CBN sees knowledge economy as panacea for sustainable development

Clara Nwachukwu  

The Central Bank of Nigeria (CBN) believes that deepening reforms that improve human capital development through skills enhancement and proper linkage of research to industry will improve the performance of the small and medium enterprises (SMEs), thereby boosting sustainable economic development. 

According to the apex bank, the catalytic roles of knowledge and innovation are essential for delivering more inclusive growth especially for the SMEs if they must continue to play strategic roles in strengthening national economies and creating jobs.

To this end, CBN Governor, Godwin I. Emefiele, charged educational institutions “to ensure effective collaboration with industry players in key sectors of our economy, in the training of relevant manpower to minimize mismatches between the skills required by firms and the educational qualifications of our graduates.”

He also urged them to be ready to tap into the educational trends that are significant drivers of productivity in advanced and emerging markets.

Speaking on, “National Development and Knowledge Economy in the Digital Age: Leapfrogging SMEs into the 21st Century,” Emefiele said for emerging and developing economies like Nigeria, a lot of efforts are still required to maximize the use of cutting-edge technologies and highly skilled human capital in fast-tracking national development.  

The CBN Governor, who spoke as the Guest Speaker during a public lecture at the 51st Convocation of University of Lagos, in Lagos yesterday, insisted that “For Nigeria to tap into the productivity-enhancing benefits of a knowledge-driven economy, training of quality manpower through both formal and informal educational curricula is essential.”

This is because knowledge has become ubiquitous with the proliferation of digital channels, and “Many advanced economies have shifted focus from the adoption of traditional factors of production including labour and capital to a technology-driven development model, resulting in improved economic development indices,” he said.

Knowledge and social development

Education, being an essential tool for achieving sustainability, is also an enabler for achieving set targets for many of the sustainable development goals (SDGs), including economic growth, gender equality and a host of others.

Furthermore, it has been globally recognized that current economic development trends are not sustainable; therefore, public awareness, education, and training are key to moving the society toward sustainability.

Emefiele further observed that the 21st century has witnessed ground-breaking innovations and growth in several countries, stemming from significant investments in building a knowledge-based system that enables greater application of technologically driven research and innovation.

He added that technology is not only reshaping how knowledge is shared, but also how goods and services are produced and traded, and therefore called for enhanced collaboration between universities and players in key sectors of the economy including Agriculture, Manufacturing and ICT.

He noted that universities in most developing countries like Nigeria have little or no formal linkages to industry. “This often arises from the implementation of training curricula that is irrelevant to the industry, thereby, resulting in the production of ill-equipped graduates.”

He argued that the current economic situation in Nigeria requires an accelerated adoption of knowledge to drive developmental goals. “The fast pace of growth and innovation in the digital space along with the large and growing population of vibrant youth places Nigeria on a vantage position to harness this potential for accelerated economic development.”

Nigeria’s 2020 VNR on SDGs

Education (SDG-4), is said to be one of the current development priorities and the development objectives of President Muhammadu Buhari’s administration.

Nigeria’s 2020 Voluntary National Review (VNR) on SDGs submitted to the United Nations focuses on the key issues of poverty (SDG-1) and an inclusive economy (SDG-8), health and wellbeing (SDG-3), Gender equality (SDG-5), and the enabling environment of peace and security (SDG-16), and partnerships (SDG-17).

This VNR was developed while the country faced huge challenges from the COVID-19 pandemic, which tested its public health systems amid the collapse in oil prices, especially as the economy derives about 86% of public revenue from oil and gas.

In his presentation, Emefiele noted that the convocation lecture themed: National Development and Knowledge Economy in the Digital Age: Leapfrogging SMES into the 21st Century, comes at a time when the entire globe, including Nigeria, is gradually recovering from the devastating effects of the COVID-19 pandemic.

“In response to the impact of the virus on our economy, the monetary and fiscal authorities deployed unprecedented countercyclical measures aimed at containing the effects of the pandemic and driving the recovery of our economy.

“These targeted measures were aimed at supporting vulnerable segments of our society, as well as stimulating growth in key sectors of our economy such as Agriculture, and Manufacturing. As a result of these measures, our economy exited the recession in the 4th quarter of 2020 and is currently on a path of gradual but sustained recovery.”

He also admitted that despite the economy being on a growth trajectory, the impact of the pandemic in terms of job losses, low productivity and weak growth has continued to linger.

Against this backdrop, he said the educational institutions and key institutions including the CBN, have critical roles to play in realizing the huge potential of a digitized economy. 

“With the abundant resources at our disposal, including a large population of over two hundred million (200 million), natural resources and favourable climate among others, extensive measures must be put in place to accelerate the development of the economy and to make it more globally competitive,” he added.

SMEs in knowledge economy

Emefiele also insisted that a digitalized and knowledge-driven economy can accelerate the growth and development of SMEs as well as create new opportunities to strengthen productivity, especially in the services industry.

He said: “Countries such as India, China, Korea, and Singapore have continued to harness the benefits of the knowledge economy to accelerate economic growth, largely, through the contributions of SMEs. This therefore poses a challenge for Nigeria, such that to enable greater growth of our economy, we must work towards building a knowledge-based economy and enable SMEs to leverage digital channels in enhancing the growth of their operations.”

Indeed, experts say that the leading edge of economies is now driven by technology based on knowledge and information production, dissemination and use.

According to them, GDP per capita against the Knowledge Economy Index (KEI) suggests Ireland, USA and Norway are at the pinnacle of countries currently harnessing the benefits of a knowledge economy.

Given the current paradigm shift, they stressed the need for a global repositioning that is enshrined in the four pillars of knowledge economy, including economic incentive, innovation, education and information infrastructure, which cannot be overemphasized.

With the abundant resources at our disposal, including a large population of over two hundred million (200 million), natural resources and favourable climate among others, extensive measures must be put in place to accelerate the development of the economy and to make it more globally competitive

“Therefore, as a nation, Nigeria needs a realistic and dynamic framework which predicts current and future supply and demand for patentable skills. And there must be provision for the framework to be diffused up and down the different tiers of governing structure,” adding that skills acquisition programmes should reflect the practicality of the said paradigm shift.

For the CBN, a vibrant and growing SMEs sector is critical for achieving our goals of enabling greater growth of our economy and in creating jobs for our teeming youths.

However, notwithstanding the benefits that a vibrant SME sector provides, Emefiele said financial constraint has hindered SMEs from accessing innovative tools that could enable greater expansion of their activities as many of them remain trapped in the large informal sector.

“In response, and in collaboration with key financial institutions, the CBN has deployed several measures aimed at improving access to finance for SMEs in order to enable greater expansion of their operations. Some of these activities include enabling SMEs to leverage their movable assets to obtain capital from financial institutions, and the development of credit reporting agencies, which would encourage SMEs to maintain good credit ratings in order to obtain access to credit at relatively lower cost from financial institutions,” he said. 

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