Not All Manufacturing Is Created Equal

Developing country governments typically want to promote manufacturing and de-emphasize agriculture. One of the concepts I teach in my development classes is the importance of backward and forward links.  For example, the creation of a railroad may have positive spillover effects on anything from commerce & transportation (forward links) to steel manufacturing (backward link).  If a government wants to promote a particular industry, it is wise to look for one that has widespread potential links, because not all manufacturing is created equal.

This was brought home to me recently by the great satirist Elnathan John, who regularly excoriates the Nigerian government (as well as many others).  He tweeted:

Screenshot 2015-10-29 08.16.01

I can tell you from experience that Import Substitution Industrialization is not a subject that is ripe for comedy, so kudos to Elnathan John for this.  I can think of some positive backward links to creating arms but not many good forward ones!

p.s. This reminds me of an instance when I asked students once on a midterm to choose an industry that would likely have a lot of links to other sectors and one student chose the unlikely industry of fighter jets.  Again, the backward linkages are clear (steel, airplane part manufacturing, aviation schools) but the positive links…not so much.  Not all midterm answers are created equal either!

From central banker to emir?

The Economist recently had an article about Nigeria’s former central banker governor, Sanusi Lamido Sanusi.  Sanusi, if you recall, was fired by President Goodluck Jonathan in February after being too outspoken about “government corruption and presidential ineptitude.”  I’m guessing President Jonathan really didn’t like the ineptitude comments from his appointee.

So where do you go after you’ve been fired from the Central Bank?  If you’re Sanusi, you become elected as emir of the northern state of Kano, making “him the country’s second-highest authority in the Muslim north after the Sultan of Sokoto.” 

The Economist helpfully gives a brief job description of an emir:

For centuries before the British imperialists arrived in what is now northern Nigeria, the emirs ruled as kings. Today they hold little constitutional power, but their influence is still huge. They act as peacemakers, rally public opinion, preserve religious tradition, and endorse political candidates. On paper, they are neutral. 

I’m not sure how many of the job skills as CB governor would transfer to being an emir.  They seem like a totally different set of skills, especially since Sanusi wasn’t known for being a “peacemaker” or “neutral.”  Based on recent photographs, he does seem to have fully embraced his new job though.

Here’s Sanusi as CB governor:

sanusi_banker

and here he is as emir:

sanusi_emir

 

Import Substitution Fishing?

In the department of “what could go wrong?”, the Nigerian government has embarked on a new plan to promote fish farming by slapping import quotas on foreign fish (that’s a funny concept, as if the fish in Nigerian waters carry (waterproof) citizenship papers)).

So what are the details of this creative new plan for growth?  The Ministry of Agriculture first sought to ban all fish imports for four years and force fish importers to start fish farms.  This brilliant nugget was shot down by public outcry, who rightly realized that there would be massive fish shortages.  Somehow the government thinks that the skills needed for import-export are the same for fish farming.  I don’t know what exactly each of those jobs entails, but it doesn’t strike me as likely that the same person would be equally well suited for both.

Alright, back to the drawing board.  The Minister then decided on a 25% annual reduction in fish imports, using foreign exchange as a control mechanism. Foreign exchange is already regulated by the Nigerian authorities and fish importers have already learned to game the system; that is, claim to be importing way more fish than they actually are and resell the foreign exchange on the black market.

The article does a good job of summing up other reasons the policy is likely to fail:

“The Nigeria Agriculture Minister has said, “In 2013, a total of 3.6 million juveniles, 36,000 bags of 15 kilograms of feed and 200 water testing kits were provided to fishermen in ten states, at a total cost of N1.5 billion Naira.” While many fish farmers indicate they are yet to see and/or get these items, market analysts state that these are grossly inadequate to make any impact on boosting production to cover the import cut.

Nigeria’s marine waters are also unsafe with serious security challenges which hamper fish and shrimp trawling. Nigeria’s Niger Delta areas used to be the hub of the country’s fishing and fishery production. But that status has been overwritten since Nigeria’s oil and gas discovery in that region. Water pollution from oil and gas exploration activities in the region has continued to deplete the region for fishery activities.”

and I agree completely with their forecast:

“Many industry watchers indicate that Nigeria’s fish quota regime can only increase food inflation and open up channels for profiteering by politically-connected importers and individuals with privileged access to top government officials. This will fuel smuggling and the corruption of port officials, as well as increase the risk of disease in domestic fish farming as pond will be overtaxed as fish farmers try to boost production.”

The real question is if the program’s failure is so easy to predict in advance, why is the government pursuing it?

“Some are skeptical”

One of the best sub-titles ever, in this case from the WSJ’s article named “In Nigeria, Wedlock Seen as Terror Fix: One Islamic City Tries Mass Weddings to Coax Single Men Into Peaceful Ways.”

Northern Nigeria has been wracked with violence from an Islamic sect called Boko Haram and the Kano State Hizbah (“a local bureau that implements Islamic law,” whatever that meansis getting creative.  The institution is funding mass weddings under the theory that good wives make men less interested in terrorism.

Policymakers who tried the same thing in India and Yemen might disagree.  So far 1,350 couples have been married so far in the last year and a half and there are more than a 1,000 scheduled for the rest of the year.  The policy appears to be popular as the waiting list is around 5,000 people.

So why are people so interested in having the government play matchmaker for them?  Well, for the men, the government pays the traditional dowry of $60.  The brides receive “a bag of rice, two crates of eggs, some cooking oil, a mattress, about $125 to start a business, and sometimes a sewing machine.”  They also get help in learning the Nigerian marriage basics are, which includes being able to “make perfume from local plants and to cook bite-size butter cakes.” Who knew?

As an extra enticement, the couple receives hand-sewn “flowing white Islamic wedding robes” and afterwards, a “chicken and yogurt lunch with the governor.”

Not all women are convinced; Faiza Iza argues that the mass weddings are unlikely to reduce terror.  She argues instead that it is just a “superstition to discriminate against unmarried women.”

How good are the institutions match-making skills?  The chairman of Reports and Documentation confidently claims that “It’s usually a match.”  That’s understandable after the government’s thorough questionnaire, which asks men (in all caps), “Do you want a tall and elegant girl? Fine?”

Not all of the matches seem to be totally on the up and up though.  For instance, police recently arrested 20 prostitutes and gave them the option of participating in a mass wedding or going to jail.  The new husbands shockingly weren’t informed of this.  Sounds like a match made in heaven!  The divorce rate in the region is around 50%, so what happens to terrorism when the marriages go sour?