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Southeast’s next economic transformation 09 Oct 2023

On 28-29 September 2023, the governors of the Southeast held a security and economic summit to develop strategies to address the crisis of livelihood in the region that manifests as high insecurity and economic stagnation. The Director General of the World Trade Organisation, Ngozi Okonjo-Iweala, was the keynote speaker for the plenary and focused on how the region can tap into its resources and the changing nature of global economics to reposition itself as a successful competitor in global trade. The highpoint of the event is the apparent commitment of the governors of the region to pursue economic development and security for the region. It was satisfying to behold all of them together in a summit with experts to seek solutions to governance and development challenges in the region.

But more than words are needed in the Southeast. We need good visions and the right actions. It is true that the region outperforms the rest of the country in the critical human development indicators. It has the lowest poverty rate, including multidimensional poverty. It has by far a lower number of out-of-school children than any other region. Its per capita GDP is better than most of the regions. But its relatively good economic performance is bad compared with its factor endowment and its past performance. Nigeria’s economic performance has been terrible in recent time. So, comparison with other regions does not really show good performance. The truth is that the Southeast should be far ahead of the national average in every economic and human development indicator. But it is not. More worrisome is its insecurity index. Although it is no where close to those of Northwest and Northeast, it is a decline from where it used to be a few years ago when it was adjudged as by far the most peaceful and secure region in Nigeria. Things fell apart.

How should the Southeast begin to redeem itself and move more assuredly towards its destiny as the nation’s economic powerhouse? With its mineral resources and well-educated, entrepreneurial people, the region should be fast industrialising and enhancing Nigeria’s export trade. But the path to this future goes through the past. We need to go back to the 1960s when the Eastern Nigeria was the fastest growing economy in the world, outperforming the likes of Singapore, Bangladesh, and Taiwan. There was something different about that burst of entrepreneurial energy by the government of Eastern Nigeria under M.I. Okpara. That something is politics.

Many people have argued that economic development itself is a handmaid of politics or at least related to politics in an inseparable way. That is why it is called political economy. The great performance of Eastern Nigeria in the 1960s is because it has a more development-oriented politics. The region was a developmentalist state. Today, under the ideological sway of neoliberal economics, it is no longer hip to describe a state as a developmentalist state. But strangely, most of the real economic transformation we have witnessed in the world has come through countries that were somewhat developmentalist and not neoliberal, whether England, starting from the 1820s (as recognised by Karl Polanyi) or the United State under Alexander Hamilton as Secretary of Treasury, or even East Asia (as argued by Robert Wade and others).

Chalmers Johnson, in his classic “MITI and the Japanese Miracle: The Growth of Industrial Policy, claimed Japan as a developmentalist state and showed the elements of developmentalism which is the idea of the function of state as the pursuit of development in the form of ‘techno-industrialism’. One core element of developmentalism is that the economic policymaking is based on ‘plan-rationality’, rather than ‘market-rationality’. Developmentalist economies are planned economies without the autarchy. The state creates a pilot agency to coordinate the transition to advanced productivity through a level of coherence and coordination that the market cannot achieve. The heart of the success of developmentalism is elite consensus on a developmental bargain that is oriented towards industrialisation. The ruling elites are both nationalistic and technocratic in engaging the business community in an institutionalised way that guarantees economic transformation, not rent-seeking.

Whether in Japan, Taiwan, China, or Eastern Nigeria, the logic and positive outcomes are the same: the state focuses on economic transformation in terms of marketable goods through transition from agriculture to industry and commits to reducing constraints and activation catalysts for industrial development. Micheal Okpara did the same in Eastern Nigeria in the 1960s and the result was a harvest of industries that grew the GDP exponentially. Professor Anya O. Anya described the explosion as follows: “there were numerous industrial projects scattered over the length and breadth of Eastern Nigeria. In one frenetic burst of energy, a wave of maniacal and frenzied activity was on-going over Eastern Nigeria. … by January 25, 1963, the Michelin Factory at Port Harcourt was opened. The tyre factory was a USD 3,000,000 undertaking. On March 22, the headquarters building of the Universal Insurance Company was opened in Enugu. On May 10 the Nigerian Gas Company was commissioned at Emene near Enugu. On May 16, the Aluminum Factory at Port Harcourt was opened. On August 24, the Glass Factory became operative in Port Harcourt. On October 18, the Aasbestos Cement Factory was opened in Emene.”

The explosion of industrial projects was possible because the leadership had a clear ideology and the passion and commitment to implement techno-industrial transformation. They also constructed a political settlement that managed political power in a manner that contributed to productivity and high human development. Peter Evans calls it ‘embeddedness’. Political power in Eastern Nigeria of the 1960s was embedded in the society. Political power in the Southeast in 2023 should be similarly embedded to drive economic transformation and human security in the region.

Sam Amadi, PhD, a former Chairman of the Nigerian Electricity Regulatory Commission, is the Director of Abuja School of Social and Political Thoughts.