Henry Ford began producing Model T in Detroit around 1908. In the 1960s, Detroit rose to the mountaintop and became one of the most important tech-cities in America, as entrepreneurs moved there, to pursue a future of starting a car company. The number of car startups in Detroit exceeded 100! And the future looked unbounded.

Then, OPEC (Organization of the Petroleum Exporting Countries) which began life in Baghdad (Iraq), in Sept 1960, started to work! OPEC’s work was to get members to control crude oil production in order to get more money per barrel in the international market.

OPEC contributed to the destruction of Detroit because prices of fuel went up even when Detroit car makers like Ford, GM and Chrysler were not paying deep attention to Japanese car makers who produced fuel-efficient vehicles. The American car makers have always liked their big cars, typically agents of fuel guzzling!

The Japanese introduced a huge shift, and made cars that used less fuel per mile driven, and consumers moved: expectation demand worked. Just like that, Detroit began a sustained decline as the big 3 car companies lost market shares with layoffs, and plant closings everywhere. Detroit has not recovered – in short, Detroit city went through bankruptcy, and the car makers were bailed out by the U.S. to ensure their continued existence.

Simply, Detroit was innovation. But Detroit declined. The modern American Detroit today is Silicon Valley. This is Google’s 21st birthday. Google’s impact cannot be overstated in our world; it has totally redesigned and transformed how we find and consume information. With Google, Facebook, Apple, Intel and amalgam of other companies, America has renewed even as Detroit faded. 

With Uber and Lyft, adding a new layer on Detroit, U.S. will get a part of the game in most parts of the world, irrespective of the brand of cars people use. So, in Lagos or Nairobi, even if you are using Toyota for Uber, America will get a part of that revenue. Simply, creative destruction can come but nations with inherent internal capabilities will always emerge stronger.

Creative destruction can be described as the dismantling of long-standing practices in order to make way for innovation. Creative destruction was first coined by Austrian economist Joseph Schumpeter in 1942. Schumpeter describes creative destruction as innovations in the manufacturing process that increase productivity, but the term has been adopted for use in many other contexts.

The Lesson for Nigeria

In this video, I have shared what needs to happen for us to have that internal capacities to renew. Yes, as the Kano groundnut pyramid was declining, Nigeria could have made Eket a powerful city for energy technologies. As the palm oil declined in Owerri along with cocoa in Ife, Kainji dam could have been boosted to power the next industries in Nigeria. We must be prepared for shifts and re-alignment as a nation, across all the geopolitical zones. All the young people are going to Silicon Valley, not Detroit, and America continues to thrive. Nigeria needs to see itself as one nation in order to have a big picture perspective on how to manage creative destruction as it happens.

This is thought-provoking: the construct in Nigeria has been consistent – universities should educate, prepare and unleash to the economy competent graduates. But Andela has shown that doing just that ALONE is not enough. Yes, you can have all competent graduates (by global standards) but if there is no opportunity, they will not flourish. That explains why in a world where software developers are scarce, a company in Nigeria is firing hundreds! Simply, there needs to be opportunities before the agents of productivity can work! This Olumide Durotoluwa’s observation deserves deeper thoughts form policymakers! 

One of the arguments against the Nigerian education sector, is that they do not churn out the right talent. While this is very correct, but here, we see an educational firm, with a global market, producing the right talent, yet limited by the diminishing returns of marginal productivity. For a quick reminder, the law of diminishing marginal returns, states that when an advantage is gained in a factor of production, the marginal productivity will typically diminish, as production increases. On a macro level, this implies that, even if the Nigeria education system, churns out the right talents, without creating an economic opportunity for them, we will continue to experience the same problem.

Obviously, Nigeria has crossed the productivity threshold a long time ago, where an increase in labour force, can no longer bring the desired increase in economic productivity.  When productivity fails to grow significantly, it confines potential gains in wages, corporate profits and living standards. The resulting effects are underemployment, talent exodus, increase in the cost of education, etc.

Except the government, corporate organization, create an eco-structure, which can continue to absorb the increasing number of graduates, while at the same time, funding education, it will be difficult to make giant economic strides.

I must confess that his observation is deep.Have 20 Andelas in Nigeria but without opportunities, the brilliant geeks will stall, and possibly leave the nation. Simply, there is a limit a nation can get to without a strategic plan that harmonizes all elements at the same time. We cannot waltz into prosperity as a nation – broad strategic plan is imperative. 

You may think it is graduating brilliant graduates only to be thrown off that you have them, and will not know what to do with them. This is a huge (unexpected) discovery that Andela has provided for the nation. Let me call it the Andela Experiment: the availability of extremely brilliant and competent graduates without opportunities will not advance Nigeria, other factors are critical and required to make use of the graduates, and ensure they are not jobless!

The Andela Experiment needs more examination because it has shown that even the universities ALONE cannot save Nigeria, at least in the short-run.

The Andela Evolution – Fires 420 Engineers