Building Knowledge Economies is important for developing countries. This study provides key strategies for transiting to a knowledge economy in Nigeria.

1. TOWARDS A KNOWLEDGE-BASED
ECONOMY: CHALLENGES AND
OPPORTUNITIES FOR NIGERIA
OLUWADARE Adekemi Jessica
National Centre for Technology Management,
Obafemi Awolowo University, Ile-Ife, Nigeria.
Presented at Covenant University International Conference on African
Development Issues (CU-ICADI), Ota, Nigeria.
May 11th – 13th 2015.
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2. Knowledgeisourmostpowerfulengineofproduction.
AlfredMarshall,1890
Knowledgehasalwaysbeenanessentialforceineconomicdevelopment....in
today’sincreasinglyknowledge-basedworld,moreandmorecountriesare
embracingknowledgeandinnovation-relatedpoliciestospurgrowthand
competitiveness.
F.A.Léautier,2007
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3. What is the Knowledge Economy?
“Economies which are directly based on the production, distribution and use of
knowledge and information” (OECD, 1996)
“One where organizations and people acquire, create, disseminate and use
knowledge more effectively for greater economic and social development” (World
Bank Institute, 2004)
• The term “knowledge-based economy” (KBE) is the result of an emphasis on
building economies around knowledge and technology.
• Studies on the KBE became prominent in the 1990s, with the observed increase in
the contribution of knowledge-intensive industries, to GDP and employment
(OECD, 1996).
• Economic activities based on new knowledge stimulate economic growth, provide
higher wages and greater employment opportunities, as well as enhance a
country‟s competitiveness within the global environment (Blankley and Booyens,
2010).
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4. Indicators of the KBE
Full recognition of the role of knowledge and technology in
economic growth.
Increased contribution of knowledge-intensive sectors and
the service sector to GDP.
Investments are directed towards high-technology goods
and services (particularly information and communications
technologies), R&D and human capital development
(education and training).
Highly-skilled labour is in highest demand.
Strong University-Industry collaborations (Efficient NIS)
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5. The Problem?
• Global pattern of economic growth:
• Knowledge exploitation and the use of technology
• Africa’s pattern of economic growth:
• Exploitation of natural resources, leading to low level of competitiveness
[more than half of the 20 lowest ranked countries in the 2014 Global
Competitiveness Index (GCI), and 15 nations ranked among the least 20 nations
based on the 2012 Knowledge Economy ranking]
• Nigeria:
• Still driven by factor endowments, primarily crude oil and unskilled labour.
• Global Competitiveness ranking is 127th out of 144 economies in 2014
(WEF) and Knowledge Economy ranking is 119th position out of 145
economies in 2012 (World Bank).
• Yet to make significant progress in terms of the knowledge economy
(Radwan and Pellegrini, 2010).
• What are the immediate challenges and opportunities faced in transiting
towards a knowledge-based economy?
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6. Study Approach
• Descriptive analysis and evaluation of the four pillars of the
knowledge economy as identified by the World Bank.
• Economic Incentives and Institutional Regime
• System of Innovation
• Education and Training
• ICT
• These pillars help to identify the challenges and opportunities that a
country or region faces in transiting to a knowledge economy, and where it
may need to focus policy attention or future investments.
• Some selected countries for comparison
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7. System of
Innovation
Economic
Incentives and
Institutional
Regime (EIR)
Education
and Training
ICT
Infrastructure
Knowledge
Economy
• Telephone
subscriber base
• Access to Computers
• Internet Users
• Access to Basic
Education
• Average years of
schooling
• Tertiary
Enrolment
• Patent Count
• Journal Articles
• University/Industry
Relations
Adapted from
World Bank 2012
• Tariff and Nontariff
Barriers
• Ease of doing
business
• Rule of Law

8. Pillars of the Knowledge Economy
• Economic and Institutional Regime (EIR)
This comprises incentives that stimulate and promote enterprise
development via knowledge creation, dissemination and use.
• An educated and skilled population
A highly-skilled and flexible human capital is essential to compete
effectively in today‟s world and is a key building block of a knowledge-
based economy
• A dynamic information infrastructure
Access to ICT infrastructure facilitates the effective communication,
dissemination, and processing of information. Many features of the KBE
are actually based on the increasing use of ICT.
• An effective innovation system
This allows for close relations among knowledge institutions (research
centres, universities) and firms with which they can tap into the growing
stock of global knowledge, adapt it to local needs, and create new
technological solutions.
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9. SOME COUNTRY CASES
• SWEDEN
• SINGAPORE
• SOUTH AFRICA
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10. SWEDEN
• Most advanced knowledge economy (KEI of 9.43) and the
10th most competitive economy in the world.
• Strong, transparent and efficient institutions
• Excellent infrastructure, and healthy macroeconomic
conditions
• Right set of conditions for innovation, high royalty payments
and receipts, science and engineering journal articles, and
patents.
• Companies compete by producing new and different goods
using the most sophisticated production processes and by
innovating new ones.
ICT adoption is among the highest in the world
• Like other Nordic countries, Sweden is doing very well with
regard to its economic and institutional regime, having
recorded success in the implementation of policy reforms.
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11. SINGAPORE
• 2nd most competitive country in the world, consistently occupying the
position of the highest-ranked country from Asia in the past decade
• Knowledge Economy Index of 8.26 places the country in the 23rd
position in the world.
• Good governance, strong commitment towards development and
good institutional frameworks. Economic Incentives and Institutional
Regime (EIR) is 1st in the world.
• The Singaporean workforce is highly educated, highly motivated,
highly skilled and highly productive.
• Successfully grown R&D base, drawn top scientific and creative talent
and nurtured R&D collaborations between the public sector and
private enterprise. Innovation Index is ranked 4th.
• The ICT infrastructure in the country is comprehensively developed
and Singapore now produces a diversity of goods, ranging from
electronic goods to transportation equipment and machinery, all of
which are knowledge-intensive.
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12. SOUTH AFRICA
• KEI (5.21) is placed in the 67th position
• Efficiency-driven, high quality institutions, intellectual property
protection, efficiency of legal framework, accountability of private
institutions, and strong financial market development.
• The innovation system features good scientific research institutions
and strong collaboration between universities and the business
sector in innovation
• Building a Knowledge-based Economy is important to the South
African government. An important component of the South African
drive towards a knowledge economy is the Ten-Year (2008-2018)
Innovation Plan which is proposed “to help lead economic growth
by the production and dissemination of knowledge for the
enrichment of all fields of human endeavour”
• Knowledge economy vision: To create a society that uses its
knowledge systems and human capital to solve problems, while
exploiting economic opportunity in a sustainable way.
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13. Country Knowledge
Economy Rank
(of 145)
Knowledge
Economy
Index (of 10)
Global
Competitiveness
Rank (of 144)
Global
Competitive
ness Index
(of 7.0)
Singapore 23 8.26 2 5.65
South Korea 29 7.97 26 4.96
Malaysia 48 6.1 20 5.16
South Africa 67 5.21 56 4.35
Nigeria 119 2.2 127 3.44
World Bank (2012) WEF (2014)
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14. Innovation
Index 2014
(/100)
Human Development 2013 Networked
Readiness 2014
Ease of
Doing
Business
Rank 2014
(of 189)Index Ranking
(of 187)
Expected
years of
schooling
Life
Expectancy
at birth
Index
(of 7.0)
Rank
(of 148)
27.8 *0.504 152 9.0 52.5 3.31 112 170
NIGERIA
Sources: World Bank, UNDP
*Low Human Development
Networked Readiness measures the performance of economies in leveraging information and communications
technologies to boost competitiveness and well-being.
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15. EIR in Nigeria
• The economic incentives and regulations required for a
dynamically functioning business environment in Nigeria are quite
inadequate.
• Low regulatory quality of the business climate.
• High tariffs
• Non-transparent valuation procedures
• Frequent policy changes
• High costs of doing business
• Inadequate electricity supply
• Difficulty in accessing, and high cost of credit
• Poor transportation system
• Poor legal provisions to ensure transparency and accountability in
the business environment
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16. 16
Regulations affecting Businesses (SMEs) in Nigeria 2014 2013
Starting a business 129 122
Dealing with construction permits 171 151
Getting electricity 187 185
Registering property 185 185
Getting credit 52 13
Protecting Investors 62 68
Paying Taxes 179 170
Trading across borders 159 158
Enforcing Contracts 140 136
Resolving Insolvency 131 107
World Bank Doing Business 2014. Rank (of 189 economies)

17. Education and Training in Nigeria
• Large number of out-of-school children and young adults with
limited literacy skills. [Efforts on the implementation of the UBE
programme still needs to be enhanced].
• Brain drain
• Academic staff shortages in tertiary education [esp. S&T]
• Low capacity of universities to accommodate the burgeoning
student
• High emphasis on paper qualification
• Priority of theory over practice [inadequate for equipping
learners with the skills needed for active participation in the
global knowledge economy (Oseghale and Adeyomoye, 2011)]
• Deteriorating quality and insufficient investment.
• (From 2000 to 2006, the number of Nigerian students abroad became more than doubled,
from 10,000 to 22,000. In the US, Nigeria was the 17th and 19th largest source of
international undergraduates and graduate students, respectively in 2009/2010, and the
largest source of students from SSA - Education Fact Sheet, 2012).
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18. System of Innovation in Nigeria
• Companies in Nigeria are yet to compete by producing new and different
goods using the most sophisticated production processes and by innovating
new ones (WEF, 2014).
• Weak firm-level capacity to absorb technology
• Lack of institutional capacity to address IPR issues
• Knowledge-generation capacity of universities is weakened by
insufficient funding, institutional rigidity and bureaucracies, brain drain, a
„publish-or-perish‟ approach to research, and frequent industrial actions
by academic and non-academic staff (Bamiro, 2012)
• Weak University-Industry collaborations (Oyewale, 2005; Adeoti et al., 2008;
Oyelaran-Oyeyinka and Adebowale, 2012). Universities function, for the most part,
independent of industry; and industry depends on foreign sources of
knowledge to sustain production and possibly meet competitive challenges
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19. 19
Nigeria Innovation Indices Value* Rank (/144)
Capacity for innovation 3.7 73
Quality of scientific research institutions 2.8 120
Company spending on R&D 2.8 106
University-industry collaboration in R&D 2.8 123
Gov’t procurement of advanced tech products 3.0 109
Availability of scientists and engineers 3.8 89
PCT patents, applications/million pop 0.0 117
World Economic Forum, 2014. *values are on a scale of 1 (lowest) to 7 (highest)

20. ICT in Nigeria
• Vibrant, dynamic and rapidly expanding telecom industry
• Nigeria is currently ranked as the leading telecommunications
country in Africa ahead of South Africa in terms of subscriber
base (Pyramid Research, 2014).
• 139 million active telephone connections as at December 2014
(NCC, 2015) (400,000 pre-liberalization)
• 99.32 teledensity (0.4 pre-liberalization)
• Increase in adoption of 3G technologies (15.9% of the mobile
subscription base in 2014)
• Increase in online shopping
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21. ICT in Nigeria
Growth in ICT in Nigeria has translated into:
• Significant increase in access to basic telephony services
• Reduction in acquisition costs of telephone lines
• Innovation and technological development as a result of competition
• Reduction in call charges
• Growth in Teledensity
• Employment Generation
• Skills acquisition and technology transfer
• Inflow of foreign capital
However,
• High cost of owning personal computers
• Use of computer, access to internet and other tools of ICT are limited
greatly to the urban areas and there is low penetration in the rural areas.
• Internet market is still plagued by poor network quality and sluggish
rollout. Mobile internet access is increasingly becoming the service of
choice for most business and residential customers, but prices are still
high.
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22. In transiting to a knowledge-based economy, Nigeria appears to
have a long distance to cover:
• Absence of a national drive towards the knowledge economy
• No distinct policies and programmes towards building a knowledge
economy
• Dependence on crude-oil makes the country is highly sensitive to world
economic cycles, commodity price trends and exchange rate
fluctuations.
• Poor infrastructural development
• Government involvement in key areas of the economy not restricted to
policy making and regulatory activities
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23. Key KBE Strategies for Nigeria
Business Environment
• Diversification of the economy
• MSMEs sector contributes significantly to GDP and should be
well developed via the creation of a conducive environment
• Ensuring continuity in economic and industrial policies and
making the business environment secure enough to increase
private sector participation and attract foreign direct investments
Innovation
• Building capabilities for technological adoption
• Exploiting reverse engineering techniques
• Fostering a culture of respect for Intellectual Property Rights
• Committed implementation of the National STI policy
• Designing public research and development activities to be
directly responsive to market needs
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24. Key KBE Strategies for Nigeria
Education and Training
• Optimizing the strength of and training the youth population and
their entrepreneurial spirit
• Active engagement of the private sector to provide education at
all levels
• Attracting Nigerian professionals in diaspora (returning post-
graduates and post-doctorates from overseas universities)
ICT Pillar:
• ICT spread to rural communities
• Exploiting mobile telephony services (lessons from Kenya‟s M-Pesa)
• The wide acceptance and use of information technology in the
country could be employed to strengthen the performance of the
other pillars
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25. Concluding Remarks
• Closing the knowledge gap between developed and
developing countries appears a difficult task. Developing
countries are actually pursuing a moving target, because the
developed world is constantly pushing forward the knowledge
frontiers.
• Efforts should be directed towards acquiring existing
knowledge and technology and building capacity to
effectively adapt it to local situations.
• To become successful knowledge economies, African nations
need to rethink and act simultaneously on their education
base, innovation system, ICT infrastructure, economic and
institutional regime.
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26. THANK YOU
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