Nigeria’s Productivity Problem

Nigeria’s Productivity Problem

About five hundred years ago, generations that lived apart did not experience any major change in their standard of livings. Global productivity was very low and man was generally poor. Yes, there were empires and kingdoms, but on average the world was on static economic expansion.

But with emergence of mass penetrated technology, things began to change. The industrial revolution was a quintessential moment in modern history. Technology brought productivity and man became richer. Largely, human standard of living improved. It remains till today that when technology penetrates en masse in any economy, national productivity improves, and living standards advance.

There is another caveat to this argument: Intellectual property right (IPR) is a cardinal part of this productivity. Without it, technology will not improve and innovation is stalled. The old world was an era of absence of IPR and that contributed in no small measure to the lack of wealth creation. Sure, people invented things in arts, and science, but there was only minimal wealth created.

Lack of IPR prevented meaningful market success in one major way: It prevented the pursuit of innovation since ideas could be stolen and commercialized with no penalty. The return to innovation was very low. That was why the world had many inventors and few innovators.

Yes, we read about inventors that developed nearly all the engineering principles in use today. They had ideas, bright people and created prototypes. They were celebrated as icons and legends. But many died very poor. They could not transition from inventors to innovators, not because of market issues, but because lack of IPR made it difficult to attract funding, since there was no guarantee to success. No funding, no mass commercialization and no human impact. In our contemporary time, the legendary venture capitalists will tell you that if you want to get them involved, you need to have a protected intellectual property, if the business requires one.

Nigerian Workers (Source: Guardian)

Two things changed the world: technology and most importantly IPR. Between the two, IPR was more important. Why? Without it, we would still be celebrating inventors with no impact on human lifestyles (just note that I respect inventors.)

Nigeria’s Productivity Problem

That brings me to the Nigerian, or indeed the African challenge. In many parts of the continent, the IPR there is still like the one that existed 500 years ago. It does mean that Africa cannot prosper, if my logic is correct, until they get a practical and working IPR. It does not matter how much aids and loans they get from foreign agencies. Without IPR, nations cannot innovate (at deep technical level) and without innovation, any economy dies a natural slow death. IPR is the catalyst that drives national technology policy, making it implementable and sustainable. You cannot have a better technology policy than a strong IPR. With strong IPR, inventors could become innovators. Without it, everyone sits on his/her ideas and the nation suffers on productivity.

In essence, Global Productivity = Technology + IPR, and productivity translates into good standard of living. When nations cannot create technology, the LHS (left hand side) of the equation suffers. Also, if they have no IPR, that suffers even more.

See the reason why Africa is not making progress? It is an illusion when boys and girls in Accra, Lagos, and Nairobi use pirated foreign software, and think they are smart. They never know that it would have been better if their nations have laws to prevent the illegality. With such laws, they have an opportunity of not needing those foreign software by developing their own and selling them locally, profitably.

In the absence of the IPR, they cannot do business because immediately they release software in the market; it appears in all shops illegally. After three months, they close their shops! It is a vicious cycle that makes innovation difficult in Africa since no guaranteed return exists. Why invest your hard earned money when there is no law to protect your creations? Why do research? You see why our businesses prefer to import and distribute than create things?

All Together

When boys hawk Microsoft Windows for N300 (about $1) openly and no one arrests them, no major creative business can incubate in that land. Nigeria is not really cheating Microsoft. Rather, we may be making it harder to build an innovation system. This goes beyond technology: it also affects our arts where people pirate Nollywood movies and resell. The reality is that productivity cannot flourish in an ecosystem with weak legal protections for creativity. The creators will be scared to invest, and that is a problem for any nation.


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2 thoughts on “Nigeria’s Productivity Problem

  1. A brilliant one here sir, both you ommited one maxim in development economics.It is a maxim that holds that what matters the most for development to occur is not the promulgation of formal rules but informal habits of compliance…If we have clear rules that define intellectual property ownership today how about the enforcement?
    Sentiments are still so agrarian in Africa that intellectual property is not regarded as property…Segun Adeniyi can bear witness.

    1. Absolutely Yemi. Yet, the absence of the ecosystem does not mean we can expect entities that require such to exist. While the African way of doing things may not have recognized that a song can be copyrighted, it does not solve the problem that the person who is denied the rewards of the creativity has not suffered. So, at the end, we simply match to the lowest denominator. I am 100% sure that if Nollywood has morphed up all the pirated revenues, they will be stronger. Tunde Idiagbon showed that Nigeria could obey laws when what we have in the books are enforced. I believe that we can comply. The problem is that no one is trying to remind us.


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