK and US government subsidizing agric in their countries it is done as a price control measure, because so much food produced in abundance that prices may crash and force farmers out on business in addition to protecting the farmers from competition of other industrialised countries where the labour cost are lower.

For nigeria, industrialization is definately the way to go, but so far why have we failed, I thinks its because of government desire to participate in business ventures, in order words this has contributed to the killing the capitalist and adventurustic spirit of the nigerian enterpreneur,


Our first attempt at industrialising failed because all the majour industries setup to propel the country into the industrial age were all goverment run, from the steel mills, aluminium rolling plants, tools shops etc, they were not run as profit making ventures, and as such crumbled,
The usual justification for this system is that nigerian are poor and can't do it them selves, so government will run it for them,


In order to move forward,
1-government needs to get out of of business very fast, if this is not what GEJ is thinking about then forget about development for the forseeable future, Concentrate solely on regulation ind inspiroing development, do not run any thing, schools, hospitals, transport, railways, houses, factories, sports, nothing, nothing at all, al government income should be derived from taxation, remember that when gevernment officials are no longer distracted by parastatals and government run businesses, there is likely to be more focus on policy and regulation

2-Subsidies, after full privatisation, all subsidies should be stopped, no food for lazy man, blanket free education, free health care, fuel subsidy, etc should be cancelled from the constitution. A proper welfare system targeted at the unfortunate in the society (not lazy people) should be set up, to the run by consultants to

3-Government activities. 95 precent of government should be run by consultants, government should be comprised of a few very highly paid professionalls in the various fields, other sundary activities should be handled by consultantants at the lowest bidder cost, no more government clearners and drivers, clerk, stewards etc,

4-Encouraging industriazation via tight policy control not by active participation in business, eg, businesses who patronise products from nigerian may end up paying 10% the tax of other companies

At the end of the day, to have sustainable power, good roads, and infrastructure, health care, schools, and various other good things of life, we need to be producing them, or at least a major component of them, its waste of money to set up a fertilizer factory or railway system just to import every single screw or bolt required for its maintenence, worse even when being run by government,

Hard decisions need to ne made, we need to move some steps backward to propel our selves forward, we should not be trying to sustain the poor with blanket subsidies, its a waste of funds, we should be rushing to increase the middle class, and the only way forward is rapid industriliasation

@ Dalover: Excellent excellent post!! 5 STARS!!!. I cannot agree more. You really do understand the role of government.

DaLover:

With regards to focusing on Agric first, I seriously fail to understand the point of the persons making this argument, are they saying that we should all go into subsistence farming, probably like 80% of the population?? Are they aware that the most industrialized countries produce the highest amount of food with less than 1% population? when we talk of UK and US government subsidizing agric in their countries it is done as a price control measure, because so much food produced in abundance that prices may crash and force farmers out on business in addition to protecting the farmers from competition of other industrialized countries where the labor cost are lower.

Notice the difference between subsidy in industrialized nations and subsidy in Nigeria. In Western nations, they subsidize production (e.g. agriculture); in Nigeria, we subsidize consumption (e.g. fuel) which is an utter waste of resources.

DaLover:

For Nigeria, industrialization is definitely the way to go, but so far why have we failed, I thinks its because of government desire to participate in business ventures, in order words this has contributed to the killing the capitalist and adventurist spirit of the Nigerian entrepreneur.

True and because of this, too many Nigerians expect the state to do things that private companies do in Western nations e.g. electricity supply, oil refining, steel production etc

DaLover:

Our first attempt at industrializing failed because all the major industries setup to propel the country into the industrial age were all government run, from the steel mills, aluminum rolling plants, tools shops etc, they were not run as profit making ventures, and as such crumbled. The usual justification for this system is that Nigerians are poor and can't do it themselves, so government will run it for them.

Agreed! Governments everywhere are usually inefficient at running companies. They run them at a loss and ultimately run it into the ground.

DaLover:

In order to move forward,
1-government needs to get out of business very fast, if this is not what GEJ is thinking about then forget about development for the foreseeable future, Concentrate solely on regulation and inspiring development, do not run any thing, schools, hospitals, transport, railways, houses, factories, sports, nothing, nothing at all, al government income should be derived from taxation, remember that when government officials are no longer distracted by parastatals and government run businesses, there is likely to be more focus on policy and regulation.

2-Subsidies, after full privatization, all subsidies should be stopped; no food for lazy man, blanket free education, free health care, fuel subsidy, etc should be cancelled from the constitution. A proper welfare system targeted at the unfortunate in the society (not lazy people) should be set up.

Gbam!!

kalokalo:

I see that someone is a disciple of De Soto   Have you read the book, the mystery of capital?

Haha, yeah I have read that and yeah I support his ideas. Very applicable to Nigeria, instead of a national ID card scheme lets do land reforms. Plus it was on Late Yar'Aduas 7 point agenda, so they thought of it but I guess things have changed now.

DaLover:


With regards to focusing on Agric first, I seriously fail to undersrtand the point of the persons making this argument,
are they saying that we should all go into subsistence farming, propably like 80% of the population??
are they aware that the most industrialised countried produce the highest amount of food with less than 1% population? when we talk of UK and US government subsidizing agric in their countries it is done as a price control measure, because so much food produced in abundance that prices may crash and force farmers out on business in addition to protecting the farmers from competition of other industrialised countries where the labour cost are lower.

Well, I never mentioned subsistence farming. I mentioned land reforms and the need to use agriculture as a stepping stone to the industriliastion you speak of. This things are not going to happen like turning on a light switch. Agriculture is not planting "agbalumo" and "ewedu" , first off it employs more folks right now as we speak. So all we have to do is to seek out stable foods and cash crops for the next 10/20 years.

With the subsidies, this is business, lets at least feed ourselves and by extension Africa, last year we spent $1.2 TRILLION not Naira, that includes milk, sugar, rice etc. Even the industrial revolution was ushered by the British Agricultural Revolution, so I am not out of order when I think agriculture is a way.

If we had unlimited resources, then lets do steel industrialization but we know we do not so how do we fund it? And saying Government should get off the way is not as easy as you make it, we can see what Shell has become in the Niger Delta when Government is out of the way. And this is why land reforms is a start for us.

talk about putting the cart before the horse.

I appreciate all the insightfull comments on this topic its been very interesting

I want to point out some of the negative effects of Education without industrialization and reiterate how industrialization will bring political stability to Nigeria.

I had an Epiphany today. I realized that the reason the protests and revolutions in the middle east were unable to pick up in Sub-Saharan Africa is because of a lack of a middle class. The middle class has historically been the demographic that pushes for political change. The Rich are oblivious and the poor are scared, and do not have a sense of their own worth.

Poor people in Nigeria act like middle class people with consumerism etc. This is because of education. (I think education has caused the over-materialism and consumerism that is characteristic of Nigerian society) But under the surface most still have the mentality of a poor person. Accepting the status quo I.e 'suffering and smiling'. And are not taken seriously by the elites in power. This is a characteristic of poor people around the world and is the #1 reason Nigeria is not moving forward. Political corruption is just a red herring.

Industrialization is the only way to create a middle class as DaLover pointed out. Thus it is even more imperative to enter this stage and fix our problems of political stability and create the middle class that will make Nigeria great. I really belive that once we become industrialized all our other problems will melt away. So we should stop worrying about them and focus single-mindedly on making Nigeria an industrialized nation. What do you guys think?

kcjazz:

Haha, yeah I have read that and yeah I support his ideas. Very applicable to Nigeria, instead of a national ID card scheme lets do land reforms. Plus it was on Late Yar'Aduas 7 point agenda, so they thought of it but I guess things have changed now.

Funny enough, if rapid industriliasation is what we need, the present land system where state governments hold the land in trust may just be the way forward, why you would ask?, since governors, along with the state houses of assembly can decide what to do with land at any point in time and pay compensation, it means there exist a possiblity of great things being achieved,

Just imagin around the Aba axis, well known for its enterprenurial drive, but being held down by lack of power and associated infrastructure, nothing stops the Abia state governor from providing lands for private people to build industrial parks or estates, self reliant on power provided by another set of private individuals tru IPPs, who are reliant on another set of private people who pipe down the gas for the IPPs from the nigerdelta, who pay the oil companies for the gas, and gbam, medium scale industries can now operate with fairly ok infrastructure, and constant light, and pay a rental for a space in any of the industrial parks,
Does the government need to reform land to achieve this? Nope
Does the government need to build the industrial parks? Nope, just provide the land, and draw up conditions to make it competitive and ensure that demand and supply fairly balance out, too few parks make the cost exorbitant, to many may discourage investors with low rate of returns, ( the business of regulation, policy fomulation and modulation of business enviromental conditions is very serious, and it presently being diminished by governments desire to participate in a businesses that can be better driven by private sector, in short land reforms is not what we need for now,

Just imagin a situation where kwara and benue state governments carved out very many sections of lands and leased them to large scale private farmers?? several hecters each, not one, not two but 50-100,

The same can apply to residential areas , commercial areas etc? maybe government may end up being fully responsible with just trunk roads linking the various layouts, industrial, residential, commercial etc after all people should contrate on buying houses built in organised areas properly setup, not building one house for 25years, block by block, but paying up your morgage over 25 years, maybe I am being too theoritical

kcjazz:

With the subsidies, this is business, lets at least feed ourselves and by extension Africa, last year we spent $1.2 TRILLION not Naira, that includes milk, sugar, rice etc. Even the industrial revolution was ushered by the British Agricultural Revolution, so I am not out of order when I think agriculture is a way.

Kcjazz, when will you realise that blanket subsidies actually kill us, don't doo us any good, create a lazy culture and and up perpetrating what it was set up to solve, lets take a few examples,

Free education: ends up creating two classes of schools, one for the poor of the society and the private ones for the rich, those for the poor are definately substanded, you will never catch a middle income person sending his kid to one of this schools even in your wildest dream, all the same, funds will be allocated for these schools, imagin replacing this messed up system with one where all the schools were privately owned, and government had to pay school fees for those who truelly cannot afford it, the gap between the standards of the schools might not be that high, all the private schools had a to meet a minimum requirements, and govt will not lack the moral justification to demand this min standard because it wouldn't run substandard schools

Free or subsidized healh care: exactly same as above,

@pleep if you could point the way in the direction of an american /european bank that will allow a nigeria-based nigerian like to take a loan, that would be helpful.

last time I checked, HSBC politely informed me they do not handle clients from my part of the world YET.

kodewrita:

@pleep if you could point the way in the direction of an american /european bank that will allow a nigeria-based nigerian like to take a loan, that would be helpful.

last time I checked, HSBC politely informed me they do not handle clients from my part of the world YET.

HSBC no get money to borrow anybody right now, period.

kodewrita:

@pleep if you could point the way in the direction of an american /european bank that will allow a nigeria-based nigerian like to take a loan, that would be helpful.

last time I checked, HSBC politely informed me they do not handle clients from my part of the world YET.

I really wish i knew  but i don't think it is common. When we start our business next year, were going to have it registered in the U.S to avoid that problem. I belive my uncle said that if your registered in the U.S but opperate in Africa etc, it souldn't be so hard to get a loan from an american bank. especially if you have made profit or have a building.

AjanleKoko:

HSBC no get money to borrow anybody right now, period.

Why not?

pleep:

Why not?

They are busy trying to save their business from collapse.

Though they might want to open up new lines of business in places like Africa, if there is significant opportunity created by the governments of Africa. I don't think they do small scale financing in that region.

nigeria should forget about industrialisation and face products that can be a source of foreign exchange. see, even when we industrilise, can we match the foreign made goods? the taste 4 foreign goods among we nigerians is high. even the industries that established themselves here are forced to closed down due to high cost of running on generator.

unfortunately the power issue often puts a full-stop on all discussions about Nigerian development. But as u can see in the topic title, that subject has been addressed.

I see that someone is a disciple of De Soto   Have you read the book, the mystery of capital? The biggest barrier to development, industrialization and wealth creation in Nigeria and third world countries is the lack of property rights. That is the difference between poor third world countries and rich industrialized societies. In poor and socialist nations, ownership and control of all the wealth of the nation is vested in the state i.e land, oil, gas, minerals, water rights etc. In developed nations, all these assets are constitutionally vested in individual owners. It is these assets that private citizens use as security to access capital for economic activities.

A poor Okada rider in Nigeria may have inherited acres of farmland in the village but he has no legally recognizable ownership that he may use as security to access capital from a bank to set up a small or medium scale enterprise. As a matter of fact, the land is constitutionally vested in the state governor who holds it "in trust" for the people courtesy of the land Use Act.

That was one reason the founders of America made property rights a foundation for the new nation since they saw how all the economic assets of England was vested in the Crown. This made the royal family, its friends and cronies the wealthiest  people in the land while the vast majority of the English people were poor in Medieval times.

That is the exact same scenario happening in Nigeria and third world countries. The state, its rulers, friends and cronies of the rulers are stupendously wealthy while the vast majority of the people are poor. Why? Because whoever has access to the levers of power has access to the wealth (land, minerals, oil & gas, licenses etc) vested in the state. This is not so in wealthy developed nations

Wonderful post

Hehe