As President Bola Tinubu endeavors to steer the Nigerian economy into a productive one over the next three years, there is the need to give attention to an important ingredient of economic growth and prosperity, productivity.
Nigeria, known for its hardworking and ambitious people, seems poised for economic prosperity. However, a closer look at global competitiveness rankings raises concerns.
According to Labour Productivity statistics of the International Labour Organisation and the Global Competitiveness Index 4.0 2019 Rankings, Nigeria stands at 134th and 116th globally, respectively, signalling challenges in productivity.
Labour productivity, a key economic indicator, directly influences economic growth, competitiveness, and living standards. It gauges the efficiency of combining capital and labour to produce more with the same inputs. The 2019 Global Competitiveness Index projected Nigeria’s competitiveness index to improve to 48.00 points in 2021 and 50.00 points in 2022.
However, the ILO’s 2023 labour statistics indicate that not much has been achieved by Nigeria in terms of productivity. The fact that Nigeria currently ranks 18th in Africa, two positions from its 16th position in 2019, shows some extent of stagnant improvement among its labour force.
Productivity growth involves optimizing both capital and labour, not just output per person employed or per person hour. Total factor productivity considers changes in capital and labour force size, providing a more comprehensive measure of productivity.
Productivity is more than a numerical metric; it significantly impacts living standards. Lower productivity can hinder economic growth, while higher productivity can lead to cost savings, lower prices, increased demand, more output, and improved competitiveness.
Efficiency gains translate into higher profits for businesses, fostering long-term growth. Moreover, a productive economy can afford higher wages, contributing to increased consumption and tax revenue for public goods.
Productivity improvements also enable the reallocation of labour across industries, addressing emerging needs. For instance, enhanced efficiency in farming can increase food production, catering to export or urban population growth.
Dr. Nelson Akpan, an economist, and economic affairs analyst notes that in most cases national productivity is propelled by deliberate policy by national governments.
He said the effectiveness of national efforts to improve productivity depends largely on the extent to which the most important social forces can be combined and integrated.
- “These forces include government and its institutional mechanisms, employers and managers represented by their professional associations, workers, normally represented by trade unions and other non-governmental organisations.
- “All these forces play (or should play) a major role in productivity drives at the national level through direct intervention and participation in industry and economic processes, coordinating the activities of all the major social groups in productivity promotion, improving the quality of both workers and managers through productivity-oriented professional education and training and raising public awareness and productivity consciousness,” he said.
Dr. Samuel Olaleye, an economist, agrees. He further recommended that governments play a pivotal role in economic growth and productivity.
- According to him, “While direct intervention varies, providing essential infrastructure and growth opportunities is fundamental. Infrastructure encompasses education, health, housing, power, transport, communications, research, and technology.
- “Investment in research and development is crucial for sustained growth, enabling the development of vital systems like agriculture, highways, airports, water, and railways. These infrastructures, in turn, support the productivity increases of various industries,” he stated.
Indeed, quality education is the cornerstone of a productive workforce. Olaleye stressed that Nigeria must focus on improving educational standards, ensuring that the curriculum aligns with the needs of a rapidly evolving job market. Investing in STEM (Science, Technology, Engineering, and Mathematics) education can foster innovation. He however cautioned that frequent strike actions at the tertiary education level will do no good to improve the country’s labour productivity.
He also stated that vocational training programs tailored to industry needs can enhance the practical skills of the workforce.
- “Collaboration between educational institutions and industries is essential to create a symbiotic relationship,” he said.
- “Embracing technology is non-negotiable. Nigeria should incentivize businesses to adopt modern technologies, fostering a culture of innovation. Digital transformation can streamline processes, reduce costs, and enhance overall productivity,” noted an industrialist, Moses Ibuza.
- Ibuza added that innovation is a key driver of productivity. “Offering tax incentives for businesses investing in research and development activities can spur creativity. Collaboration between industries and research institutions should be actively encouraged,” he said.
He said President Bola Tinubu made campaign promises on all these counts and urged the president to make good on his promises to create the right environment for business and productivity to thrive.
Special Advisor to President Bola Tinubu on PEBEC and Investment, Dr. Jumoke Oduwole, cited that Small and Medium-sized Enterprises (SMEs) form the backbone of the economy. She noted that ensuring easy access to finance, coupled with supportive policies, can fuel the growth of these enterprises, creating jobs and contributing significantly to productivity.
Nigeria’s journey to improved productivity requires a holistic and coordinated effort.
By addressing education, skills development, infrastructure, technology, and regulatory frameworks, among other factors, Nigeria can unlock its full potential and position itself as a vibrant and competitive player in the global economy.
Continuous assessment and adaptation of strategies will be key to navigating the evolving landscape of productivity enhancement.
