Fixing These Paralyses in Nigeria’s R&D Sector to Unlock Steady GDP Growth

By Mutiu Iyanda

To be a leading economy and providing sustainable public goods to citizens, countries need a set of policies and programmes with the right political will for effective implementation. Some countries in the developing continents are competing with those in developed regions utilising available human resources and knowledge. The ongoing trade war between the United States of America and China is being fought on both sides with the appropriation of knowledge. Since 2017, the two countries have reaffirmed the need for countries to pursue a knowledge economy rather than resource-based economy. China does not stop developing innovative science and technology products, challenging the hegemony of the US and some countries in the world.

For a knowledge economy to materialise and make significant contributions to a country’s growth, adequate attention must be paid to research and development programmes or initiatives within academia, security and agriculture circles. These circles are essential for enabling business environment. Problems or frictions in processes, people, product or solution and technologies in private and public sectors cannot be resolved absolutely without using research findings. In fact, the Global Knowledge Economy Index evolved on the basis of measuring countries in terms of innovation that strengthens the components –processes, product or solution and technologies–towards sustainable economic growth.

Nigeria, like other countries in the developing world, has been ranked low in the Global Knowledge Economy Index over the years because of its attitude and lack of political will to research and development in academic, security and agriculture. With over 200 universities, the country can only celebrate 44% of the “scholarly output” of South Africa and 32% of Egypt. This is what Nigeria earned after 8 years of establishing the Tertiary Education Trust Fund (TETFund), an agency set up by the Federal Government to manage and disburse to public tertiary institutions funds gained through the imposition of a 2% tax on company profits.

A few years after the establishment, the argument among the academics has been that the agency is failing local universities. According to the scholars, by investing in postgraduate studies of Nigerians in other countries, the agency is still essentially enriching universities abroad instead of investing in higher education in Nigeria. With this approach, Nigeria will continue to have low “scholarly output” and contribution to the GDP growth every year. The position of the academics is further reinforced through the latest Journal Citation Reports. Out of the numerous journals being published across the universities and other institutions in the country, only 4 met the international standards –African Journal of Library, Archives and Information Science, African Journal of Reproductive Health, Nigerian Journal of Clinical Practice and Tropical Journal of Pharmaceutical Research.

Considering the high level of insecurity occasioned by the terrorist attacks, kidnapping, herdsmen and farmers crisis, among others, expectation among the experts and public analysts is that adequate spending on research and development will be the priority of the government. A year after the emergence of the Boko Haram in the northern region, available statistics shows that Nigeria spent only 1% of its Gross Domestic Product on its military compared with 4.8% by the United States of America.

When it was obvious that the attacks from the terrorist group seemed too difficult to contain, the government increased its defense budget by 32% in 2011. Eight years after, it took the intervention of the National Assembly before ‘adequate’ funds could be allotted to the security in the 2019 budget. The poor funding and other issues such as insufficient equipment and materials have been the factors contributing to the poor ranking of the country’s military. For instance, 2019 Global Military Rank report places Nigeria in 44^th among 137 countries. In terms of the military strength, Egypt (12), Algeria (27) and South Africa (32) are the leading countries in Africa.

From Operation Feed the Nation to the current Economic Recovery Plan, Nigeria has always had good plans for the agriculture sector, but the lack political will to implement them. As the population increases every year, agricultural production decreases, especially the production of the most consumed stable foods. In 2014, 6 million metric tonnes of rice were produced and increased to 6.2 million metric tonnes in 2015. Since 2016, the production has been on decline status, according to available statistics. Despite being the most important in the country, employing about 70% of the workforce, the sector is suffering because of the low output occasion by poor funding and adequate personnel. There is no doubt it would be hard for Nigeria to feed its growing population without addressing these challenges. Latest statistics from ASTI indicates that Nigeria has 2,975 national agricultural researchers working full time with the farmers across the country. Comparing this figure with the countries such as South Africa (811), Kenya (1,168), Ghana (587) and Botswana (108), Nigeria is on a good pedestal. But, Nigeria is really lagging behind when researchers per 100,000 farmers becomes a yardstick. In terms of researchers per 100,000 farmers, South Africa and Botswana are better than Nigeria.

Does It Pay Off to Research Nigerian Economy?

Developed and some developing countries spend a lot of money on research and development towards innovation. They spend on it because innovation remains one of the key drivers of economic growth. In most developed countries, expenditures on research and development exceed 2% of GDP. And about 70-75% of R&D expenditures are covered by private business corporations. The big question is what have been the impact of inadequate funding and lack of enabling environment, including resources in research and development sector on the Nigerian economy from 2015 to 2018?

The Global Competitiveness Index, the country’s GDP growth and GDP per capita provide the answers. According to the World Economic Forum, the publisher of the GCI, “a higher competitiveness ranking (in lowest score) shows the higher productivity of the country’s economy, which should lead to higher and more sustainable economic growth.”  This signifies that countries with the lowest score on the Index should produce faster GDP growth rates year on year.  The total GDP per capita from 2015 to 2018 was $8,906, while total GDP growth was 3.8%. The average GDP growth rate was 0.95%, while the average GDP per capita was $2,227.

To understand the impact, quality of scientific research institutions, university-industry collaboration in R & D, availability of scientists and engineers, availability of research and training services and company spending on R & D were selected for the analysis along with the GDP growth and per capita.

The poor ranking of these indicators had varied impact on the Nigerian economy between 2015 and 2018, analysis reveals. The impact was more severe on the GDP growth rate than GDP per capita. Four out of the 6 indicators connected with the GDP growth negatively, while 2 only had negative links with the GDP per capita. From the analysis, it is clear that the availability of research and training services, availability of scientists and engineers and the quality of scientific research institutions carpeted Nigeria’s GDP growth during the years. Business costs of terrorism and university-industry collaboration rankings did not established significant impact on the GDP growth.

Can Nigeria Be Resilient to Economic Crisis?

Analysis of each indicator along with the GDP growth and GDP per capita has revealed different results. But, there is a need to be curious about the severity of all the indicators on the two measurement criteria. In the first analysis leading to the severity analysis, availability of scientists and engineers, company spending on R and D and university-industry collaboration in R and D had highest values followed by quality of scientific research and institutions, and business costs of terrorism. This suggests that the indicators with the highest values caused biggest havoc on the GDP growth and GDP per capita.

This is clearly established from the analysis by one percent of the Severity of the GCI (SGCI) decreasing the real GDP growth by 11.2%. For the GDP per capita, analysis reveals that the SGCI decreased it by 62.6%, signifies $5,575 reduction in the country’s GDP per capita during the years.

Further analysis indicates that Nigeria survived the influence of the poor ranking on the GDP per capita in 2017 and 2018 by 66.7% and 33.3% respectively. However, the stakeholders in the Nigerian project need to address the poor positions on the GCI. This is imperative as analysis suggests the possibility of the indicators impacting the country’s quest to increase its current GDP per capita ($2,028=2018) and GDP growth (1.9%=2018).

Strategic Options

Increasing Nigeria’s competitiveness on the global space and averting severe consequences of poor ranking on the economy require collective efforts. Stakeholders identified in the analysis cannot not come together and devise the right strategies and plans for adequate funding of research and development programmes, equip personnel with the needed skills and knowledge, and improve workforce through strategic recruitment of competent hands. Nigeria needs to key into an innovative research mantra towards better industries, life for citizens and change the world.

Mustapha Adeitan made significant contribution to this piece by providing statistical support using relevant methods, especially regression analyses and summarising insights towards forming coherent themes.