The Multiplier Effects of Oshiomhole’s Industrialisation Policy
By John Mayaki
It may not be possible for a government to build industries across the state and turn the economy around within a short time of 8 years, but there are quick wins that a government can achieve. There are also opportunities that a government can exploit immediately they present themselves. These opportunities will always present themselves in the life of every administration and whatever an administration makes of such opportunities depends on that administration’s policy thrust as powered by its economic team, if any.
Sometimes, even a bad situation can be quickly turned around by a government that thinks on its feet and that is what the Adams Aliyu Oshiomhole administration have succeeded in doing.
From outset, the Oshiomhole administration said government have no business running industries but creating the enabling environment for investors to thrive and that is why we have an avalanche of private sector industries dotting the entire length and breadth of the state.
That Oshiomhole’s industrialization policies is impacting positively on the socio-economic landscape of the state by creating the enabling environment for investors to do business is not in contention. There is also no doubt that it is as a result of the Governor’s economic policies that these multinationals like Dangote Group of Companies, Yong Xing, Wells Farms, Bua Group, Azura power among others are investing in the state.
While some of these investments are public private partnership with the state Government owning some shares, others are not. Besides, government is retooling Central Hospital to a Five-Star Hospital and a new University in the state which is currently employing and admitting students.
At least, no less than 100,000 job opportunities must have been created between the period Governor Oshiomhole assumed office, when he will exit and a year after. These jobs exists both in the public and private sector. This estimated conservative figure is, however, contestable due to unavailability of statistical figures and reliable data portal in the country.
From this estimation, and from the public service records, the Information and Communication Technology Agency, Board of Internal Revenue, Edo State University, Central Hospital among others have employed and still employing thousands of jobless youths.
Wells Farm alone promises to employ over 80,000. Bua and Dangote will employ just as Okpella Cement factory has employed and running. Yong Xing and Azura power have also employed and will continue to employ youths in their thousands among others not in focus today.
The multiplier effect of the above job opportunities in the state is simply unquantifiable just as it has elicited a wide commendation from the people including beneficiaries and their families.
The impact of this important and gargantuan achievement cannot be over emphasized, especially when we consider the multiplier effect on the economy of Edo State and possibly, the neighbouring states because every time there is an injection of new demand into the circular flow, there is a multiplier effect.
The workers in the public service are earning salaries as at when due, the pensioners are not left out. The newly engaged workers in these various companies are also earning just as there would be increase in final income arising from any new injection of spending.
The size of the multiplier depends upon household’s marginal decisions to spend, which is called the marginal decisions to consume (MPC), or to save, called the marginal propensity to save (MPS).
Importantly, when income is spent, this spending becomes someone else’s income, and so marginal propensities show the proportion of extra income allocated to particular activities, such as investment, spending by construction firms, saving by households, and spending of imports from abroad.
If beneficiaries, for example opted to complete the building of their new houses with their salaries, the project injects extra demand and output into the economy of the state. Not a few businesses including architects, suppliers of blocks, sand, water, iron rods, wood etc. will benefit directly or indirectly from the beneficiaries expenditure.
Building a new house according to elementary economics, generates a new flow of factor income which includes wages and profits, so the multiplier effect is likely to be strong and the resultant input on GDP quite large.
In addition and to put it differently, workers will engage dry-cleaners or washer-men, lesson teachers, mechanics, artisans among others. They would pay rents, if they are not building their homes. In all these, the real effect and gains would fully impact on the state within the period of 3 – 5 years’ time.
Quickly, let me add that apart from the fact that these companies would open up the state and their various host communities, it is traditional that it would bring tremendous exposure to those localities, increase housing needs and infrastructural developments; what I termed as the ‘urbanization of localities’.
Still on the multiplier effect, it is a known fact that injection of new demands for goods and services into the circular flow of income stimulate further rounds of spending that is, one man’s spending is another’s income. This can translate to a bigger eventual effect on output and employment.
The economic potentials of Edo State is enormous with what Oshiomhole has achieved and those his policies have attracted to the state. This is the path of Oshiomhole’s industrialization of Edo State.
John Mayaki is Executive Director, Media and Public Affairs, Governor’s Office