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TECHNOLOGY POLICY
and
PRACTICE in AFRICA

EDITED BY
Osita M. Ogbu, Banji O. Oyeyinka, and Hasa M. Mlawa

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Published by the International Development Research Centre
PO Box 8500, Ottawa, ON, Canada K1G 3H9

Contents

Acknowledgments

v

Part 1. Introduction and Framework

Chapter 1. Introduction — Ogbu, Oyeyinka, and Mlawa

3

Chapter 2. Understanding Deindustrialization and Technological Stagnation
in Sub-Saharan Africa: A Framework — Ogbu, Oyeyinka, and Mlawa

7

Part II. Technology: Choice, Transfer, and Management

Chapter 3. Management of Technological Change in Africa:
The Coal Industry in Nigeria — Oyeyinka

19

Chapter 4. Technological Acquisition and Development in Zimbabwe:
The Hwange Thermal Power Station — Zwizwai

40

Chapter 5. Choice of Technology in Small-Scale Enterprises — Ngahu

56

Chapter 6. Technology Modifications and Innovations: A Case Study
of Rice and Cassava Processing in Sierra Leone — Massaquoi

62

Chapter 7. Technology Transfer and Acquisition of Managerial
Capability in Tanzania — Okoso-Amaa and Mapima

72

Chapter 8. Formulating Technology Policy in Africa:
New Directions — Mudenda

82

Chapter 9. Exploring the Potentials of Water Mills in the
Grain-Milling Industry in Ethiopia — Aredo

91

Part III. Technical Change, Innovation, and Diffusion

Chapter 10. Technical Change and the Textiles Industry
in Tanzania— Mlawa

109

Chapter 11. Diffusion of Precommercial Inventions from
Government-Funded Research Institutions in Nigeria — Adeboye

119

Chapter 12. Technological Capability in Oil Refining in
Sierra Leone — Smith

140

Chapter 13. Technological Assimilation in Small Enterprises
Owned by Women in Nigeria — Aina

165

Chapter 14. Translating Technical Innovation into Entrepreneurship
in Nigeria: Social and Policy Implications — Adjebeng-Asem

180

Chapter 15. Technology Adoption by Small-Scale Farmers
in Ghana — Owusu-Baah

197

Chapter 16. The Impact of University Research on Industrial
Innovations: Empirical Evidence from Kenya — Mwamadzingo

211

Chapter 17. University-Based Applied Research and Innovation
in Nigeria — Alo

238

Chapter 18. Technical Change in the Nigerian Cement
Industry — Esubiyi

249

Chapter 19. Institutions Supporting Technical Change in Nigeria:
The Role of Industrial Development Centres — Amdi

266

Chapter 20. Technological Change and Project Execution in Nigeria:
The Case of Ajaokuta Steel Plant — Oyelaran-Oyeyinka and Adeloye

273

Chapter 21. Adaptive Responses to Modem Technology: Kitui
Farmers in the Semiarid Regions of Eastern Kenya — Oduol

302

Part IV. Gender and Technology and Technological Capability

Chapter 22. Technology and Women’s Ventures in Nigeria’s Urban
Informal Sector — Soetan

315

Chapter 23. Equity and Gender Consequences of Policy for Distribution
of Irrigation Technology in Nigeria — Oramah and Ogbu

327

Chapter 24. Female Farmers’ Access to Technological Inputs
in Nsukka — Ezeh and Okoli

346

Chapter 25. Technology Transfer from the Adaptive Crop Research
and Extension Project in Sierra Leone — Kaindaneh

358

Chapter 26. Dirty Industries: A Challenge to Sustainability
in Africa — Olokesusi and Ogbu

367

Biographical Notes

382

Acknowledgments

It would be difficult to acknowledge everyone who has contributed in one way or another to the creation of this book. Its story dates back to when the International Development Research Centre established a Technology Policy Program in the early 1980s. The support of this program, throughout its many transformations, and of the Carnegie Corporation of New York led to the creation of the two Technology Policy Studies Networks in Africa, under which all of the case studies in this book were completed. We are, therefore, very grateful to both IDRC and Carnegie Corporation for their moral and intellectual support, without which this book would not have come into being.

At IDRC and the Carnegie Corporation, we worked with a number of colleagues who provided intellectual guidance to the two networks and critical advice, which helped to improve the case studies. These colleagues include Dr. Eva M. Rathgeber of IDRC, Nairobi; Professor Paul Vitta, formerly of IDRC, Nairobi, and now the director of UNESCO-ROSTA in Nairobi; Mr. Brent Herbert-Copley, who has had the primary responsibility for the Technology Policy Program at IDRC since 1990; Dr. Patricia Rosenfield of the Carnegie Corporation; Dr. Akin Adubifa, who was the coordinator of the West African Technology Policy Studies Network and is now with the Carnegie Corporation; and Dr. Kirby Davidson, who is a consultant for the Carnegie Corporation. All these people worked tirelessly to ensure the success of the networks. We are very grateful to them for their contribution and for providing the impetus to edit and publish this volume.

At the network level, the peer review process was lively and constructive. It would be difficult to acknowledge every network member individually. But we acknowledge the network members for their many insights, which in no small way improved the case studies. We are very grateful to these network members, as well as the authors, who allowed us editorial discretion in the publication of this book.

Finally, in preparing this book, we benefited from the editorial advice of Mrs. Gillian Ngola of Nairobi and the secretarial support of Ms. Imelda Wasike and Ms. Joanne Mwenda of IDRC, Nairobi.

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PART I
Introduction and Framework

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CHAPTER 1
Introduction

O. Ogbu, B.O. Oyeyinka, and H.M. Mlawa

The economic crisis in Africa has defied both traditional and nontraditional approaches to economic management. The African development questions continue to pose serious challenges to governments, nongovernmental organizations, the donors, and development researchers. The search for solutions lacks consensus, partly because there are divergent views on the relative weight to be assigned to the multiple causes of problems and partly because the impacts of some proffered solutions are not fully anticipated. But there are certainly a few accepted premises: that Africa has suffered as a result of all types of hostile environments, both natural and artificial; that some international terms of trade are adverse; and that, in many countries, there are domestic management problems. Conceptually, therefore, the causes of the African problems fall into two categories: those that are external and those that are “home grown,” arising out of domestic policy mistakes. All agree on the roles of technology and, by implication, effective technology policy in influencing growth and development. But the good intentions and rhetoric have not always been matched by action. Many countries have full-fledged technology ministries, which are supposed to demonstrate the importance of technology in development and articulate an enabling technology-policy environment.

Although the evidence is of mixed value, some of the case studies in this book will demonstrate that the basic role of the government in coordinating and evaluating technology acquisition and use has remained unclear. Consequently, technology adoption and diffusion and the consequences of technology for the various productive elements of society are not fully understood by many countries when they are importing technology. The so-called white elephants and the many instances of projects abandoned after heavy initial investment point to Africa’s need for an effective technology policy.

In the policy arena, attempts to correct past policy mistakes have been made largely with the help of the World Bank-supported structural adjustment programs (SAPS). There can be no denying that the implementation of these programs in most African countries has been less than perfect. Many of the promised benefits of the program have been elusive. Again, even though we recognise the role of technology in development, the proponents of SAPS have failed to analyze or fully anticipate the implications of the program for technology. These questions are only now beginning to attract the attention of those concerned with technology policy in Africa. The assumption that “once we get the prices right, the output will follow” is no longer credible. In the agricultural sector, for instance, the aggregate-supply response to prices has been very weak (Ogbu and Gbetibouo 1990a, b). It is, therefore, important to understand how prices interact with technical inputs and the use of technology, research, infrastructure, etc., for a full appreciation of the supply response behaviour of the farmers. On the industrial side, the argument for the weak prognosis rests on the following:

• African manufactured products are not competitive internationally, so prospects for export will remain dim.

• Manufactured African products have a high cost because of inefficient protectionist policies and “quantitative restrictions on competing imports” (Riddell 1990).

Imports are important because along with imports come technology, technical know-how, and the modernization that competition from abroad ensures. This is the classic justification for import liberalization. SAPs have led to massive currency devaluations, liberalization of trade and financial-sector regimes, and privatization and commercialization of public enterprises. With the infusion of foreign capital, these SAPs were supposed to ensure a stable industrial sector for Africa, ready to compete with the rest of the world in the 21st century. SAPs have been around for more than a decade, and it seems that African industrial sectors are worse off than they were before the reforms. The growing dependence on imported goods is quickly eroding the weak industrial base of most African economies. In fact, many agree that African economies have been undergoing deindustrialization for more than a decade. According to Riddell (1990), “the structural adjustment policies promoted by the World Bank have been a major force preventing restructuring of industry away from the deep dependent link.”

The recent crash of the Mexican economy underscores the fact that we are still not certain of the path of optimal reform. Mexico had a 30 billion USD (USD = United States dollars) infusion of foreign capital in 1993 and was being showcased as the model for other developing countries. It is true that the economy grew, but it did not grow in the productive sectors. The inflow of foreign capital appreciated the peso, the trade deficit grew, and the crash became inevitable. It is clear that if growth is to take place in the productive sectors, an enabling technology-policy environment will be a prerequisite.

There are now serious questions about whether complete trade liberalization is optimal, given the structure of African economies and the experience of East Asian countries that took a different route. In this regard, the overall policy prognosis for the stagnating African economies is somewhat worrisome. The orthodox view, implicit in SAPs, is that Africa should expand its agricultural and extractive mineral-commodity sectors so that it can export more. Industry and technology often get nothing more than a passing mention. The continued insistence that Africa should do what it does best, that is, produce primary commodities, has lost our sympathy as a result of current evidence. This orthodox prescription may well be due to the enduring mind sets of African policy-makers and the proponents of SAPs, who regard capital flow and savings as the only necessary or sufficient conditions for generating greater additions to the existing capital stock of physical plants and machinery. In the thinking of investment experts, all a nation needs to do is generate enough capital for machinery imports, and then, through learning by doing, the recipient nation will acquire all the necessary know-how.

There are two contradictions in this kind of thinking. First, as recent history has demonstrated, Africa will find it extremely difficult to finance industrialization, development, and debt repayment because the international prices for Africa’s exportable commodities are not likely to go much higher. Even oil-rich countries, like Nigeria, are having difficulties meeting foreign-debt obligations. Yet, industrialization and the acquisition of technical know-how are now being left to the vagaries of the market. Even in Africa’s agricultural sector, the productivity level is far too low to permit rapid expansion without heavy doses of innovation in agricultural practices. This calls for rapid technology acquisition. The so-called traditional nonfarming sector of the African economy shares the same fate.

The evolutionary discontinuities reflected in the concepts of “dualism,” “informal sector,” “traditional agriculture,” and “traditional industry” represent the failure of Africa’s industry to modernize by successfully blending modern technology with age-old practices. The technologically backward sectors of the African economy are large and growing (UNDP 1993), whereas the modem sector, acquired at great costs in the 1970s and 1980s, has deteriorated through both the lack of spare parts and components to sustain them and the paucity of foreign exchange needed to modernize the obsolete plants.

This brings out the second contradiction. Many African policy-makers and their advisers probably still equate Africa’s industrial problems with those described by Hobsbawn (Mytelka 1988):

The technological problems of the early industrial revolution were fairly simple. They required no class of men with specialized scientific qualifications, but merely a sufficiency of men with ordinary literacy, familiarity with simple mechanical devices and the working of metals. …

Many of Africa’s backward sectors may well resemble the craft shops of 17th-century England, but the mechanical devices in the modern sector are 20th-century artifacts. Unlike the picture painted by Hobsbawn, modern technology requires massive investment in capital, production, and innovative capabilities. It requires infrastructure, technomanagerial capabilities, and institutional competencies. It would seem that many of the orthodox prescriptions are rooted in days gone by. Evidence from the way the 20th-century latecomers developed (and, indeed, as Germany and the United States before them did) contradicts the simplistic prescription to “get the prices right.” In fact, according to Amsden (1992), Korea deliberately “got the prices wrong.” Japanese bureaucrats, said Freeman (1989), “repudiated the view that Japan should be content with a future as an underdeveloped country with low productivity and income per head.” On the catching up by Germany and the United States, he remarked, “It is clear that in their catching up, Germany (and the United States) relied not simply on tariffs … but on technology, and in gaining technological lead. …”

The point of this book is that technology is central to the development process. We suggest that African economies need deep technological revolutions to bring about rapid structural shifts, to break the tenacious structure of dualism, and to deepen their industry and build up their endogenous technological capability. The common denominator in most of the case studies is the conclusion that we should pay greater attention to an enabling macroeconomic environment and the ways that environment interacts with an effective technology policy. This interaction should allow for technological learning, the right technical choices, the setting up of appropriate institutions, and effective technological management for both the industrial and agricultural sectors, including those small and medium-sized enterprises that are now so vital for income and employment.

Structure and format of the book

The book has 26 chapters — this introduction, the analytic framework, and 24 case studies — and is divided into four sections. The introduction and analytic framework constitute the first section. An attempt was made to group the case studies according to the following themes:

Part II. Technology: Choice, Transfer, and Management

Part III. Technical Change, Innovation, and Diffusion

Part IV. Gender and Technology and Technological Capability

Although these thematic categories provide some clarity, it is difficult to neatly separate the essential elements of the technological change process. In other words, we would like to believe that there is a thematic order unifying the case studies, disparate as they are in methodology and language.

As the titles will make immediately obvious, the case studies emerged from widely differing research backgrounds: engineering, economics, sociology, political economy, business studies, and science, among others, encouraging a multidisciplinary approach to research, with the objective of building the capacity for technology-policy analysis. Because of this diversity of research approaches, conclusions that generalize too much have been avoided.

Each case study was to include objectives and methodologies sections for two reasons: (1) to help the reader judge the scope and findings of the studies as individual research projects designed for policy learning; and (2) to give these studies further educative value in future research efforts, as well as making future comparative studies relatively objective.

In both the introduction and the analytical framework, sub-Saharan Africa was presented as a uniform entity. This, we admit, is certainly not so. Planning and policy design at the country level will certainly benefit from this collection. Nevertheless, a differentiated approach will have to be taken by individual countries. We consider this a modest beginning.

References

Amsden, A. 1992. Asia’s next giant: South Korea and late industrialization. Oxford University Press, New York, NY, USA.

Freeman, C. 1989. New technology and catching up. In Kaplinsky, R.; Cooper, C, ed., Technology and development in the third industrial revolution. Frank Cass, London.

Mytelka, L. 1988. The unfulfilled promise of African industrialization, Presented at the annual meeting of the African Studies Association, Oct. 1988, Chicago, IL, USA.

Ogbu, O.M.; Gbetibouo, M. 1990a. Agricultural supply response in sub-Saharan Africa: A critical review of the literature. African Development Review, 2(2).

——1990b. Agricultural supply response in sub-Saharan Africa: Review and empirical evidence from MADIA countries. World Bank, Africa Technical Department.

Riddell, R.C. 1990. Manufacturing Africa: Performance and prospects of seven countries in sub-Saharan Africa. Unpublished manuscript.

UNDP (United Nations Development Program). 1993. Human development report.

CHAPTER 2
Understanding Deindustrialization and Technological
Stagnation in Sub-Saharan Africa: A Framework

O. Ogbu, B.O. Oyeyinka, and H.M. Mlawa

Introduction

In explaining the decline of African industry, two related explanations always arise. The first concerns hostile and largely external influences, which result in perennial shortages of foreign exchange, spare parts, and components and in turn lead to the underutilization of capacity. The second concerns the system of incentives, which hinders industrial growth through high protectionist barriers and in turn leads to high product costs and industrial inefficiencies. There is no doubt that these factors explain in part the malaise of African industry, but they do not capture the whole story. Lall (1992) has made the structural weaknesses of industry in sub-Saharan Africa (SSA) much more central to the explanation of Africa’s deindustrialization. He identified incentives, institutions, capabilities, and the right mix of policies as the means to “call forth a proper response.” Our conception of the problem follows from a detailed examination of not only the macroeconomy but, more important, the microeconomy.

Consequently, our line of explanation draws on the evolutionary-structuralist concepts of the role of technology in economic development, and it is in this tradition that we anchor our search for an understanding of the performance and behaviour of the technological and industrial systems in SSA. In following the evolutionary school, we make three implicit assumptions:

• Technology is central to the development process, and long-term structural change is technology driven.

• The growth of systems is an evolutionary process; therefore, technological and organizational learning cannot be circumscribed.

• Explicit efforts and investments are essential preconditions for learning and development; that is, learning is not an automatic outcome of capital accumulation and investment.

For a systematic account of the evolutionary-structuralist school, see Rosenberg (1976), Nelson and Winter (1982), Freeman (1982), Bell (1984), Justman and Teubal (1991), and Bell and Pavitt (1993), among others.

In providing an explanation for the technological behaviour of industry in SSA, we focus on four main issues:

• the changing perspectives on technical change;

• production capacity, technological capabilities, and technological learning;

• firm linkages and industrial subsystem interactions; and

• the state and technical change.

The changing perspectives on technical change

Concomitant with the changing material conditions of newly industrialized countries (NICs) has been a marked paradigm shift in research on technical change. In the 1960s and 1970s, research focused on questions of transfer, choice, and appropriateness of techniques. The implication was that developing countries are passive recipients of technology. The positive change in the quality of life and the technological dynamism of the NICs led to a revised research agenda and, in consequence, a perceptual change in the policy analyst. The technological dynamism suggests some measure of technology creation and accumulation in those NICs.

From the 1970s, the focus of research shifted to how and why technology has been mastered and adapted in these NICs. Most of the countries that were studied accumulated technology through minor or incremental technical changes — a phenomenon that had been found in the industrial countries (Enos 1962; Hollander 1965). At present, technology accumulation through minor technical changes is taken for granted, but it does not come about by learning by doing alone.

The influential work of Nelson and Winter (1977) stated that technology accumulation strongly depends on the recipient’s ability to manipulate the given technology. They suggested that technology has the required element of “tacitness” and that the buyer can never hope to obtain all the required information from blueprints, manuals, or training. This, then, compels the buyer to make certain efforts to master the technology and adapt it to environmental conditions, which, in turn, brings about minor, incremental technical changes. This process confers idiosyncratic characteristics on individual plants and sets firms on specific evolutionary trajectories. In effect, recipients of technology cannot effectively develop plants and processes without some kind of investment in the learning process, a point dwelled on extensively by Bell (1984), Dahlman and Westphal (1981), and many others. These theories and assertions are backed by detailed firm-level cases, mostly from Latin America.

Evidence from SSA differs very sharply with that from East Asia and Latin America. Instead of progressive, incremental technical change, we find almost predictable productivity decline; instead of dynamic industrial growth, we find stalled projects, project delays, and, in many cases, abandoned technological efforts. The firms are uniformly unsuccessful in most of SSA. From the Delta Steel Company in Nigeria, which has not broken the 30% capacity utilization barrier since it was established in 1982 (Oyeyinka 1988), to the textile industry of Tanzania, which continues to record a productivity slide (Mlawa 1983), the story is the same.

From the case studies in this book, two important factors may well appear to account for the dismal production record of SSA firms. First is the perception of the technological and organizational learning process as costly and automatic. Second is the technical (as distinct from the political) environment of the firms. This second point is best illustrated with some proxy technological indicators, as shown in Table 1. The indicators reveal, primarily, the state of the manufacturing industry in two blocks of countries. Block A countries are those that have made tremendous progress in technological advance, and block B represents all SSA countries, without exception. The figures are important for two reasons. (1) They demonstrate that the manufacturing technology in use in a particular environment reflects the technical maturity of that environment. (2) Manufacturing technology directly influences the other sectors of the economy. There is a big difference between a nation where the most sophisticated farm implements are hoes and cutlasses and a nation that uses tractors and harvesters.

Table 1. Value added in production for two blocks of countries.

Technological indicator

Block Aa

Block Bb

Total manufacturing output as a percentage of total GDP (1983)

>15

<10

Capital goods as a percentage of total manufacturing (1980)

>30

<20

Machinery sector as a percentage of total manufacturing (1980)

>15

<5

Ratio of capital goods to consumer goods (1980)

>1.0

<0.4

Source: Bhagavan (1990).

Note: GDP, gross domestic product.

a Brazil, China, India, South Korea.

b All of sub-Sahara Africa.

Specifically, the indicators in Table 1 reveal the relative strengths of the domestic manufacturing capacity of the two blocks, especially the strength of the capital goods sector, which provides the intricate linkage among the various subsystems, such as chemicals, engineering, transport, and services. In block A countries, the total manufacturing output, as a percentage of gross domestic product, is >15%, whereas in block B countries in it is <10%. The key indicators that distinguish the technological leader from the laggard are in the area of domestic capital-goods and machinery production. Although the block B contributions to total manufacturing value added (TMVA) in the two areas are <20 and 5%, respectively, the block A contributions are >30 and >15%, respectively.

The lack of capacity for domestic capital-goods and machinery production is a singular characteristic of underdevelopment. The indicators reflect, therefore, the fact that the industrial environment of SSA is extremely weak, lacking the capacity to produce even the most basic tools for manufacturing. The lack of capacity for capital-goods and machinery production also means that even when machinery and equipment are imported, these countries lack the domestic capabilities to maintain the systems. The pervasive undercapacity of industry, the slow growth in productivity, and the incidence of white elephantism (abandoned large-scale projects) have direct connections with the weak industrial structures that the indicators reveal. In essence, although the analysis of technical change in advanced technological environments assumes these factors are parametric, in SSA the technical environment becomes a variable. Indeed, much of the firm-level x inefficiencies could well be traced to variable environmental factors: unstable power supply (most manufacturing firms have stand-by generators); irregular water supply (most firms dig boreholes); and erratic and inadequate supply of spare parts and consumables. This is true for small firms and, even more, for capital-intensive projects. We find in the case studies on large-scale projects that rated capacity and nominal throughput (a function of raw-material and optimal machine availability) are never attained. These two decisive factors are subject to considerable external factors, apart from organizational and technical capabilities.

We suggest that analysis of technical change in SSA must consider the technical environment. The technical environment is structurally weak; furthermore, it remains in constant flux from the point of view of firm-level planning because firms are never assured a regular source of inputs. But the weak technical environment of SSA is as much a cause of the observed failure of the SSA production structure as it is an effect of an evolutionary process. We now turn to the fundamental elements of that process.

Production capacity, technological capabilities, and technological
learning

Bell and Pavitt (1993) drew attention to the important difference between production capacity and technological capabilities. Overlooking this difference has been a source of much policy confusion in the past, especially in developing countries, so this distinction is important. Production capacity refers to the resources, mostly equipment and machinery, required to produce industrial goods at given levels of efficiency and from given input combinations. Technological capabilities, on the other hand, are the skills to initiate, manage, and generate technical change. These capabilities include human resources, knowledge, experience, and institutions. The distinction between knowledge and human resources is important. Porter (1990) made a distinction between basic factors and advanced factors. Basic factors are passively inherited resources, such as unskilled and semiskilled labour, in the same category as climate and location. Advanced factors consist of highly trained, specialized labour, in the same category as advanced telecommunications. Hence, production capacity is mainly capital embodied, whereas technological capability is a dynamic resource, an advanced, change-inducing factor in creative industrialization.

Another important concept is technological learning. Learning can set a firm or industry on three broad types of technical-change trajectories (Malerba 1992):

• Production may be increased through dynamic efficiency and yield improvements. This may be brought about by actual plant modifications and incremental innovations, as well as by organization of production.

• The characteristics and physical properties of a product may be completely altered to improve its reliability and performance. This may come about through dynamic learning and through improved performance in terms of horizontal and vertical differentiation.

• Processes and products may be scaled up. This may come about in a situation of indivisibilities and high capital intensity and when there are difficulties in modifying a production process. In such a case, engineers may well resort to capacity stretching through incremental investments in technology up to a certain vintage.

The distinction between production capacity and technological capabilities is important for three reasons. First, conventional investment analysis and decisions overemphasized the importance of capital-embodied resources as the vehicle of technological development.

Second, the characteristics of a particular vintage of technology were assumed to be fixed and unalterable properties, implying that once a machine or system had been designed, it could not be subjected to further technical alterations in its lifetime. The conceptual and policy implication of such mistaken assumptions was that technological capabilities were irrelevant or, at best, a commodity that would emerge in time, through automatic learning by doing. It stopped further consideration of postinvestment learning.

Third, policy-makers used to conceptualize international technology transfer as being no more than a transplant of a given commodity from one geographic location to another. Investment decisions were limited to finding the requisite capital — the long-term issue of technology creation, using imported technology as the base, was hardly ever raised.

In sum, technology was seen as freely available information. It was believed that a steel plant, a petrochemical complex, or a sugar factory could be “transplanted” in some isolated place, far removed from its prototype, and be made to function perfectly. A mistaken view of the relationship between production capacity and technological capabilities, which promoted this kind of thinking, may inadvertently have underpinned decisions that gave rise to many a white elephant. We now know that innovation and technical change are sustained, not within firms alone, but between a network of firms.

Although the central role of firms is important, one must not assume that individual enterprises are isolated actors in the process of technology accumulation. Technical change is generated out of complex interactions between firms (Bell and Pavitt 1993).

Further important lessons are that (1) acquiring technological knowledge is a cumulative process, so national technological competence cannot be changed rapidly; (2) blueprints accompanying turnkey projects are no more than road maps; (3) the buyer must travel the road alone, by his or her own efforts; and (4) technical knowledge is largely tacit and specific and can only be mastered by painstaking learning. All of this takes time.

Firm linkages and industrial subsystem interactions

An important element in industrial competence and production capacity is the system of linkages among industrial units and firms. The phenomenon of dynamic linkages, as a precondition for generating and diffusing innovation, has been persuasively established by Bell (1986), Lundvall (1992), Bell and Pavitt (1993), Von Hippel (1988), and Porter (1990), with his “clusters of industries,” and forcefully established by Rosenberg (1976). According to Bell, “technical change will often involve detailed interaction between product-centred change and cost-reducing change … not only within firms but also between them.” The study by Porter shows that some particular clusters often cover more than half of a country’s exports. He went on to suggest that “industry clustering is so pervasive that it appears to be a central feature of advanced national economies.” This may be so because of the systemic nature of contiguous technologies, whereby one “industry helps to create another in a mutually reinforcing process.”

Rosenberg (1976) suggested that firms be grouped together on the “basis of some features of the commodity as a final product.” In other words, processes and products within the firm, rather than the industry — taken as a Marshallian unit — should be regarded as a unit of analysis. If we focus specifically on the engineering industry, we find that there are certain functional processes that cut across industrial lines in the Marshallian sense. Functional activities, such as drilling, milling, planning, grinding, turning, and boring, lie at the heart of manufacturing and of the machinery subsector, in particular. The techniques behind these processes cut across industries — textiles, automobiles, chemicals, etc. — and, in that sense, they constitute interchangeable skills rather than unrelated activities. This is what Rosenberg described as technological convergence. In a national industrial system, these skills and processes could justifiably be regarded as industrial subsystems because they are linked between firms through subcontracting and personnel exchange (Watanabe 1979). It would seem that an important derivative of this notion of the convergence of technological processes, is what might be described as the convergence of technological capabilities, a notion that is not too far fetched, considering the importance of user-producer interactions in technical innovation (see Lundvall 1992; Von Hippel 1988).

For instance, we suggest that behind Porter’s (1990) “health cluster” or “agricultural cluster” are certain common processes and certain specific technological capabilities that provide for learning commonalities and make technological mastery relatively easy. Porter provided examples of Swedish competitiveness in the pulp and paper industry, in wood-handling and pulp-making machinery, and in chemicals for pulp and paper making. The process technologies and skills may not be so apparent to the casual observer, although the common material, pulp and paper, runs through all the examples. Rosenberg (1976) illustrated his point with seemingly unrelated sectors, such as aluminium, electricity, and fertilizers, as examples of industries with “large numbers of interlocking, mutually reinforcing technologies.” As he further observed, left on their own, these undergirding technologies are “of very limited consequences” until they are brought together in an industrial system.

The rate of technical change in an industry may well depend on dynamic linkages between firms. Underdeveloped areas may have missed out on the opportunities to acquire key technological processes and to develop the right technical environment to foster mutually reinforcing industrial subsystems and are likely to experience limited technical change or none at all. Central to dynamic industrial interactions is the capital-goods sector, especially machine tools. The capital-goods sector is needed for the realization of all innovations, whether revolutionary or incremental. The smooth functioning of large-scale, highly matured industries depends on a wide array of component manufacturers, which a dynamic capital-goods sector spawns. Apart from the production of consumer and intermediate goods, there are important learning consequences.

We suggest that the absence of a dynamic capital-goods sector in a region like SSA constitutes the most serious obstacle to dynamic industrial linkages, limiting the rate of technical change and, in the extreme case, being responsible for the absence of technical change in large parts of SSA. We have the making of a vicious cycle: no capital goods, therefore no effective linkage, therefore no technological learning therefore no technical change.

What this scenario implies is that even where demand for innovation exists in developing countries, the initial condition of underdevelopment (the absence of a strong capital-goods sector) imposes on potentially demanding firms or potentially producing firms a constraint so severe that future possibilities for linkages and technical change will be very limited. Recourse to foreign import of capital goods was at one time the only route for the underdeveloped areas if they had to industrialize. This may in effect have hindered a “natural” sequence of development — principally the sequential development of the local machinery industry — thus reinforcing this vicious cycle, or “acquilibrium trap.” According to Rosenberg (1976), “the failure to achieve a well-developed capital goods sector means a failure to provide the basis for technical skills and knowledge necessary for development.” In other words, suppliers in distant lands are a poor substitute or no substitute at all for local suppliers.

Let us note that complexity, of course, is relative and that for an underdeveloped area, an integrated steel plant, a petrochemical complex, or an automobile assembly plant is very complex, indeed. In other words, the vast array of parts and components that these countries import to maintain the large-scale plants is to be defined as complex. Ordinarily, investment-project documents specify parts, and some of the parts purchased from the supplier may not last longer than 2 years, which means the importing country is obliged to establish a parts-and-component base to meet these extraordinary requirements. This rarely occurs, and the seeds of large-scale plant failure are almost always sown in this way (see Oyeyinka 1988). Internal units could never hope to meet all requirements because “the truly mass-production industries, such as automobiles, are served by an extraordinary complex of relatively small firms, each constructing very limited numbers and ranges of tooling devices” (Rosenberg 1976).

Tragically, in the past, investors conceived of these large-scale projects as sui generis, capable of propelling themselves forward without the evolutionary accretion of competence through technological and organizational learning. Establishing a large-or even medium-scale industrial plant in an underdeveloped area involves significant technical discontinuities. By the time the automobile plant emerged in the United States, the transition was relatively easy because “the basic skills and knowledge required to produce the automobile did not themselves have to be ’produced’ but merely transferred from existing uses to new ones. The transfer was readily performed by the machine tool industry” (Rosenberg 1976). We may add that the transfer was made within the same technical environment, and, thus, an apparent technical discontinuity was enclosed by profound technical continuities that the established machine-tool industry had produced. It is important to mention that short distance in the language of technology transfer refers to the cultural, linguistic, and locational contexts. That underdeveloped areas have to resort to mass importation of capital goods indicates what technological opportunity is missing for these countries. This is true especially for SSA. In a much more fundamental sense, the understanding of technological stagnation and of the present stalemate in the evolution of African industry lies in the profound ways in which technological discontinuities — specifically the absence of the machinery-making sector — have truncated the natural sequence of industrial progress.

The state and technical change

Received theory has sought a limited role for the state in the economy and has tended to play up the virtues of a free market. In the judgment of orthodox economists, government intervention produces more damaging consequences than market failure. Yet, the history of 20th-century economic growth provides a preponderance of evidence to the contrary. The rapid structural transformation witnessed in the late-industrializing countries of Japan, South Korea, Brazil, India, and Taiwan could not have occurred without the strong intervention of the state. For Amsden (1992), economic backwardness has a strong origin in the weak role of the state in the economy: “industrialization was late in coming to ’backward’ countries because they were too weak to mobilize forces to inaugurate economic development.” The state has an even more urgent and decisive interventionist role in modem economic growth where backwardness is relatively greater and catching up means still heavier doses of government support. Amsden presumably had in mind the increasing gap between, on the one hand, Britain, Germany, the United States, and other parts of Europe and, on the other, the colonized states of Asia and Africa. The defining event has been a change in the nature of industrial production, which was brought about by the increased scientific content of production technologies. Although scientific and technological advancement has, in many ways, made technology transfer relatively easy, the widening gap between industrial leaders and the backward areas has made it impossible for the modern state to remain passive.

The interventionist mechanisms have been as diverse as the countries studied, although these mechanisms may well be subsumed under a common analytic framework of tariff and subsidies. Undergirding the accumulated efforts of late industrializers, such as South Korea, “were subsidies offered by the state to private enterprise in exchange for higher output of exports and import substitutes” (Amsden 1992). Infant-industry protection, far from being a 20th-century phenomenon, was a ready instrument of the state during the earlier industrial revolutions. Tariff was typically used to protect infant industries to enable firms to master technology and to accumulate technological capabilities.

State intervention has taken other forms. In late-industrializing countries, governments have sought to influence the rate, nature, and direction of technology transfer and accumulation by influencing the price and the form of technology and the structure of industry (Fransman 1986). Costs and forms of technology sometimes complement each other. But more widespread is the objective of bringing about certain kinds of industrial structures. This development of local capital goods has been a consistent objective of late- and early-industrialized nations alike. This sector is pivotal to the long-term goals of industrialization. To this end, tariff exemptions have been granted for imported machinery, and medium- and long-term credits have been offered to establish local capital-goods production. In India, industry has been subject to strong government interventions (Lall 1984).

The magnitude and intensity of the structural shifts needed for modern economic growth have inevitably been accompanied by continual social innovations, typified by the changing role of the state. The emergence of a strong role for the state in the economy and the range and depth of the interventionist instruments applied across countries may well be evidence of a profound paradigm shift with which orthodoxy has yet to come to terms. According to Kuznets (1971), “the sovereign state is an important factor in modem economic growth; that given the transnational, worldwide character of the supply of useful knowledge and science, the major permissive factor of modern economic growth, the state unit, in adjusting economic and social institutions to facilitate and maximize applications, plays a crucial supplementary role.”

This crucial role manifests itself in three ways, with the state serving as (1) the clearinghouse for continual social innovation; as (2) an agency for conflict resolution, because “structural shifts mean different rates of growth for different parts of the economy, and hence for the different groups,” often leading to conflicts that only the state can mediate to guarantee law, order, and stability; and as (3) a major entrepreneur providing a strong social infrastructure, the absence of which may act as a disincentive to private investment. Apart from physical infrastructure, such as transportation and communication, trained, skilled labour, such as engineers and managers, has been central to the technology and development policies of advanced and backward nations alike. Because of the revolutionary speed at which structural shifts are now occurring, the state will have to attain certain critical thresholds of organizing abilities to achieve the required mixture of market mechanisms and interventionist policies.

References

Amsden, A. 1992. Asia’s next giant: South Korea and late industrialization. Oxford University Press, New York, NY, USA.

Bhagavan. 1990. The technological transformation of the Third World. Zed Press, London, UK.

Bell, R.M. 1984. Learning and the accumulation of industrial technological capacity in developing “countries.” In Fransman, M.; King, K., ed., Technological capability in the Third World. Macmillan, London, UK.

—— 1986. The acquisition of imported technology for industrial development: Problems of strategy and management in the Arab region. UN Economic Commission for Western Asia, Baghdad, Iraq.

Bell, R.M.; Pavitt, K. 1993. Technological accumulation and industrial growth: Contrasts between developed and developing countries. Industrial and Corporate Change, 2(2).

Dahlman, C.J.; Westphal, L.E. 1981. Technological effort in industrial development: An interpretative survey of recent research. World Bank, Washington, DC.

Enos, J.L. 1962. Invention and innovation in the petroleum refining industry. In National Bureau of Economic Research, ed., The rate and direction of inventive activity: Economic and social factors. Princeton University Press, Princeton, NJ, USA.

Fransman, M. 1986. Technology and economic development. Wheatsheaf Books.

Freeman, C. 1982. The economics of industrial innovation. 2nd ed. Frances Pinter, London, UK.

Hollander, S. 1965. The sources of increased efficiency: A study of DuPont rayon plants. MIT Press, Cambridge, MA, USA.

Justman, M.; Teubal, M. 1991. A structuralist perspective on the role of technology in economic growth and development. World Development, 19, 1167–1183.

Kuznets, S. 1971. The economic growth of nations.

Lall, S. 1992. Technological capabilities and industrialization. World Development, 20(2), 165–186.

Lundvall, B. 1992. National systems of innovation: Towards a theory of innovation and interactive learning. Pinter Publishers, London, UK.

Malerba, F. 1992. Learning by firms and incremental technical change. Economic Journal, 102, 845–859.

Mlawa, H. 1983. The acquisition of technology, technological capability and technical change: A study of the textile industry in Tanzania. Science Policy Research Unit - Institute of Development Studies, University of Sussex, Sussex, UK. DPhil thesis.

Nelson, R.; Winter, S. 1977. In search of a useful theory of innovation. Research Policy, 36, 76.

—— 1982. An evolutionary theory of economic change. Belknap Press of Harvard University, Cambridge, MA.

Oyeyinka, O. 1988. Technological capability acquisition under environmental constraints: The steel industry in Nigeria. University of Sussex, Sussex, UK. DPhil thesis.

Porter, M. 1990. The competitive advantage of nations. Macmillan, London, UK.

Rosenberg, N. 1976. Perspectives on technology. Cambridge University Press, Cambridge, UK.

Von Hippel, E. 1988. The sources of innovation. Macmillan, London, UK.

Watanabe, S. 1979. Technical cooperation between Philippine automobile industry. WEP Research, Geneva, Switzerland.

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PART II
Technology:
Choice, Transfer, and Management

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CHAPTER 3
Management of Technological Change in Africa: The Coal
Industry in Nigeria

B.O. Oyeyinka

Introduction

Coal mining began in Nigeria in 1916. Average production in the first decade was >150 000 t a-1 (Table 1); this reached a level of around 300000 t a-1 by the time World War II broke out. From the 1940s to the mid-1960s, production averaged >600 000 t a-1, until the Nigerian civil war (1967–1970) disrupted activities. In 1976/77, production began to decline rapidly, reaching as low as 53 500 t a-1 in 1983. This was remarkable. Concomitantly, the sole enterprise responsible for coal mining in Nigeria, the Nigerian Coal Corporation (NCC), began an economic decline. Its operating losses in 1979 were 9.5 million NGN (in 1995, 78.5 Nigerian naira [NGN] = 1 United States dollar [USD]), and the corporation could not even meet its administrative costs. Paradoxically, in 1977/78, when it sustained its greatest operating loss, NCC’s production was fairly substantial: >190 000 t.

Of course, there were many reasons for the decline of the coal industry. Some factors were external to NCC. Among these were the following:

• the advent of the “oil boom” and the shift of attention from coal;

• the “dieselization” undertaken by the Nigerian Railway Corporation (NRC), which had been a major customer of the coal industry;

• the switch to natural gas and oil by several power stations run by the National Electric Power Authority (NEPA), another major customer; and

• the disruptive consequences of the civil war (the mines had been at the heart of the war zone).

But these problems did not stand in the way of other avenues of challenge and opportunity. There was a decent outlet for export to the Economic Community of West African States (ECOWAS) and Europe. In 1972, for instance, coal export was 52000 t and expected to grow, but it declined instead. There were industrial consumers like the Nigerian Cement Company (NIGERCEM), Nkalagu, which fired its cement with coal. NCC’s estimates in 1988 showed a potential coal demand of 335 000 t for NIGERCEM and some smaller industrial consumers. There was also a potentially high demand for coal as a source of basic and industrial chemicals and as a domestic household fuel. Finally, not all of NEPA’S thermal power stations shifted to oil and gas: the Oji River project (120 MW), the Makurdi Power Station (600 MW), and the Onitsha-Asaba project (1200 MW) still needed coal.

In 1976, the year that productivity began to decline, the Nigerian government commissioned the state-owned Polish Overseas Mining Company, KOPEX, to completely modernize NCC’s technology, installing fully mechanized longwall equipment, with shield support. The investment and installation process lasted 3 years

Table 1. Nigerian coal production (1916–1987).

 

Production

 

Production

 

Production

Year

(long tons)

Year

(long tons)

Year

(long tons)

1916

24 511

1939/40

300 000

1962/63

615 681

1917

83 405

1940/41

318 594

1963/64

600 229

1918

145 407

1941/42

402 640

1964/45

698 502

1919

137 844

1942/43

463 978

1965/66

730 183

1920

180 122

1943/44

528 421

1966–70

Civil war

1921/22

194 073

1944/45

505 568

1970/71

264 258

1922/23

112 818

1945/46

610 283

1971/72

323 001

1923/24

175 137

1946/47

633 852

1972/73

314 457

1924/25

220 161

1947/48

551 706

1973/74

250 769

1925/26

242 582

1948/49

610 283

1974/75

257 832

1926/27

353 274

1949/50

526 613

1975/76

249 446

1927/28

345 303

1950/51

583 487

1976/77

246 192

1928/29

363 743

1951/52

566 393

1977/78

188 806

1929/30

347 115

1952/53

613 374

1978/79

153 005

1930/31

327681

1953/54

679 437

1979/80

114 875

1931/32

263 548

1954/55

675 918

1980/81

63 122

1932/33

259 860

1955/56

750 058

1981/82

52 730

1933/34

234 296

1956/57

790 030

1983

83 461

1934/35

258 893

1957/58

846 526

1984

139 744

1935/36

257 289

1958/59

905 397

1985

151 214

1936/37

310 308

1959/60

684 800

1986

110 161

1937/38

391 159

1960/61

565 681

1987

82 487

1938/39

323 266

1961/62

596 502

 

 

Source: Nigerian Coal Corporation.

Note: 1 long ton = 1.016 t.

and was completed in 1979. Production was expected to grow from a first-phase installed capacity of 624 000 t a-1 to 1 Mt a-1.

What happened was the exact opposite: the installation of the first phase marked the beginning of an incredible productivity slump at NCC. In the 1960s, productivity had been 0.6 t/person per shift (Table 2). In 1979, it was 0.09 t/person per shift. NCC abandoned the new and expensive machinery, after which productivity rose again. By 1986, it was 0.36 t/person per shift. NCC continued to be a drain on government, and, like all other public enterprises of its kind, it was placed on the list of enterprises to be commercialized.

This failure of NCC is one of the reasons for this study. There are a number of radical technical and managerial conditions that an enterprise of this kind must meet to achieve sustained productivity growth. The study should bring out the kinds of policy lessons that will be useful for similar firms in Nigeria and elsewhere.

In addition, because this 70-year-old industry is unique among the heavy industries in Nigeria, it gives us an opportunity to examine what happened over a relatively long historical period. The nexus of technology choice and productivity growth represents two sides of the same coin (Pack 1987), requiring adequate time-series data. It is left to be seen whether the age of a firm directly correlates with its technological capabilities or its ability to become a mature enterprise.

Table 2. Productivity of the Nigerian Coal Company (1960s-1986).

 

Productivity
(t/person per shift)

Remarks

1960s

0.60

Semimechanized longwalls with conveyor belts and single props were in use

1979

0.09

This is after the installation of the fully mechanized longwall system

1982

0.40

There has been a slight improvement, but productivity lags the 1960’s values, when semimechanized longwalls were in use

1986

0.36

There has been a further decline

The research problem

There are many sides to the research problem — all with very important implications for public policy. However, the technological investments made in 1976–1979 will constitute our point of departure. We shall concentrate on the technological dimension of the investment process and define the problem as one of technology choice. To the extent that investment in new technology entails considerable foreign and local finance capital, the problem of technology choice becomes crucial. The issues involved in technology choice could be varied and complex. The decision to adopt an industrial product and process results from the combined effort of many actors and many decision centres. Some questions come readily to mind:

1. Under what terms was the foreign technology chosen?

2. What was the basis of this choice — a quest for the “most modern,” the “most sophisticated”? For instance, why was the KOPEX technology chosen over one from other firms or other countries? Was a fully mechanized longwall process really the most appropriate system for the geological conditions at the Enugu, Orukpa, and Okab mines?

3. What was the nature of the finance capital? Was it a tied loan that could compel an inappropriate choice of technology?

The offer of capital from foreign governments or international agencies is frequently tied to a few particular projects and is not available for other uses (Vernon 1977). The choice of such financing bears on the eventual configuration of the production technology, and the recipient country may well end up with an abnormally high capital-output ratio, in addition to the capacity underutilization associated with inefficient machinery and equipment. Some complaints made against major Nigerian heavy-industry projects relate to inappropriate choice of techniques; unusually high capital-output ratios, as with the iron and steel plants (see Oyeyinka 1988); and shoddiness in the arrangements for finance capital, which lead to high cost and time overruns. All of these invariably result in low-productivity operations.

Following from the above, the study proposes to trace NCC’s operations over a long period to bring out the factors responsible for the observed behaviour and those responsible for the productivity performance. There are several approaches we could take. According to Pack (1987, p. 41), we can

emphasize one major obstacle (absence of “modernity”) in an occasionally tautological way, and the implicit hypotheses are largely incapable of being tested or quantified. A more fruitful approach involves the identification of the most likely major sources of deviation from best-practice productivity and the quantification of each of them where possible.

The “fruitful” approach suggested by Pack (1987) is more holistic and considers (1) factors at the national and industry levels; (2) technomanagerial capability at the firm level; and (3) productivity of industrial workers at the task level.

For this study, the following six hypotheses were proposed:

• Hypothesis 1 — NCC’s management made little or no effort to build plant-level technological capacity to cope with the idiosyncratic nature of the plant.

• Hypothesis 2 — NCC lacked the basic knowledge and experience to operate the new manufacturing process.

• Hypothesis 3 — Both KOPEX and NCC management paid little attention to the organization of human resources during the important start-up phase.

• Hypothesis 4 — The poor performance of the new equipment is directly traceable to the initial decisions NCC made in the preinvestment phase.

• Hypothesis 5 — External infrastructural and economic constraints played a big part in NCC’s poor performance.

• Hypothesis 6 — NCC’s choice of frontier technology was not appropriate for the mine’s environment.

The research objectives

The research objectives were to examine the technical-change process in the Nigerian coal industry for the past 30 years and also look at the way NCC made a technological choice for a major investment project. The research actually focused more on the latter objective because institutional memory was insufficient for generating credible bases for past behaviour. The project was designed to capture the industrial and enterprise behaviour of NCC during a long period to allow policy-makers to make informed policy prescriptions for the expected future under rapidly changing conditions. To this end, the following questions were asked:

1. What specific technical and economic regimes led to the observed performance of NCC and the industry at different times?

2. To what extent did the industry adopt technical advances over time and what was the impact on productivity growth?

3. Human resources are crucial to the profitable operation of old and new plants. What has been NCC’s human resources policy, quantitatively and qualitatively? What has the trend been in its labour productivity?

4. What informed the huge technology investment of 1976–1979? Was it plant obsolescence, simply a drive to “modernity,” or a serious effort to achieve greater production capacity and higher efficiency? Above all, why and how did the project fail?

As well, I interviewed the users of coal and coal products for ideas that could be incorporated in policies for long-term planning and marketing of NCC’s products.

Scope of study

The study covered the following aspects:

• NCC’s production records from 1916 to 1987 — This time scale was meant to encompass production records from long before the Nigerian civil war (caused a major disruption), the “boon years,” the “lean years,” and the period of the structural adjustment program. These milestones might help to explain the conditioning influence of NCC’s environment.

• Specific technoeconomic indicators, such as productivity measures of capacity utilization, capital use, plant-use efficiency, sales, and turnovers — These indicators would chart NCC’s evolutionary trajectory. Although such indicators have limitations, they can throw some light on NCC’s performance.

• NCC’s technical and managerial staff — Staff were evaluated to see whether they were capable of operating the mines and effecting technical change.

• NCC’s stock of plant and machinery, especially the KOPEX-installed system — These were examined to see how much artefactual and other constraints affected NCC’s technical progress.

• NCC’s modernization efforts — NCC’s efforts were reviewed to see why the modernization plan failed. The preinvestment (preparation), investment (construction), and postinvestment (production) phases were examined to extract any evident learning that could be applied in future policy-making.

• Market-mediated factors — Although firm-level factors like techno-managerial capacity and equipment efficiency may help explain plant performance, it is necessary to ascertain the importance of the additional constraints and inducements that conditioned the growth of the industry.

Methodology

The conceptual framework adopted for this study was flexible enough to capture the range of activities undertaken in NCC’s technical-investment process before, during, and after the installation of its operating plants and to compare these with the activities in the typical technical-investment process, which has three phases: the preinvestment phase, the investment phase, and the postinvestment phase (Table 3).

Table 3. Activities in the typical technical-investment process.

Phase

Activities

Preinvestment: preparation

Identification of the project’s technical and economic requirements

Investment: construction

Basic engineering studies; design engineering; equipment specification, procurement, and testing; supplier and capital goods selection; civil engineering works and equipment erection, commissioning, and start-up

Postinvestment: production

Plant debugging, modifications, redesign, and adaptations; process and product engineering; and so on

I collected all available technical, economic, and financial data for each phase and analyzed these to determine the project costs, financial clauses, and choice of technique, raw materials, and energy and how well these latter variables were suited to the technoeconomic environment.

It is inevitable that the choices made during the first two phases would bear heavily on the postinvestment phase. Analysis of operational data would provide useful evidence of the way the project was conceived and implemented. Data were collected to reveal maintenance capability and the quality of machinery and equipment.

In the postinvestment phase, a process plant requires certain basic technological, material, and managerial inputs to function well (see Oyeyinka 1988 for a full elaboration). These include basic feedstock (e.g., raw materials, energy, utilities); technical and organizational capacities, (e.g., operational, maintenance, and innovation capabilities); and replacements (e.g., spare parts and consumables).

The overall technical capability of an enterprise is a function of its ability to simultaneously provide all these components. To capture firm-level performance, I looked at the following parameters:

• capacity utilization, which represents the ratio of the level of output actually produced (Qa) to the capacity output of the plant (Qp);

• production rate, which is tonnage/hour;

• capital use or plant availability (%), which is the number of operating hours divided by the number of available hours within the period; this indicator measures plant efficiency and, indirectly, maintenance capability; and

• labour productivity, which is tonnes/person per shift.

Data collection

Nonstructured questionnaires were used to collect from NCC primary data on its technical performance. Visits were made to the mines to see the working environment. Economic and financial data were collected from both the firm and the Mines, Power and Steel Ministry. Secondary enterprise data and policy papers were obtained from other research institutes: the Nigerian Institute of Social and Economic Research; the National Institute for Policy and Strategic Studies; and the Nigerian Export Promotion Council (which collects data on export statistics).

To get a view of the two sides of the equation, the demand and supply sides, I used a set of questionnaires to randomly sample the users and potential users of coal and coal products: NEPA, NRC, and the steel plants. I was unable to visit the various NEPA installations and had to seek information from the headquarters.

Technical change in the coal industry

Coal mining started essentially as a manual process and remained so for a very long time. However, extraction of large underground reserves was limited by the presence of water. The first major technological innovation was the introduction in 1710 of Newcomen’s steam atmospheric engine, which eased the water problem and made previously vast and inaccessible reserves available for industrial use.

This was the age of the industrial revolution, and coal was at centre stage. Indeed, in the first two technological revolutions, spanning the period between the 1770s and 1890s, the coal industry was a key sector (Freeman and Perez 1988). Coal, in a cluster with the pig iron (the iron and steel sector), cotton, and railway industries, fostered dramatic new growth in textiles, chemicals, machinery, water power, iron castings, machine tools, and shipping. Coal, thus, qualifies as what Freeman and Perez referred to as a “key factor” input in the creation of a new technoeconomic paradigm.

Freeman and Perez (1988) clearly defined the “key factor” in a paradigmatic change and the conditions that must be fulfilled. To properly conceptualize the pervasive effects of the technoeconomic change the coal industry introduced at the time, one must view these effects as much wider, as Freeman and Perez emphasized, than just a “cluster” of innovations; that is, the paradigm change is

a combination of interrelated product and process, technical, organizational and managerial innovations, embodying a quantum jump in potential productivity for all or most of the economy and opening up an unusually wide range of investment and profit opportunities. Such a paradigm change implies a unique new combination of decisive technical and economic advantages.

Newcomen’s steam atmospheric engine was further refined by Watt and others, and, in time, coal production soared, especially in underground mines. The mechanization of coal mining initially covered mine ventilation, water drainage, and transport of coal to the surface.

Technical change was then directed toward increasing the productivity of the mines. The manual methods of supporting the roof and extracting, loading, transporting, and grading were replaced with mechanical methods.

Nevertheless, innovation ever since has remained incremental and focused on these key aspects of coal mining, and these have been quite certainly responsible for the observed productivity change in the industry.

Coal mines are heterogeneous because of the differences in their natural bedding conditions, such as the thickness and slope of coal seams. It follows that mining machinery has to be designed to accommodate the idiosyncratic conditions of the mines.

Hence, the incremental innovations were meant not only to foster productivity growth but also to accommodate a wide range of geological conditions. For instance, shearers and self-advancing roof supports were initially developed for flat and moderately thick seams, but much later, functionally different equipment, albeit with the same name, had to be developed for steep bedding and thin seams. In sum, although bedding conditions may require differentiated techniques, mining technologies vary little. For example, techniques for underground mining can be divided broadly into longwall and shortwall; each is suited for a particular range of geological conditions.

Not all countries with substantial coal reserves adopted the different innovations at the same time, but most investments in mechanization ended in the 1960s. By this time, “large scale application of machines to coal face operations … with fully mechanized longwall mining ’system’” (Clark 1987) was in place. This new system, amenable to remote-control monitoring through microelectronics, sharply increased productivity, which rose from around 1.2 t/person per shift in the mid-1950s to 2.2 t/person per shift by 1970, almost 100%.

In other areas, information technology improved the management of collieries most dramatically, leading to great savings in labour costs. Modern technologies, such as those using X-rays, are improving the quality control in coal properties; new conveyor and elevator systems have replaced manual methods of transportation; and new ventilation techniques have been introduced.

Table 4 lists the major innovations in the industry since World War II.

Table 4. Major post-war innovations in coal mining.

Innovation

Description

Diffusion

Armoured face conveyor

Basic face equipment that mechanized face activities

Practically 100%

Hydraulic props and cantilever bars

Early roof-support system that allowed the introduction of narrow-web power loaders

Started to be introduced widely, but overtaken by newer technology

Narrow-web power loaders

Machines operating on a “Prop-free front system” that resulted in a large reduction in personnel

Incorporated in newer technology

Powered roof supports

Self-advancing jacks that reduced the amount and degree of manuallabour involved in advancing a face

Practically 100% incorporated in newer technology

Shearer–loader (Anderton)

Basic machinery of all mechanized systems

Practically 100% incorporated in newer technology

Fully mechanized advancing face

A shearer-loader system but with improved safety

Practically 100% incorporated in newer technology

Prop-free front longwall mining system

A system that allows the use of power supports and application of high-horse-power cutting machines to traditional coal-face layouts

 

X-ray measurement of ash content

A rapid method of determining ash content that allows automatic blending

Very widely used

Carbonization and combustion in fluidized beds

 

Technique still awaiting perfection, although many experimental applications in operation

Coal gasification

Starting with the Lurgi process, several modified and novel processes known

Limited application only, although several pilot plants in operation (e.g., Westfield in Fife)

High-temperature combustor for MHD power generation

Equipment that burns coal at >2000°C (part of MHD program)

Pilot scale demonstrated; depends on fate of MHD

Coal liquidation

Old (Fisher-Tropp, etc.) processes

Still in use but not economic enough, not generally applied (apart from South Africa); various approaches still in R&D phase

Coal desulfurization

Removes sulfur from emissions, but various appliances expensive

Appliances not widely used yet; better methods for preventing pollution being sought

Better environmental control

Methods to monitor and control emissions of grit, dust, tar vapour and other gaseous constituents (including SO2)

Appliances not widely used yet; better methods for preventing pollution being sought

Remotely operated longwall face

Advanced system for remotely operated mining operations

Very limited introduction, but overtaken by electronic developments

Microelectronic applications

ATM and HD mechanization that use microprocessors and computers; the basis of NCB’s fundamental schemes for further development

In course of wide introduction; 7 ATM and 35 HD schemes in operation in 1983

Coal for metallurgical coke manufacture

Aims at upgrading lower quality (noncoking) coal by various methods such as preheating, adding inert matter, controlled blending

Commercially applied, but not widely

Notes: ATM, advanced technomining; HD, heavy-duty.

The Nigerian coal industry: Historical background

The Nigerian coal industry was born in 1909, when coal was first discovered along the Udi Escarpment in the present Anambra State, and mining commenced in 1916. The NCC, established in 1950, handles all aspects of the Nigerian coal industry.

The extensive coal deposits in Nigeria vary in grade and structure from area to area. The reserves, shown in Table 5, are not equally distributed but have a total potential of almost 3 Gt. This supply is expected to last for well more than 100 years.

Table 5. Nigerian coal reserves by location.

State

Location

Indicated in
situ
reserves (Mt)

Inferred reserves (Mt)

Overall reserves (Mt)

Anambra

Enugu

54

200

254

 

Ezinmo

56

60

116

 

Inyi

20

Unknown

20

Benue

Onikpa

57

75

132

 

Okaba

73

250

323

 

Ogboyoga

107

320

427

Delta

Asaba

250

Unknown

250

Plateau

Lafia–Obi

22

Unknown

22

Other states

 

 

1160

1160

Total

 

639

2065

2704

Source: Nigerian Coal Corporation.

Subbituminous coal is found mainly in the north-south belt, stretching from the Afikpo and Okigwe area, through Enugu and Ezimo, to Orupa, Oturkpo, Okaba, Dekina, and Idah and from Afuji in Delta State northward, to Koton Karifi in Kwara State.

Lignite deposits are found in the southern belt, stretching from Umuahia to Ihioma and across to Nnewi and Onitsha. The belt extends to Asaba, Oguwashi-Ukwu, and Odiasa and finally ends near Okitipupa. The lignite deposits are found close to the surface, so mining is easier and cheaper than for the deeper coals.

Coking coals, found in the Lafia–Obi coal field, are high in sulfur and have to be processed before use.

Before independence in 1960, coal was the major energy resource. There was not much of an alternative, anyway, and this caused a steady increase in coal production, as shown in Table 1. Between 1916 and 1928/29, there was steady and consistent growth in production rates, from about 2 500 t to almost 370 000 t. NRC and the electricity suppliers in the country were the major consumers of coal in this period. The construction of the Port Harcourt – Enugu rail line was an important catalyst for the accelerated growth of coal production.

During the Great Depression (1929–1939), however, production fell to a low of about 238 000 t (1933/34) from the previous peak of almost 370 000 t (1928/29). This represents a fall in annual production of 132 000 t. Production improved tremendously during World War II, reaching 514 000 t in 1944/45.

The peak production times in the history of the Nigerian coal industry was in the late-1950s, with an average output of more than 806 000 t. Until independence in 1960, coal was a major component of the commercial energy needs of the country. The exit of the colonial masters, however, saw a very sharp fall in production, from almost 920 000 t in 1958/59 to about 575 000 t in 1960/61.

Shortly after, though, production picked up again, steadily growing until the civil war cut off production completely for 3 years (1967–1970). The mines destroyed during the war were repaired, and production resumed in 1970/71. Output rose to a maximum of about 328 000 t in 1971/72, by which time the extraction of oil and gas in Nigeria had begun in earnest. The oil boom led to an almost total neglect of the coal industry: NCC’s major customers, such as NRC, started using the less bulky and much more efficient diesel oil. In addition, most of the NEPA power-generating stations abandoned coal in favour of natural gas, oil, or hydroenergy. This was not peculiar to Nigeria: the world also switched to nonsolid fuels. Other West African countries that formerly imported Nigerian coal for their railways also changed to diesel. Consequently, the shrinking market led to the gradual decline in coal production in Nigeria. However, there was still a potentially high demand for coal because most ECOWAS member states were not oil producers.

Enugu coal field

Mining in the Enugu coal field started in 1917 and is supported by the following infrastructures:

• modern, well-ventilated adits (tunnels), with belt and rail conveyors;

• a modem coal preparation and beneficiation plant, capable of handling 250 t h-1 and linked by rail to the NRC rail network;

• aerial ropeway haulage connecting the two existing mines, Onyeama and Okpara, to the preparation and beneficiation plant; and

• a good road network, capable of taking heavy coal transporters, that connects Enugu and Oturkpo.

The Enugu coal field has proven reserves of 54 Mt, and each of the two mines can rapidly be mechanized to a production capacity of more than 1 Mt a-1.

Okaba coal field

The Okaba coal field, where mining started in 1968, has opencast, or surface, mining. Okaba has the following advantages:

• Opencast mining is a cheaper and quicker method of mining coal than underground methods. Okaba has a proven reserve of 73 Mt, of which 19 Mt can be mined by opencast mining.

• Okaba lies close to the proposed road and rail line from Ajaokuta to Oturkpo.

Ogboyoga coal field

The Ogboyoga coal field is approximately 20 km northwest of Okaba. Its advantages lie in its proximity to Ajaokuta and its large proven reserve of 107 Mt. Because of its topography, opencast mining is limited to about 18 Mt.

Lafia–Obi coal field

The Lafia–Obi coal field has the only Nigerian coal with coking properties, but it is high in ash (31–45%) and sulfur (1 to >6%). It has been extensively explored (137 boreholes); 36 seams have been identified, but only 2 (No. 12 and No. 13) are feasible for mining. Consequently, out of 22 Mt of proven reserves, only 15 Mt is workable and only 6.42 Mt is recoverable.

The area is geologically disturbed and has many normal and reverse faults, with throws of 8–125 m. The seams dip from 1 in 14 to 1 in 2, and nowhere are they level. In-seam exploration was required to see if it was feasible to mine the coal field. This exploration was to take about 2 years, at a cost of about 16 million NGN.

Experts expect that mining may well be difficult. Because of the high sulfur content, the mine water is likely acidic and, therefore, corrosive. Based on these constraints, the capacity of the Lafia–Obi coal field may be limited to 450 000 t a-1 of run-of-mine (ROM) product. Because of the poor quality of the ROM product, the coal will need cleaning. The yield of the cleaned product will be very low (about 20%), amounting to about 90 000 t a-1. This is equivalent to about 7% of Ajaokuta’s initial demand. Consequently, the Lafia–Obi coal field would provide only a fraction of the blend of coals needed for Ajaokuta if this field is ever mined.

Description of production techniques

NCC once had three drift mines near the town of Enugu. These were the Okpara, Onyeama, and Ribadu mines. However, Ribadu Mine was closed, so only the first two were pertinent to this research. Okpara Mine, the largest of the two, is about 10 km south of Enugu. The Okpara Mine includes the Okpara New Mine, the Okpara East Mine, and the Okpara West Mine. Okpara East, the largest of the three, is northeast of the Olowba River at the head of Okpara Valley. The available mining area is about 9.2 m2 and lies to the west of the Hayes Fault. The Onyeama Mine, on the other hand, has an area of 10 m2, has an estimated 20 million t of coal, and lies 12 m west of the Asata Fault.

Research findings

From records of operations and maintenance, I tried to document details of NCC’s inadequacies and trace these inadequacies to the decisions made in the earlier phases of the project. The project can best be described as a series of failures resulting from the constraints that attended it right from start.

Machinery and equipment failures

Equipment failure was pervasive and frequent. The following examples taken from operational records illustrate what happened almost daily at the mines:

1. The conveyor chains, made of high-carbon steel (a brittle material), broke down incessantly.

2. The shearer-loader combines were not fitted with a plow, resulting in inefficient loading on the chain conveyor. It is worth noting that the plows were actually paid for and were in stock at the time.

3. The shearer drums were in fixed positions and, therefore, could not be altered to the shifting configurations of the roof and the floor of the seam.

4. Overall, there was so much system mismatch that it led to an unusually high rate of mechanical wear and tear.

Geological and infrastructural weaknesses

The geological problems were very severe. Very little was known about the characteristics and nature of the mine waters, the constraints the fault patterns would have on the longwall layout, or the roof and floor pressures. One consequence was excessive weight on the powered roof supports along the face line. The undulating seam floor made it impossible to establish a definite gathering ground for mine water. This posed severe problems to longwall operations and also created excessively acidic mine waters. Within 2 months of operation, the Polish pumps began to break down as a result of the excess acid in the water. The pumps were made of cast iron and not easily repaired.

The operations also suffered considerably from inadequate transportation. Railway wagons needed to evacuate the coal were in very short supply, and the resulting dumping of coal created blockages in the coal bunkers. Nominal production targets could not be met, and what was produced could not find its way to the consumer. Power supply was inadequate, and outages were more the rule than the exception. The estimated production loss resulting from power outages alone was about 21 000 t in 215 h. Power outages also created severe flooding problems because the pumps were inoperative most of the time.

Human resources deficiency

As already pointed out, different stages of technology acquisition demand different levels of technical competence. Although a broad engineering and economic knowledge base may well suffice in the preinvestment phase, specific competence is needed as the project progresses to the investment phase. For instance, the formation of a commissioning team facilitates the rapid transfer of knowledge at the start-up stage. This is the stage at which all design imperfections become obvious. This is the stage at which engineers and management get to understand the special character of the technical system.

There is no evidence that NCC even conceived of a commissioning team, and there was no awareness of the complexity of the human resources requirements for what was, in fact, a new system. Even the Polish engineers at the site were of very limited use to operation and maintenance. It is unclear whether KOPEX did in fact deploy its most competent engineers. What may well have undermined the effort of the KOPEX engineers, if, indeed, they had the requisite capabilities, was the extremely poor supporting infrastructure.

Analysis of research findings

The general findings

This section will focus on the period 1976–1982, the period during which the major investment was made. However, to provide a context for analysis, the physical output preceding the period is given below:

Period

Average output
(t a-1)

1960/61–1966/67

645 000

1967/68–1969/70

Nil (civil war)

1970/71–1975/76

281 000

At the time of the first phase of the installation of the Polish equipment, a nominal production target of 3.7 Mt was set for 1976/77–1981/82. For the 6 year period, only 831 830 t was produced, representing a capacity utilization of 22.5% (see productivity figures in Table 2). The dismal physical outputs were reflected in the financial performance of the firm. NCC’s liquidity problem was so severe that regular overdraft spending was needed to cover operating costs.

Human resources

Table 6 lists the elements contributing to NCC’s failure, along with the consequences of NCC’s actions and inaction. The first element on that list is human-resources development. At the time of the technical change, junior staff made up 87.5% of total human resources at NCC; professionals and management staff, 12.5%.

Today, direct-production staff are mostly junior-level and illiterate members. The few professional staff (who mostly supervise) are not directly involved in production; most are in the head office. Although NCC has the negative characteristics of an old establishment, that is, it has an aged work force, the firm completely lacks the positive characteristics of acquired technological competence. Our findings show that the senior staff of the firm are mostly illiterate mine hands, who have no alternative means of livelihood.

Partly as a result of the mining techniques but more as a result of overstaffing at the junior-staff level, productivity growth has in the main been negative. Two factors were readily identifiable:

• The firm, because of its poor financial state, has been unable to pay retirement benefits to those who should have been discharged long ago.

• The miners’ union is against the mass layoff of workers.

The older workers, who are in the majority, are resistant to new techniques or are unable to adjust to new ways of doing things. Because process, or organizational productivity, depends very much on the quality of skills directly available for production, this component of the elements of investment capability scores very low as an input into NCC’s organizational productivity.

Table 6. Elements of investment and production capability versus NCC’s action (or inaction) in the acquisition of KOPEXtechnology.

Element of investment
capability and purpose

NCC’S action
(or inaction)

Consequences

Human-resources development: to prepare for start-up

No special training was undertaken; there was no proactive strategy for start-up personnel; aged and illiterate staff were in the majority

No start-up lessons were learned; start-up was chaotic

Preinvestment feasibility studies: to identify projects and potential feasibility of alternative design concepts

No prefeasibility study was undertaken

Physicochemical properties of mine were unknown

Detailed studies: to make tentative choices among design alternatives

No detailed studies were undertaken

NCC was limited to only one choice

Basic engineering: to supply core technology in terms of process flows, material and energy balances, specifications of principal equipment, and plant layout

Basic engineering function was surrendered to supplier of the technology

All flow A and flow B technologies without any technical inputs from NCC came from KOPEX, whose knowledge of the physical environment was very limited

Detailed engineering: to supply peripheral technology in terms of complete specifications for all physical capital, architectural and engineering plans, construction, equipment, and installation

Detailed engineering function was surrendered to supplier of the technology

 

Procurement: to choose, coordinate, and supervise hardware suppliers and construction contractors

No search was conducted for alternative supplies: no efforts were made to master procurement skills

Project cost too much; inappropriate machinery was selected;

Embodiment in physical capital: to accomplish site preparation, construction, plant erection, and manufacture of machinery and equipment

Approach was passive

 

Start-up and commissioning: to attain predetermined norms

No proactive strategy was formulated for start-up

Seed of future undercapacity and declining productivity was sown here

Production management: to over see operation of established facilities

NCC flaws were mainly here

Human resources deficiency and poor infrastructure revealed weak production-management skills

Production engineering: to provide information required to optimize operation of established facilities, including

• raw material control

• production scheduling

• quality control

• maintenance and trouble-shooting to overcome problems encountered in operations

• adaptations of processes and products to respond to changing circumstances and to increase productivity

NCC relied very much on KOPEX engineers and experience. KOPEX engineers were unable to cope with both maintenance and more serious technical problems

Spare parts were unavailable; complete system collapsed; finally, government cancelled investment program and KOPEX was sent home

Export development’, to find and develop uses for possible output and to channel outputs to market

NCC’s effort is unknown

Combination of weak internal capabilities and inadequate export facilities prevented NCC from taking advantage of export potentials

With the acquisition of new technology, a firm must provide some training in key areas of design and operation, both locally and in the home base of the technology supplier. There was no attempt to systematically train the staff: it seemed that NCC relied solely on “training by operating.” With the skill level that NCC is saddled with, it is not surprising that the acquisition process turned out to be a costly experiment.

It is important to mention that the firm had no specific human resources strategy for start-up. A strategy is necessary to reap the benefits of start-up calls for multidisciplinary engineering and technical pools of skills for scheduling, operation, and maintenance. The assignment of start-up teams may well go beyond the routine of ensuring a smooth takeoff. Because they have the knowledge, members of a startup team tend to assume leadership of future technological investment necessary to make adjustments. Troubleshooting tends to imbue the engineer with the confidence needed to face future challenges. Design formulae, procedures and routines, and theoretically determined specifications may well undergo radical alterations during commissioning and start-up. Active participation in start-up operations contributes to evolutionary technological mastery. Therefore, the neglect of this critical subphase may well have contributed to the observed failure of NCC. Because the firm had no deliberate strategies to capture the experience needed for start-up, perhaps it did not plan to acquire that kind of technical knowledge. The firm may also have been unaware of such a need. If the firm was aware, the human resources structure of NCC leads one to the conclusion that the firm was without the capacity to plan for such an endeavour.

Prefeasibility and detailed studies

A feasibility study and a detailed study were not done before money was committed to the KOPEX project. As indicated in Table 6, the feasibility of the project would have been ascertained by consideration of alternative design concepts. A feasibility study would have included a geological study to determine the conditions of the mine water. As it turned out, nothing was known about it. Detailed study would have revealed the tectonic character and dimensions of the mines. For instance, because these steps were not taken, the longwall supports (props and shields) that KOPEX supplied were a mismatch for the NCC mines. These systems are more suitable for deeper mines, such as found in Britain, West Germany, and Poland. The system failed completely in a situation where the overlying roof was about 50–200 m, a characteristic of near-surface mines. The structural configuration of the Nigerian mines created rock pressure, a phenomenon that is absent in Poland, where the equipment originated. If detailed studies had been done, stronger longwall supports to counterpoise the heavy loads in the overlying rocks would have been designed and installed. As part of the detailed study, an economic study would have been undertaken.

In the end, the total capital investment came to $55 million USD. Based on the rated capacity of the mines, the cost per tonne installed was about 90 USD, compared with about 20–40 USD t-1 in most industrialized countries, including South Africa. This cost excluded training. Detailed studies would have given NCC the information it needed to decide whether to accept this kind of cost and, indeed, whether it was wise to go ahead with the investment. As it turned out, the NCC invested in a costly experiment; worse still, the experiment failed.

Procurement and start-up

Only a brief comment is called for here because some aspects of start-up were discussed in “Human Resources.” Following the pattern established right from the conception of this project, no cost-benefit analysis was undertaken and no competitive tenders were invited. Technical and financial alternatives were not considered. The activities ordinarily engaged in by firms during the period of procurement — that is, choosing, coordinating, and supervising suppliers — became the sole prerogative of KOPEX, and it decided what it wished to supply to the NCC.

During commissioning, there were about 100 Polish engineers on site, but I was unable to obtain details about their qualifications and experience. According to sources at NCC, however, “these chaps were just as confused as we were, or even worse, they could hardly deal with any of the technical problems we had.”

Productivity dropped drastically during start-up, which is abnormal. Any serious equipment manufacturer would have ensured that an optimal level was reached during this phase. If a performance-guarantee test shows a failure of the equipment to conform to the expected norms, a manufacturer risks penalty payments and jeopardizes future contracts with the client and with other clients, as well. For these reasons, it is ordinarily expected that productivity will be at a very high level during this phase of the project. It may be argued that structural imbalances and design inadequacies made the job of the Polish engineers more difficult. But this could not possibly explain all the problems. What calls into question the competence of these “experts” was their inability to make adaptations to solve mundane engineering problems. NCC’s maintenance records show how small technical problems tended to overwhelm the engineers. Throughout the performance-guarantee period, the system never attained anything near its nominal output, and because NCC had never considered any penalty clauses, KOPEX got away with the nonperformance of its obligations.

Production capability

The elements of production capability are listed in Table 6. More often than not, an engineer will interpret the transfer of production capability as the transfer of technological capability per se. Indeed, technology transfer through a turnkey arrangement is incapable of providing anything but the elements of production capability. Extra effort is needed, and, in most instances, separate contractual agreements will be required for the acquisition of technological capability because turnkey projects deliver “packaged” facilities.

The start-up of NCC clearly signalled the future production trajectory of the firm. Preparation for commissioning was inadequate because preparation for production management and engineering was inadequate. Not much information was available on the details of quality control and production scheduling: however, maintenance records show that very little was achieved. NCC failed woefully at maintenance and elementary innovations for the following reasons:

• NCC lacked a competent maintenance crew. NCC’s technical pool was clearly deficient in quality, not in quantity.

• Compulsive repairs took the place of planned and corrective maintenance (the objective of planned maintenance is to remove technical flash points before trouble occurs).

• The investment package made no allotment for the pervasive technical and structural problems that emerged at commissioning.

• There was a dearth of local spare parts suppliers, and this adversely affected maintenance and procurement.

The central problem underlying NCC’s failure was the fact that the investment decisions were completely surrendered to the supplier. If NCC had been in charge, it could have specified the semimechanized or the fully mechanized longwall technique; it could have brought the characteristics and idiosyncrasies of the mines to the notice of the suppliers; and it would have been in a better position to negotiate better prices and determine which combinations of equipment would have better served the firm.

The market and the views of coal users

NCC also had to contend with demand-side problems:

Factor 1 — The major coal users “dieselized” their operations.

Factor 2 — The overall industrial environment forced major users to cut back on production and, thereby, reduce their consumption of coal.

For almost two decades, NCC has had three major customers: NRC; NIGERCEM, Nkalagu; and NEPA. Table 7 reveals that demand picked up for a few years after the end of the civil war (1970), but then there was a gradual decline until the mid-1980s. Indeed, for NRC and NEPA, coal consumption became quite negligible. NRC’s demand pattern reflects factor 1. For NEPA, represented by Oji River Power Plant, factor 2 comes into play. At this thermal power plant (the main coal user of the NEPA installations), only one of four furnaces is operational, and even this does not operate at optimal capacity. NIGERCEM, Nkalagu, has similar problems with capacity under-utilization. The combined coal demand in the domestic and export markets does not amount to much. This certainly raises a question about the modernization project, which increased the nominal supply capacity of the mines to several times the domestic demand. NCC officials contend there was a significantly higher export potential, but this claim is hardly borne out by the facts. The export figures show an

Table 7. Coal sales (1970–1988).

Sales (t)

Year

NIGERCEM

NRC

NEPA

Domestic

Export

Total

1970/71

22470

1 830

2 174

26474

1971/72

59 201

90915

17 252

7 785

4 300

179 453

1972/73

120 617

128 557

13 403

8118

51649

322 344

1973/74

148 730

74 528

54 142

8 449

16 000

301 849

1974/75

146 334

47 309

52 062

8 994

18 800

273 499

1975/76

140 211

64 101

56 261

11 153

24 599

296 325

1976/77

115 121

69109

63 401

10 480

6101

264212

1977/78

113 587

36225

63 528

13 021

13 884

240245

1978/79

126495

3 933

43 190

12 353

4500

190471

1980

94 413

1783

12 117

6 370

114 683

1981

67 385

3464

13 743

4 577

89 169

1982

n.a.

2 484

10316

6485

19 285

1983

32 807

3 086

9 809

8459

54 161

1984

51452

1 857

5 349

3 871

11 080

73 609

1985

86 110

1391

5 040

4 159

5 000

101 700

1986

74 988

1 565

2 648

4 673

39 552

123 426

1987

90 301

757

2311

4608

97 977

1988

73 996

296

1 298

3 625

79 215

1989

73 800

150

659

3 875

78 484

erratic demand pattern. If, indeed, this demand had existed all along, the firm would have had enough reason to push for higher export, as one of its main constraints was shortage of foreign exchange.

However, there was no certainty that with the high capital-output ratio (NCC’s capital investment was extremely high), the firm’s product would have been competitive on the world market. It is also doubtful that NCC would have had the facilities to exploit that market. This is all conjecture, of course, but there is an even more fundamental misconception pertaining to the potential demand from the domestic iron and steel sector. Enugu coal has a noncoking character and is mainly suitable for steam raising, as in thermal power plants. The use of Enugu coal in steel production would be limited: the coal would have to be blended with coals of superior coking quality. The demand for coal in Ajaokuta is potentially high, but NCC is a long way from being able to meet this demand.

From discussions with domestic users, it appears that the future of coal may depend on the external market. Far from switching to coal, cement companies, such as West African Portland Cement Company have connected their facilities to the major domestic gas line. This trend is likely to be followed by other users. The major attraction of gas is that it is a clean form of energy. In addition, transporting coal far from its point of production adds to the overall cost of the product. These are the major concerns of the potential domestic consumers of coal.

Conclusions

The NCC technical-change effort was hastily conceived and badly executed. The firm and its supervising government agencies did not formulate explicit strategies to acquire, assimilate, and adapt technology. Increased productivity seemed to be the major reason for the acquisition; the acquisition of technological capability did not seem to be important. The practical difficulties inherent to technology were paid scant attention, and the entire transfer process was jeopardized.

NCC thought of the transfer process as being simply a matter of transporting a piece of hardware from Poland to Nigeria. But Nigeria ended up with a white elephant.

The firm did not conduct an international technology search before making a choice. It did not carry out any prefeasibility activities or detailed studies. Consequently, it failed to consider physicostructural limitations, which later created bottlenecks in the operation. There was no systematic search for alternative suppliers. No competitive tenders were requested. There was, therefore, no basis for negotiating either the technology package or the price. In the end, NCC ended up with a system that was technically unsuitable and inappropriate for the Nigerian environment, and it cost three times the world market price.

Despite its age (NCC has been in operation since 1916), the firm has not accumulated any significant investment and production capabilities. This turned out to be a great hindrance to technical change, embarked on in 1976–1979, and to the firm’s ability to mature in the long run.

Technology management and policy

Two distinct themes, encapsulating several issues, emerged from this case study:

• the macroeconomic policy and the physical environment; and

• the management of technical change at the firm-level.

First, technological investment and attendant activities shift to the firm level the moment a supplier is selected. Second, the role played by supervisory agencies, critical as they may be, sometimes results in irreversible decisions, and the role, therefore, is hardly ever linked to subsequent investment decisions.

This study did not explicitly set out to investigate the macroeconomic influences on the project. But my findings and those of previous studies on Nigerian industries illustrate the important effects of macroeconomic policy and the physical environment on a firm’s development.

Macroeconomic environment

We find a conceptual parallel in the way physical infrastructure and knowledge infrastructure were defined by Justman and Teubal (1992). In their view, infrastructure goes beyond the provision of, for instance, power and communications equipment. Infrastructure includes coordination and information exchange at the early stages of the project and beyond, “to all situations where the economy must make far-reaching decisions concerning structural change.” Therefore, in acquiring technology, it is important to consider the interdependence of investment and physical infrastructure, the coordination of resource accumulation and use, and the provision of enough trained engineers (knowledge infrastructure), and the necessary financial, export, and marketing infrastructures.

We know that a firm in the process of technology acquisition must do at least two important things:

• deploy either internal or external human resources (external capabilities could be within the nation or outside it); and

• exploit certain critical infrastructures, which may be internal or external to the firm, but preferably external if the firm is not to carry the burden of a huge, unproductive investment.

From this study and others, we know that the largest proportion of knowledge infrastructure (broad and specific) has been obtained outside the nation. In the case of NCC, the dependence on external human resources was total.

Although the role the physical infrastructure played in the failure of NCC was only tangentially related to persistent power outages, the shortage of railway wagons, and so on, other studies (Esubiyi 1992; Oyeyinka 1988; Amdi, this volume) revealed that these phenomena are not sporadic or isolated. They are a pervasive problem and pose a significant challenge to the operation of firms and the acquisition of technology. It is because the external environment was deficient that, for instance, Ajaokuta Steel Company had to build its own power plant and machine shops, Delta Steel had to acquire its own foundry, and cement firms in Nigeria had to develop internal fabrication facilities. For the same reason, a lack of critical inputs (spare parts and consumables) forced NEPA to completely shut down its system several times. Constraints of the physical environment can, therefore, be likened to what Hughes (1983) described as “reverse salient.” Reverse salient has a military origin and customarily refers to a section of an advancing battle line that is continuous with other sections of the front but has fallen behind. Reverse salient refers to an extremely complex situation in which individuals, groups, material forces, and historical factors have idiosyncratic causal roles. It also refers to delays in the growth of systems and other enterprises as they evolve toward a goal. Hughes talked about organizational, financial, and physical reverse salients. Contemporary analogies of reverse salients are “drag,” “emergent friction,” “systemic inefficiency,” “bottlenecks,” and “technical imbalance.”

Constraints posed by the following constitute forms of reverse salient in the evolution of Nigeria’s technological system, as well as that of most developing countries:

• poor ancillarization (shortages and long lead times for the delivery of spare parts and consumables);

• lack of coordination of production, distribution, and services;

• inadequate provision of utilities, such as those for power, transportation, and communications; and

• lack of human resources with the broad and specific kinds of knowledge needed to define and execute projects.

Firm-level management of technology

Under the theme of firm-level management of technology, two main issues are intricately interwoven: NCC’s trivialization of investment decisions in both the investment and the production phases; and its inadequate development and use of human resources.

Concurrent with technological activities are streams of technical and managerial decisions that are pivotal to the successful outcome of the project. Three sets of decisions are needed:

1. those concerning the terms of reference, the kinds of outputs expected from the investment, the types of information needed, etc.;

2. those concerning the experience and qualifications required of the firms, individuals, and organizations needed to carry out the specific tasks; and

3. those concerning the evaluation of reports submitted, their specifications, and fine-tuning on the basis of the findings.

Each decision — including, especially, the early decisions — sets a boundary around future actions. For instance, a decision to adopt a semimechanized technique excludes a later choice of a fully mechanized longwall technique for the life of the plant. Plant suppliers will manufacture facilities to order, which are invariably unadaptable to any other system and any other geological conditions. The ways technical systems acquire characteristics may well jeopardize future operations through suboptimal decisionmaking, as has been demonstrated by this project; no further elaboration is required.

The story of NCC’s investment efforts teaches us how decisions should not be made:

1. When decisions about requirements for human resources with broad and specific knowledge are trivialized, a firm may end up with critical deficiencies in operational, maintenance, adaptive, design, and R&D capabilities.

2. When decisions about specific terms of contract agreement are trivialized, a firm may have problems with replacement capacity and technomanagerial capabilities.

The interconnection of human resources and the firm’s ability to maximize learning cannot be overstated. Indeed, the kinds of technological knowledge and how well they are learned remain, as Hoffman and Girvan (1990) pointed out, the real challenge in managing technology at the firm level.

References

Clark. 1987. Technological trends and employment in basic process industries. Gower Publishing Company Ltd, UK.

Esubiyi, A.O. 1992. The acquisition of technological capabilities in the Nigerian cement industry. International Development Research Centre project.

Freeman, C.; Perez, C. 1988. Structural crises of adjustment: Business cycles and investment behaviour. In Technical change and economic theory. Pinter Publishers, London, UK.

Hoffman, K.; Girvan, N. 1990. Managing international technology transfer: A strategic approach for developing countries. International Development Research Centre, Ottawa, ON, Canada. IDRC Manuscript Report 259e.

Hughes, T.P. 1983. The evolution of large technological systems. In Bigker et al., ed., The social construction of technological system: New directions in the sociology and history of technology.

Justman, M.; Teubal, M. 1992. The structuralist perspective to economic growth and development: Conceptual foundations and policy implications. In Evenson, R.E.; Revis, G., ed., Science and technology: Lessons for development policy. Intermediate Technology Publications, London, UK.

Oyeyinka, O. 1988. Technological capability acquisition under environmental constraints: The steel industry in Nigeria. University of Sussex, Sussex, UK. DPhil thesis.

Pack, H. 1987. Productivity, technology and industrial development: A case of textiles. World Bank - Oxford University Press.

Vernon, R. 1977. State-owned enterprises in the international economic system: A prospectus. Harvard Business School Press, Boston, MA, USA. Memo.

CHAPTER 4
Technological Acquisition and Development in Zimbabwe: The
Hwange Thermal Power Station

Benson Zwizwai

Introduction

The objective of this study was to examine the process of technology acquisition and development in Zimbabwe, at the Hwange Thermal Power Station. Also of interest were the implications for local industry and Zimbabwe. The study focused on the contractual arrangements at the power station, identifying the major participants in its construction and assessing the degree and extent of local technical capabilities in operating, maintaining, and repairing the power plant. To some extent the study also explored the constraints on capabilities within local industry and the development of such capabilities to supply the requirements of the station. To place the case study in a wider context, it examined the policies relating to technology in Zimbabwe, the international structure of the power-equipment industry, and the effects these are likely to have on efforts to build an indigenous technical capacity.

Study approach

The first step was to review the literature on technology acquisition. I then examined the relevant secondary information and constructed the historical background of the project through newspaper reports and annual reports of the former Electrical Supply Commission (ESC) relevant officials. I relied on official documents, such as the Three-Year Transitional National Development Plan 1982/83–1984/85 (Government of Zimbabwe 1982) and the First Five-Year National Development Plan (Government of Zimbabwe 1986), and interviews with officials from various government departments for an overview of the technology policy of the country. Finally, I made three visits to the power station and carried out extensive, structured and unstructured interviews with management and several employees at various skill levels.

The study sought to answer the following questions:

1. To what extent did local industry participate in the construction of the power station?

2. What factors inhibited further local participation?

3. Are there any measures to increase such participation?

4. Did the Hwange project improve local technical capabilities in power-equipment production?

5. Does government have a clear policy on procurement of plants and machinery to develop local industry?

6. To what extent are local human resources being trained to reduce reliance on foreign expertise and to ensure effective technology acquisition?

The initial hypothesis was that the limited participation of local industry did not necessarily reflect a weak technological base in Zimbabwean industry. This hypothesis was based on the fact that Zimbabwean industry is relatively advanced compared with that in most countries in sub-Saharan Africa, particularly the metal working subsector, which forms the basis of a capital goods sector. Zimbabwe has an integrated iron and steel industry. Therefore, the limited participation of local industry to some extent reflects the lack of a procurement policy to promote local industry.

The situation at Hwange

In the late 1960s, the chairman of Wankie Colliery, Sir Keith Acutt, said in his annual report for the Anglo-American Corporation (AAC) that he was prepared to offer financial assistance to install a steam generating unit at Hwange. The chairman had predicted an electric power shortage “within a few years.” The hydroelectric station at Kafue, in Zambia, was about to start. The same annual report showed that AAC’s coal sales during that year had dropped by 10% to a low of 3 Mt. In addition, the chairman expected a further drop in coal sales to Zambia when the road lift to Livingstone ended and the Zambia Siankandobe Colliery came into production.

In August 1968, Sir Frederick Crawford, a director of AAC, made a strong plea for the construction of a thermal power plant at Hwange. He evoked both political and economic arguments and pointed out that Rhodesia needed “cheap power to continue to develop its primary and secondary industries.” The establishment of the thermal plant “would be in keeping with the current trend for greater self-reliance in industry and mining, keeping us independent of external suppliers or pressures and would also be the mainspring for increased employment internally.”

Like Sir Acutt, Sir Crawford could “foresee” a power shortage in the country by the 1970s. At that time the country’s generating capacity, including half of Kariba’s and all the thermal stations’ production, totalled 690 MW. But Sir Crawford predicted that before the end of the 1970s, demand for electricity would exceed 1000 MW. He argued that the country electricity requirements (before the North Bank Station was built by Zambia) would call for more thermally produced power. If this was to be done cheaply, there was a strong case for centralizing generating capacity at the coal fields. However, no possibility for hydro schemes was considered.

The Minister of Transport and Power, Mr. Roger Hawkins, and ESC commissioned consultants to investigate the possibility of installing a large thermal power station at the Wankie coal fields. The consultants worked closely with AAC on the project. In 1972, the consultants recommended that a 1250 MW power station be constructed at the coal fields, and estimated that the cost of the power plant would be 240 million ZWD (in 1995, 8.51 Zimbabwe dollars [ZWD] = 1 United States dollar [USD]). Rhodesian industries, it was hoped, would receive massive orders for the construction and equipping the power station. Most transmission materials, including structures and conductors, were to be made in Rhodesia. Steel, cement, and engineering firms in the country were to make equipment for the boiler plant, and the electrical engineering sector would contribute auxiliary transformers and switch gear.

The recommendation of the consultants was accepted by ESC and approved by the government. Stage I (four 120 MW units) commenced in 1973/74. Civil engineering, mechanical, and electrical contracts were signed, and the work started.

In 1975, because of sanctions, the overseas contracts were deferred indefinitely. News about the project was unavailable because of a security blackout until 1980. In that year, the ESC general manager announced in the ESC annual report (ESC 1980) that almost 670 million ZWD had already been spent on the Hwange Thermal Power Station. He revealed that despite the indefinite deferment of overseas contracts that had occurred in 1975, “civil works continued unabated using local finance and materials, and the main structure, namely the turbine house cooling towers, chimneys, control and administration block were completed [by 1980].” The overseas contracts were resuscitated in January 1980.

When the project continued in 1980, it was estimated that additional costs to complete stage I would amount to 250 million ZWD, and an extra 350 million ZWD would be needed for stage II. Stage I, comprising four turboalternators with four boilers and an ancillary plant, was expected to produce a total output of 480 MW. In other words, each set of alternators would have a capacity of 120 MW. At that stage, the turboalternators and boilers, etc., had still to be manufactured, shipped, erected, and commissioned.

Stage II was to be much bigger, both in terms of financial investment and generating capacity. Its initial output was planned at 800 MW, with an option to extend it by another 400 MW. It may be useful at this point to compare the country’s generating capacity at that time with the planned capacity at Hwange, to give some idea of the extent of the contemplated project. The total generating capacity of the country (excluding the Hwange project) stood at 960 MW, which was well below the planned capacity of Hwange (>1200 MW.)

Since the Hwange project resumed in 1980, costs have gone up considerably. When news about the project was released in February 1980, The Sunday Mail reported that it would cost about 235 million ZWD to complete stage I and that another 350 million ZWD (at 1979 prices) would probably be needed for stage II. In April 1980, the ESC general manager announced that the total cost of the Wankie Thermal Power Station would be around 800 million ZWD. In August, the chairman revealed that construction costs for the station had soared to 1000 million ZWD.

The spiralling costs at Hwange were passed on to consumers. In early 1983, Central African Power Corporation (CAPCO), a statutory body constituted jointly by Zambia and Zimbabwe to be responsible for operating and distributing bulk electricity power supplies from all power stations in Zimbabwe, announced a 60% increase in the bulk-supply tariff in the fiscal year ending June 1984, when the full costs of stage I would be felt.

The increasing price of electricity could also have been partly a response to World Bank pressure. The chairman of the Harare City Council Finance Committee announced in January 1981 that the World Bank was pressing for a quadrupling of Zimbabwe’s electricity tariffs within 3 years as a condition for granting World Bank aid for the construction of stage II. The World Bank representatives claimed that Zimbabwe’s electricity was “ridiculously” cheap and electricity was a “luxury” fuel.

Because of increasing costs of constructing the power station, the government decided to reconsider whether it was really necessary to go ahead with stage II after the completion of stage I. In January 1981, the government commissioned a team of consultants to reappraise the future requirements for additional power and recommend the least costly method of providing it. The international consultants, Mertz and McLellan (M&M), produced six options for hydroelectricity developments and five for coal-fired thermal plants in a report presented to the Ministry of Industry and Energy Development. The report recommended that phase I of stage II of the Hwange project be undertaken and that the South Bank Power Station of Kariba be extended. Hwange phase I would consist of two sets, generating 220 MW each, and would cost about 188 million ZWD. The extensions to Kariba South would consist of two sets, generating 150 MW each, and would cost about 108 million ZWD. The recommendations were approved by the government, and construction was completed.

The decision by the Zimbabwean government to go ahead with the expansion of the Hwange Thermal Power Station was not welcomed by the Zambian government. Before the completion of stage I, Zimbabwe was importing 40% of its electric power from Zambia, at a monthly cost of 213 million ZWD. In fact, Zambia had developed a surplus of electric power prior to Zimbabwe’s independence, which to some extent strained the relationship between the two countries, especially within the context of regional cooperation in economic development.

Observations

This brief historical description shows that the idea for the project originated with AAC, which was keen to exploit the huge resources of coal at Hwange. The self-interest of the company is borne out by the fact that the idea of a thermal power station was raised at a time when AAC’s Wankie Colliery was suffering financially from declining demand, and further decline was expected. The power station would not only boost the demand for coal but constitute a steady, ready, and guaranteed large market for the AAC. In addition, the power station would use coal with a high ash content, a type that was being discarded but the ESC would still have to purchase.

Although the price of coal for the power station was still being negotiated in 1973, The Rhodesia Herald made rough calculations of the magnitude of gains that would accrue to AAC as a result of the power station. Making the assumption that the coal-price agreement would allow for a profit margin of $0.43/t, the article calculated that the working profit from coal mined for the power station would increase fivefold, from 32 000 ZWD in 1976/77 to about 1.7 million ZWD in 1982. The company would also benefit from lower unit-production cost because of larger scale operations.

The consultants who carried out the initial feasibility study for the project worked closely with AAC, whose interest was at stake. These consultants had carried out the more recent assessment of Zimbabwe’s future power needs, with a view to finding the most economical way of meeting those needs. It should not come as a surprise that expansion of Hwange was recommended, without much attention given to some alternative sources of electricity supply, e.g., Cabora Bassa.

Contractual arrangement at the power station

To clarify the role of the consultants in the construction of the power station, it is necessary to provide a picture of the nature of the relationship between the Zimbabwe Electricity Supply Authority (ZESA), which controls the power station, and the consulting engineers and the contractors, that is, the companies involved in the construction of the project, whether local or foreign. This relationship has strongly influenced the process of technology acquisition, both at the power station and in Zimbabwean industries supplying inputs to Hwange.

The Hwange Thermal Power Station is owned by ZESA, a statutory body established by an act of Parliament. ZESA is vested with the powers of generating, transmitting, and distributing electricity in Zimbabwe. Before independence the power station fell under ESC. However, ESC did not have statutory powers to generate electricity in Zimbabwe. At that time, the organization of the power sector was fragmented, with CAPCO being solely responsible for electricity generation and transmission in the country. ESC and the electricity departments of the city municipalities of Harare, Bulawayo, Mutare, and Gweru were responsible for distributing electricity. This form of organization resulted in an anomalous situation: despite the fact that ESC owned and operated the Hwange Thermal Power Station (when it became operational), it did so on behalf of CAPCO — the only organization that could generate and transmit electricity — and then resold the electricity to ESC for distribution. The situation was corrected by the formation of ZESA in 1985/86, which took over ESC and acquired the electricity departments of local authorities.

When ESC originally constructed the power station, it appointed the M&M as consulting engineers for the project, at both stage I and stage II. M&M was very central to all the operations at Hwange, and for that reason, it is necessary to precisely define its position not only during the initiation but also during the construction and subsequent operation of the project.

When construction of the power station resumed after independence, after having been suspended because of sanctions, M&M assisted ESC by preparing the documents necessary for ESC to apply for approval in principle of M&M’s general proposals for the execution of the project. At the preconstruction stage, the duties of M&M included the following:

• investigating data and information relevant to works that had been prepared by either M&M or others;

• making any survey of the site that might be necessary to supplement information already available;

• advising ESC on the need to carry out any geotechnical investigations to supplement the information already available; and

• advising ESC on the suitability of persons or firms tendering and the relative merit of their tenders, prices, and estimates.

At the construction stage, M&M was responsible for the following:

• advising ESC on the need for special inspections or testing;

• advising ESC on the appointment of site staff;

• preparing any further designs or drawings;

• examining contractor’s proposals;

• preparing formal contract documents relating to accepted tenders for inspecting and testing during manufacture and installation of electrical and technical machinery and the plants supplied for incorporation in the works;

• arranging and witnessing efficiency and acceptance tests on site to ensure that the project was executed according to the contract and in accordance with good engineering practices;

• checking contractors’ claims and issuing certificates for payment to the contractors;

• delivering to ESC the records and manufacturer’s manuals needed to operate and maintain the works; and

• advising on disputes or disagreements between ESC and the contractors.

In addition, M&M coordinated the transportation of all equipment and materials to Hwange and had to ensure that delivery was made by the contractors in the most efficient, economical, and practicable manner. M&M gave all the necessary instructions and supervised the construction of power station.

The copyright on all drawings, reports, specifications, bills of quantities, calculations, and other similar documents provided by M&M (others were supplied by contractors) would remain M&M’s for the duration of the agreement and for 12 months thereafter, although ESC had a licence to use such drawings and other documents for the purposes of constructing the power station. After 12 months, the copyright would belong to ESC.

It should be emphasized that the position of M&M vis-à-vis ZESA has not been static. For a long time, M&M had held the monopoly on all engineering consultancy in electricity generating and transmission in the country. However, now ZESA is beginning to build capabilities within itself and is taking steps to improve its contractual relationship with M&M. It was almost natural and automatic that M&M would be the consulting engineers in any project undertaken by ZESA. But in their contract on the appointment of consulting engineers for the Kariba South extension, ZESA made it clear that the appointment of M&M would terminate with the completion of phase I and that ZESA had no obligation to appoint the same consulting engineers for phase II. M&M had to accept that ZESA might issue M&M’s enquiry documents from Kariba to any other consulting engineer(s) appointed for phase II.

Nature of the contracts

This section discusses some of the conditions in the contracts between the contractors and ZESA. The contracts were fairly standard, and discussion will focus on the common issues bearing on the development and acquisition of technology at the power station and in the relevant subsector of Zimbabwean industry. Again, it will be clear that M&M’s role was of critical importance.

When a contract was signed, all the work was to be done according specifications or to the reasonable satisfaction of the consulting engineers. M&M was entitled, at all reasonable times during manufacture, to visit the contractor’s premises to inspect, examine, and test the materials used by, and the performance of, the contractor or subcontractors. After manufacture, components of the plant were delivered to the site, with authorization from M&M. Once the work was complete and tested, the M&M issued a take-over certificate.

In general, the contracts were very specific about the work to be done and the quality specifications. Contracts usually required the design of any work to ensure satisfactory operation under the atmospheric conditions prevailing at the site. Continuity of service was the first consideration, so the design had to facilitate inspection, cleaning, and repairs.

Some months before the completion of the plant, M&M was to be supplied with copies of general instructions for operating and maintaining the plant. Operating instructions had to detail all normal start-up, running, and shut-down procedures, emergency operating procedures, and any recommended precautions to prevent the plant from deteriorating during periods of nonoperation. The maintenance instructions had to include a schedule of spare parts, with reference numbers and procedures for ordering replacements. On completion of the contract the contractors were obliged to furnish M&M with copies of all final drawings needed for the efficient maintenance of the plant and for all the parts to be dismantled, reassembled, and adjusted. Depending on the complexity of the work, the contractor was obliged to keep a competent representative at the power station for some time after a take-over certificate was issued.

A picture of the power station

This section describes the actual working of the Hwange Thermal Power Station. This should provide the nontechnical reader with an insight into what happens in thermal power generation.

The Hwange power station can be broadly divided into three major components:

• a boiler section, consisting of coal feeder mills, primary air fans, induced-draft fans, forced-draft fans, and air-seal fans (secondary air burner, oil burners, pulverized fuel burners);

• a turbine section, comprising turbine, condenser, extraction pump, feed heaters, air injectors, auxiliary steam manifold, boiler feed pump, and deaerator; and

• auxiliaries, made up of compressed-air system, ash plant, coal plant, water supply system, water treatment plant, hydrogen-generation plant, cooling water system, and fire-fighting system.

The coal used in the power station is transported from the opencast mine of Wankie Colliery by a conveyor-belt system to the coal store. From there, it is carried again by conveyor belts to boiler bunkers for storage. In the conveyor system, the coal is guided from one belt to the next by chutes. From bunkers, the coal is transferred to the volumetric feeder, which feeds the coal mills (pulverizing mill) at a controlled rate. The coal mill is very important: this is where the coal is ground into a very fine powder — pulverized fuel — before it is sent to the boilers. The quality of the pulverization should be high for efficiency of operations. If the pulverized coal is coarse, there will be a high rate of wear and tear on the pipe system.

On start-up of the boiler, the pulverized coal is ignited by oil burners. Air is drawn from the top of the boiler house by forced-draft fans and passes through an air heater into the combustion chamber; it is drawn off and blown by the primary air fans through the mills to convey the pulverized coal to the combustion chamber.

The combustion chamber is completely lined with water wall tubes. The water heated in these tubes passes to the water-and-steam drum, where steam is separated and then travels to the super heater, where its temperature is raised further. From there it is supplied to the turbine, through interconnecting pipe work. The steam has a pressure of 8.9 MPa and a temperature of 518°C. The steam passing against the turbine blades causes the turbine to rotate (controlled by its governor at 3000 rpm).

The operational efficiency and life span of the turbines can be affected by moisture. High-pressure valves control the water level in the boiler drum, which is equipped with gauge glasses for monitoring the water and steam levels. If the water level in the boiler is too low, the water level in the pipes along the boiler will be too low and the high temperatures in the boiler will melt the pipes. On the other hand, if the water level in the boiler is too high not enough high-pressure steam goes into the turbine and the water may damage the turbine blades.

The turbine is coupled to the generator, the rotor of which is large electromagnet, whose rotation produces an electric current in the copper winding of the stator. This electric current is fed to the national grid through a transformer, which increases the voltage of the electricity produced.

After passing through the turbine, the steam, now at low pressure and temperature, reaches the condenser, where it is condensed back into water as it passes over a number of tubes in which cold water is circulating. This process warms the water in the tubes. The water is cooled down again for further use by being sprayed into the lower levels of the cooling tower. An upward draft of the air within the tower cools the warm water as it falls to a pool at the bottom. From this pool, it is pumped back to the condensers.

The condensed steam, meanwhile, is pumped by an extraction pump through low-pressure heaters to the derider, where dissolved oxygen is removed to prevent corrosion of metals in the boiler. It is then sent by the boiler feed pumps through high-pressure heaters and an economizer to the steam drum, where it enters the water wall tubes as part of this continuous cycle.

The flue gas leaving the combustion chamber passes over the superheater, economizer, and air heater, giving up heat, and then to the precipitator, where dust particles are removed. The gases are drawn through the boiler by the induced-draft fans and discharged into the chimney. Coarse ash is collected in an ash hopper under the combustion chamber, and fine ash is collected in the precipitator hoppers. This ash is conveyed hydraulically from these hoppers to the disposal area.

Major suppliers and contractors

An interesting feature of the Hwange Thermal Power Station is the large number of contractors who participated in its construction. Table 1 lists the companies that won major contracts. These firms also subcontracted portions of their works.

Table 1. Main contractors at Hwange Thermal Power Station.

 

Stage I

Stage II

Boilers

ICAL, part of ICS (South Africa)

Babcock Power (UK)

Turbines

MAN (Germany)

KVS (USA)

Generator

Alsthon Atlantique (France)

Ansaldo (Italy)

Switchgear

Ansaldo (Italy); GEC, Cogelex (France)

Ansaldo (Italy); GEC (France)

Auxiliaries

Babcock (UK); Mother & Platt (UK)

Babcock (UK); Mother & Platt (UK)

From Table 1, it is clear that construction of the power station involved companies from many countries. Local companies were very much involved in the civil engineering works. Local companies like Roberts Construction and Belmont—Glendinning won the housing and extension services contracts; WJ & RL Gulliver received the contract for the construction of the ash dam; and Grinaker, in a joint venture with Roberts Construction, constructed the main foundations and the superstructure of the power station.

The involvement of local companies in the civil engineering reflects the development of the country’s capabilities in this field. However, the mechanical engineering, electrical engineering, and transmission contracts went mostly to foreign contractors, although some went to local companies, such as Bestobell (ventilation and air conditioning), Drake and Scull (vacuum cleaning plant), South Wales Electric (auxiliary transformers), and HWS Constructors (lighting). Different companies were contracted for similar sections of stage I and stage II of the power station. For example, ICAL (South Africa) constructed boilers in stage I, whereas those in stage II were constructed by Babcock Power (United Kingdom). MAN (Germany) was the major contractor for the turbine sections in stage I, whereas KVS (United States) was responsible for the same section in stage II. It is also interesting to note that the sources of financing were mainly the World Bank and the constructors themselves.

Design of stages I and II

The design of stage I was outmoded, especially that of the coal mills. This is partly explained by the fact that the construction of this stage of the power station was postponed by almost a decade. The power station was supposed to have been operational by about 1972. The stage I coal mills are not only old fashioned, but also technologically complex and difficult to maintain.

The stage II mills are more modern but use a far simpler technology. Each stage II mill consists of a big container with mill balls. Coal goes into this container, which rotates; the coal and the hard steel balls hit each other, and in this way the coal is ground. These steel balls are easy to manufacture, requiring only very hard steel.

The process in stage I is different. In each mill, there are two huge rollers on a table. As the table rotates it turns the rollers, crushing the coal. Altogether, the stage I mills have 64 segments for the tables and 32 roller tires. Table segments take about 1 year to wear off, and rollers take about 6 months. Certain parts of the hydraulic system have to be imported from South Africa.

The power station is currently using diesel oil for start-up. Power stations elsewhere use light oil for start-up, then switch to medium oils and then to heavy oils to correct flame stability. Heavy oils are cheaper than diesel, but if heavy oils are to be used, it will be necessary to install heaters to heat the oil to increase its viscosity.

Modifications to the mill

The hardness of the coal is a factor that should have been considered when the material for making rollers and the rotating table were chosen. The mill is designed to reject hard foreign bodies, so hard coal will also be rejected. When the stage I mills were put into operation, they had a very high rate of rejection of coal, which was very uneconomical, taking into account the cost of purchasing the coal and transporting it through the conveyor belt system. There was also a high rate of wear and tear on the armoury, which led to leaking of the pulverized fuel.

Modifications were made to reduce the amount of rejected coal and to reduce wear on the armoury. The gap in the valve that injects air into the mill to carry the pulverized fuel had to be reduced. The wear on the armoury occurred because some foreign particles and heavy coal remained suspended, continuing to butt against the armoury, before eventually falling down the rejection route. The valve modification increased the velocity of the air. Particles were blown back rather than left suspended, with the result that the rejection rate was reduced to negligible levels and the life span of the armoury was increased. However, it meant that the mill was forced to grind almost everything, but consumption remained at acceptable levels.

The original suppliers came up with their own modifications. First, they reduced the distance from table to top ring. This reduced the amount of coal between table and roller, which reduced the power consumption in the motor. Second, they changed the shape of the armoury.

Other modifications

Conveyor belts transport the coal from the opencast mine to the power plant. Chutes direct or guide the coal from one belt to the next belt, but the chute system was not well designed because the chute plates wear out quickly. The chutes had to be redesigned. First, a Zimbabwean company analyzed the material composition of the plates. Then drawings were made for a local company to do the manufacturing using harder steel which does not wear so easily.

In addition, the system of pipes carrying pulverized fuel was wearing out at a much faster rate than expected, particularly in the corners. Either the material composition of the pipe system failed to meet specifications or the specifications were not high enough. Different material was recommended for a trial, and two corners were reconstructed with the new material. The boiler was run to see if the new material performed better than the old.

Availability of spare parts and consumables

At initial installation and test runs, maintenance costs for a power station are relatively high. Obviously, at the initial start-up, problems will be experienced, and these may be caused by the use of components that do not meet the required specifications and the operators’ lack of familiarity with the plant. As adjustments and corrections to components are made and operators gain more experience with the plant, running costs are reduced. Eventually, the station gets to a point where it begins to operate smoothly, running costs reach a stable minimum, and the technicians become experts. However, as the equipment ages, breakdowns are more frequent, operational efficiency goes down, and average running costs start going up. At this stage, the availability and smooth procurement of spare parts and consumables become extremely important.

Spare parts

Spare parts for the boiler feed pump include the following: bearings, balancing springs and piston, pump impellers, couplings, valves, gland packing, joint gaskets, volume-to-volume seats in feed pump connections. There have been many leaks in valves, and the problems appear to be in the design; material composition may be different from that prescribed in manuals.

Spare parts for the fuel-oil system include bearings, safety valves, and screws for pumps. Problems were experienced with bearings, and the station fabricated some at the workshop, but they do not last. The problem is likely to be in the material. Oil burner hoses, which connect the oil pipe to the burners, are imported. Field and Technical Services is trying to manufacture parts for repairs. For the life span of the power station, which is projected to be 40 years, 2560 burners will be required. Gaskets are supplied by Bestobell. Electrical cords are imported — they cannot even be repaired locally and are actually sent back to the original manufacturer for repairs. NEI Central Africa (part of ICAL, which built the boilers) supplies Hwange with boiler parts. It orders from Kent.

If the system of pipes carrying pulverized fuel wears out, parts can be obtained from O’Connolly, which has already manufactured them.

The turbine lifespan is long, and no problems are expected in the first 20 years. IPTC recently formed a company in Harare to supply turbine parts and has a franchise with the manufacturing company. Other turbine parts will have to be imported, though, and so will high-pressure vessels and high-pressure valves. However, 20 years is a long time, and with planned industrialization programs, the plant may acquire its own capabilities in this field. Low-pressure valves can be obtained locally, and it may be possible to encourage some local companies to manufacture high-pressure valves for the water-pumping station from the Deka line.

Some of the turbine pumps can be manufactured locally, but boiler-feed pumps are complicated and may have to be imported for a long time to come. The ash-slurry pump and cylinder grinders will be manufactured locally by O’Connolly (drawings have already been submitted).

Consumables

We now turn our attention to consumables — propane gas, hydrogen, carbon dioxide, methanol oil, and asbestos packing — and some of the problems the power station faces in the procurement of these.

Propane gas, which is used for lighting burners, is ordered from South Africa. The power station sends the cylinders to a company in South Africa, where they are filled and sent back. However, the company faces foreign currency problems and often fails to meet the required orders in time or in sufficient qualities. Oxyco, in Harare, refills hydrogen and carbon dioxide cylinders. However, it can only do about 12 cylinders at a time. This creates problems: at times, the power station may require as many as 24 cylinders all at once. Methanol is imported from South Africa through Chemplex (Bulawayo). When there are delays in supply and, hence, a shortage of methanol at the station, more hydrogen will be used. In the absence of unforeseen circumstances, it takes about 2 months to get methanol from South Africa.

Oil is one of the biggest problems, given the high consumption at the power station. The station uses HHP 46 oil, which is not available from Shell BP. The firm does have total substitute oils and is prepared to guarantee their efficient performance, but it insists on a contractual arrangement.

Asbestos packing is imported, although Zimbabwe produces and exports asbestos — it is used throughout the country in all industries that use steam. What is required is the machinery and technology to compress the packing. ZESA imports the packing through Bestobell; however, a role of asbestos blanket, about a half metre thick, was 2000 ZWD in 1986.

Workshop

The power station has a workshop that mainly does maintenance. It is equipped with machinery imported from the United Kingdom, the United States, and South Africa. It has bending machines, a circular-bend saw, surface grinders (different types), lower press, bench drilling machines, reciprocating hacksaws, lathes, vertical drilling machines, and milling, rolling, slotting, and shearing machines. The workshop is capable of undertaking repair work on its own machinery but has to purchase consumables, such as drills, saws, and blades. Because of the shortage of consumables in the workshop, some machinery lies idle for long periods, an inefficient use of the huge financial resources that were invested in purchasing the machinery.

Human resources

The human resources at Hwange Thermal Power Station at its inception were predominantly foreign. Engineers and technicians were recruited from the United Kingdom; artisans and plant operators were recruited from India. The massive recruitment of foreign personnel even at low skill levels was justified by the size of the Hwange Thermal Power Station; existing power stations in the country were smaller.

In keeping with the government’s policy of reducing dependence on expatriate labour, ZESA embarked on a concerted drive to recruit and train local personnel. Training, in general, is going on fairly smoothly. Within a period of 3 years, the number of Zimbabwean engineers increased from 3 to 60. The majority of the graduate engineers have general engineering training, and most acquired the relevant skills to be promoted to positions of responsibility.

At the time of this study, all but 10 unit operators had been replaced by Zimbabweans.

Technical development

In anticipation of the large training requirements for technical personnel, ZESA established a training school at the power station. It would have been ideal for the first-year apprentices at the power station to spend some time acquiring theoretical knowledge, which they could then apply on their jobs. Unfortunately, the local technical colleges were not fully equipped to offer specialized training for the electric power sector. The government, therefore, gave ZESA (then ESC) the mandate to work with Electricité de France to develop a training system for the electricity sector in Zimbabwe. This led to the building of the training school in Harare, which accommodates 220 students. Unfortunately, the training school at Hwange was not very useful because there was a shortage of staff.

As a result, first-year apprentices engaged at the power station were without theoretical training. It became very difficult to provide the apprentices with systematic training: the training was determined by the specific circumstances and problems at the power station at any given time. The major problem with the on-the-job training was the language barrier— foreign workers preferred to communicate in their mother tongue. This became an obstacle to Zimbabweans actively seeking to acquire certain skills.

Zimbabweanization

Zimbabweanization of the power station has been taking place slowly because of the high staff turnover, mainly a result of salary differentials between parastatals and the private sector and between Zimbabweans and foreign staff. The salaries of foreign staff are about three times those of Zimbabweans employed at the same levels and with equivalent academic and professional qualifications and experience. In addition, the foreign staff enjoy other privileges, such as company cars and a holiday ticket to their home countries. The frustration faced by qualified Zimbabwean engineers, technicians, fitters, and others has led them to leave for the private sector. The search for greener pastures has assumed a new dimension in recent years, with several qualified personnel crossing borders to such countries as Botswana and South Africa.

The instrument maintenance department, in particular, has faced problems in recruiting, training, and retaining Zimbabweans and is, therefore, dominated by foreign staff. The difficulties in recruiting Zimbabweans in this department arise from the fact that no other company in the country has a range of instruments like that at Hwange. To make matters worse, even the established colleges in the country have problems training instrument technicians.

International structure of the power-equipment industry

To establish the role Zimbabwe plays in supplying the needs at Hwange and the potential for developing local capabilities in the manufacture of power equipment, it is necessary to get a clear picture of the international structure of the power-equipment sector. A country’s ability to enter this industry is determined not only by conditions internal to the country but also by international realities and constraints.

A review of the international power industry also helps us identify problems likely to be encountered by any nation attempting to develop this sector. International experience is a source of lessons and strategies.

Structure of the industry

The market for heavy electrical equipment is a very imperfect one. On the supply side, 12 transnational corporations (TNCs) (based in developed countries) and their subsidiaries and affiliates account for a large share of total world production and trade in this industry. According to Surrey and Cheshire (1972), there are about 250 manufacturers of power and distribution transformers in the world. These manufacturers employ about 720 000 people, 75% of whom are employed by 10% (25) of the firms, and these firms account for all the exports. The leading companies in the power industry include General Electric and Westinghouse (United States), General Electric (United Kingdom), Siemens and Allegencine Electricitate Gesellschaft (AGE) (Germany), Hitachi (Japan), and Brown Boveri (Switzerland). Other French, Japanese, American, Swedish, and Italian companies participate but in more specialized lines.

Production of large units is highly concentrated in the leading firms, and these firms dominate the world market. These firms enjoy considerable technological advantages in the production of turbogenerators, turbines (both steam and gas), and high-pressure pipes. Gas turbines, which require specialized technologies, are produced by, or under the licence of, General Electric, Westinghouse, and Brown Boveri. But in smaller plants, the technology is more accessible, even to producers in some developing countries.

All the dominant power-equipment manufacturers were established during the early development of the industry and contributed considerably to it. These firms devote large sums to sustaining research and development (R&D), which has led to considerable technological innovations. Further, technological capabilities have been acquired by international cross-licencing among the leading companies. The lead in technology has strengthened the position of the established firms and discouraged entry by newcomers.

In Europe and Japan, a major factor in development of the power sector was the acquisition policy of power parastatals, which guaranteed protection to local industry and virtually excluded imports of equipment. Further, in most cases, the companies concerned received full backing from their governments in several ways:

• Governments supported the industry by funding R&D.

• Some governments granted local private companies long-term purchase guarantees for electrical equipment.

• Other governments provided manufacturers access to expensive testing equipment at subsidized rates.

• Governments encouraged mergers in the industry when overcapacities developed.

• Governments encouraged and supported exports by giving loans to other countries under the condition that those countries purchase power equipment from the donor countries.

An important feature of the power-equipment sector is the collusion or collaboration among the leading producers. Until the 1930s, the companies used patent pools to divide the international market among themselves. These were later replaced by a formal cartel, the International Electrical Association. Most of the European producers are members. The cartel members have a system of sharing export markets, which are the developing countries.

There are also economic factors that help to explain why the industry is dominated by a few large producers. A study by UNCTAD (1978) points out that the purchasing policies of most public utilities appear to place considerable weight on the technical standards of the equipment, the prestige of or previous commercial relations with the supplier, and delivery conditions. The price appears to be only of minor importance — demand for electricity tends to be price inelastic, thus enabling the utilities to pass on high costs to consumers. Product differentiation and the loyalty of consumers to the products of existing firms act as barriers to new firms. Other barriers exist in the form of absolute cost disadvantages because existing firms possess secret know-how. In addition, the financial requirements for entry into this industry are extremely high.

On the supply side, because of the irregular nature of demand for electrical equipment, the high fixed-cost structure of the industry, and falling demand, the industry has been characterized by overcapacity since the 1960s. The resources required for investment in special machinery and testing equipment and the long gestation period to capitalize on such investments discourage new entrants into this industry. This situation is reinforced by low demand relative to existing international capacity.

What prospects do developing countries like Zimbabwe have for developing local capabilities in this line of production? Historically, TNCs have established sales offices in developing countries; in some cases, the TNCs have also set up local assembly operations for power equipment. In some large developing countries, TNCs have responded to import-substitution policies (which shift the emphasis from imported inputs to locally manufactured substitutes) by expanding their assembly operations to include manufacturing facilities. However, in most cases, the manufacturing has been small scale. Where medium-sized equipment has been produced, this has been done with a high import content. A few developing countries and newly industrialized countries, such as Brazil, Argentina, India, and the Republic of Korea, have made significant progress in the manufacture of large power equipment.

Policy implications and recommendations

Diversity of suppliers

Because Zimbabwe is a developing country that is still trying to consolidate and develop its industrial base, it is recommended that, for projects such as the Hwange Thermal Power Station, it narrow its range of suppliers. Of course, this calls for careful screening of tenders at an early stage, giving serious consideration to issues such as quality, price, and the involvement of local industry through subcontracting. The benefits of narrowing the range of suppliers are twofold. First, problems in procuring spares internationally are reduced; second, the learning process will be much easier for local technical staff.

Difference in design

For Zimbabwe, which has a limited market, it is wiser to go for standardization of design. This provides a wider scope for local industry to either diversify or invest in new lines to respond to a large demand, unlike a situation with different designs, which leads to limited market opportunities for a wider range of products. Therefore, what emerges from this study is that if a number of similar projects are to be undertaken in Zimbabwe, then the design of these projects should be similar to allow domestic industry to reap maximum benefits.

International bidding

We now turn our attention to international bidding. This is rather complex, since there is a need to balance the short-term price and the long-term benefits of developing local industry while conducting checks to ensure the efficiency of that industry. The very existence of World Bank guidelines, which provide for a 15% domestic preference margin, is a realization of the long-term benefits likely to accrue as a result of giving preference to local companies, especially in developing countries. Zimbabwe should deliberately give preference to domestic suppliers where the long-term benefits exceed the short-term costs.

Development of local capabilities

The recommendations concerning the development of local capabilities are directly derived from the experiences of those countries that have managed to develop the power-equipment sector. Those countries entered the power-equipment industry through a very deliberate planning process. This process involved government assistance, such as providing services that are too expensive and too essential to depend on the profit motivation of private companies. The government provided testing equipment at subsidized rates, protected domestic industry, guaranteed orders, and funded R&D. Because of the international structure of the power-equipment industry, an open market approach will not enable Zimbabwe to enter this sector. Therefore, it is recommended that the government should actively assist the industry in developing capabilities along this line.

Unpackaging

Unpackaging is obviously desirable because it provides the potential for local industry to get into those fields that are less technologically complex. The benefits of unpackaging are evident at two levels: the foreign-exchange requirements for imports for both construction and spare parts are reduced; and unpackaging allows for easier learning and acquisition of technology. The study, thus, recommends that in cases like the Hwange project, where contracts are very detailed and specific, Zimbabwe should take advantage of this and have those components manufactured by local industry.

Transparent technology policy

Up to now Zimbabwe does not have a clear technology policy. A document was drafted for discussion about 5 years ago (Government of Zimbabwe), but the outcome is not clear. Government does recognize the importance of building a strong domestic technological base and, hence, the importance of having a technology policy as a guide. Because Zimbabwe does not have a transparent technology policy, it is not surprising that the government makes decisions that are very inconsistent and that, at times, actually undermine progress in developing the local technological base. To avoid this, it is important for government to draw up a clear technology policy, which will be a basis for all decisions related to technology.

Implications of the Economic Structural Adjustment Program

The recommendations of this study should be viewed in the context of the general thrust of current government policy. Government has decided to embark on the Economic Structural Adjustment Program (ESAP), to be phased in over a period of 5 years, beginning September 1990. The adoption of ESAP reflects a change in the government’s philosophy of development. The major element of ESAP is trade liberalization. There are other policies accompanying this, but these are mainly aimed at ensuring the success of trade liberalization, which reflects the government’s determination to steer the economy according to an export-led growth strategy. The complementary policies include deregulation in labour laws, price controls, and investment procedures. However, the bottom line of ESAP is that government has adopted the open-market system to determine resource allocation.

This raises a question about some of the ESAP policies and the applicability of the recommendations of this study to ESAP. The very phasing in of ESAP over a period of 5 years reflects the government’s uncertainty about its sequencing of the program. Also, ESAP is very general, especially the policy for trade liberalization; this allows for flexibility and provides room for further contributions to the ultimate design of the program. As the Government of Zimbabwe is committed to ESAP and its underlying philosophy, it follows that some of the recommendations emerging from this study would require a certain time frame; this applies mainly to issues such as protecting and giving preference to domestic suppliers and providing assistance in the form of subsidized testing equipment. It is important to note that such measures are compatible with ESAP if it is aimed at developing local industry (and, of course, the rest of the economy). The recommendations of this report should be viewed as inputs to ESAP, aimed at ensuring that the program in no way unduly suppresses local industry, which can become competitive with a protected learning process.

Conclusions

Government does not have a clear procurement policy designed to develop local industry. As a result, the participation of local industry in the Hwange Thermal Power Station project has been limited, especially in stage II and in components other than the civil engineering works. Again, because of lack of policy, the government failed to take advantage of the detailed and specific nature of the supply contracts that gave scope for unpackaging.

Decisions regarding plant size and plant design should have been based on the need to develop local industry. It should, however, be pointed out that ZESA is now making every effort to reduce dependence on overseas suppliers and rely on local industry for spare parts and consumables.

The contracts between ZESA and the suppliers were drafted in a manner that ensured good work and was conducive to effective technology acquisition, especially skills related to operating and repairing the plant configuration. ZESA established a training school in Harare, and it is also sponsoring engineering students at the University of Zimbabwe. Unfortunately, ZESA is experiencing problems retaining skilled human resources. Although training is vital, staff retention is equally important — because it is usually the experienced and more capable personnel that tend to leave for greener pastures. Therefore, a comprehensive human resources development program should address issues affecting staff retention, mainly a matter of salaries, fringe benefits, and other working conditions.

References

ESC (Electricity Supply Commission). 1980. Annual report for 1980. Government Printers, Harare, Zimbabwe.

Government of Zimbabwe. 1982. Three-year Transitional National Development Plan 1982/83–1984/85. Government Printers, Harare, Zimbabwe.

——1986. First Five-Year National Development Plan. Government Printers, Harare, Zimbabwe.

——n.d. African alternative to structural adjustment programmes for socio-economic recovery and transformation — Growth with equity: an economic policy statement. Government Printers, Harare, Zimbabwe. UNECA E/CA/CM.15/6/Rev.3.

Surrey, A.J.; Cheshire, J.H. 1972. The world market for electric power equipment. Science Policy Research Unit, University of Sussex, Sussex, UK.

UNCTAD (United Nations Conference on Trade and Development). 1978. Energy suppliers for developing countries: Issues in transfers and development of technology. UNCTAD Secretariat. TD/B/C.6/31.

CHAPTER 5
Choice of Technology in Small-Scale Enterprises

Catherine Ngahu

Introduction

Private-sector development as a suitable alternative for promoting sustainable and balanced growth in Africa has attracted considerable attention. Many governments and development organizations have focused on the promotion of small-scale enterprises (SSEs) as a way of encouraging broader participation in the private sector. The promotion of SSEs and, especially, of those in the informal sector is viewed as a viable approach to sustainable development because it suits the resources in Africa.

A number of factors have helped to direct the attention of development agencies to the merits of SSEs. For instance, at the peak of the economic crisis in the early 1980s, the SSE sector grew tremendously and exhibited unique strengths in the face of recession (Grey-Johnson 1992). The sector continued to grow, despite hostile economic, regulatory, and political environments. The entrepreneurs in this sector came to be regarded as highly opportunistic and innovative. They emerged spontaneously to take advantage of opportunities that arose in the changing business environment. Moreover, they demonstrated great creativity in starting enterprises with minimal resources. It has been suggested that most technological innovations and product diversifications in Africa come from this sector (Juma et al. 1993). The SSE sector has been described as the most accessible and competitive of African economies (World Bank 1989).

SSEs have characteristics that justify promoting them in a development strategy. They create employment at low levels of investment per job, lead to increased participation of indigenous people in the economy, use mainly local resources, promote the creation and use of local technologies, and provide skills training at a low cost to society (ILO 1989).

The sector plays an important role in various African countries. According to the ILO/JASPA “African Employment Report” (ILO/JASPA 1988), the sector makes a significant contribution to the gross domestic product in Liberia (34.6%), Nigeria (24.5%), Kenya (19.5%), and Benin (17.7%). In Kenya, the sector is expected to play a key role in employment creation. Employment projections for 2000 indicate that 75% of urban jobs are expected to be in this sector, along with 50% of all rural employment (ILO 1989). The sector currently employs 40–60% of the urban labour force and contributes 25–33% to total urban incomes.

However, it is generally recognized that SSEs face unique problems, which affect their growth and profitability and, hence, diminish their ability to contribute effectively to sustainable development. Many of the problems cited have implications for technology choice. These problems include lack of access to credit, inadequate managerial and technical skills, low levels of education, poor market information, inhibitive regulatory environments, and lack of access to technology (Harper 1974; ILO 1989; House et al. 1991).

This article addresses the constraints faced by SSEs in making technology decisions. I consider the factors that influence technology choice at the enterprise level and suggest interventions at the policy level to facilitate the decision-making process. In particular, I aim to illustrate how technology decisions are constrained by problems faced by SSEs in other areas of management. The chapter incorporates findings from a study on choice of technology in SSEs in Kenya (Ngahu 1992).

Choice of technology

Technology choice has important implications for growth and productivity in industry. The use of technology is always tied to an objective. Because various types of technologies can be used to achieve an organization’s objectives, the issue of choice arises. The concept of technology choice assumes access to information on alternative technologies and the ability to evaluate these effectively. Moustafa (1990) asserted that effective choice is based on preselected criteria for a technology’s meeting specified needs. Further, it depends on the ability to identify and recognize opportunities in different technologies. The expected outcome is that the firm will select the most suitable or “appropriate” technology (AT) in its circumstances.

The concept of AT has been a subject of debate for many years. Stewart (1987) contrasted two general views. First, welfare economics defines AT as a set of techniques for making optimum use of available resources in a given environment. Second, social scientists and those working in AT institutions associate AT with a specific set of characteristics. According to Stewart, the characteristics defining AT normally include “more labour-using, less capital-using, less skill-using, making more use of local materials and resources, and smaller in scale.”

It is also sometimes emphasized that AT should not affect the environment negatively and that it should fit in with the socioeconomic structures of the community. The suggested characteristics are too numerous, which implies that a technology can be appropriate in some ways and inappropriate in others. Kaplinsky examined the trade-offs involved in the choice of technology and found that mechanized production can, at times, turn out an inexpensive, higher quality product for consumers, whereas normal production of a lower quality and higher cost product generates more employment (ATI 1987). This illustrates the dilemma involved in evaluating technology and raises the question, Appropriate for whom? This article is concerned with the gaps in knowledge, skills, or resources that hinder effective choice of technology at the enterprise level. In this context, the term appropriate is used loosely to mean technology that is most advantageous to the enterprise’s purpose and circumstances.

Small enterprises

The heterogeneity of the SSE sector complicates the problem defining it. The concept is defined in different ways, depending on the purpose of classifying firms as micro, small, medium sized, or large. Technologically, the sector is said to use low-level inputs and skills, to have much greater labour intensity, to produce lower priced products, and to operate on a small scale. The study on which this article is based focused on enterprises in the carpentry and hair-care subsectors employing fewer than 20 employees. It covered micro and small enterprises operating at various levels along the formality-informality continuum. The “Private Sector Diagnosis Survey” (USAID 1989) found that most small enterprises in Kenya had fewer than 20 employees.

Factors influencing the choice of technology by SSEs

Entrepreneurs decide at the enterprise level which technologies to use. The main factors influencing their choice of technology include the objectives of the firm, the resources available, the nature of the market, and their knowledge of available technologies (Stewart 1987). Moreover, the entrepreneurs need technical and managerial skills to choose, adapt, and effectively use technology.

Additionally, one would be in a better position to choose a technology if one were able to assess the demand for the firm’s products, estimate the rate of change in the market that may call for change in technology, gather information about alternative technologies, and estimate the potential return on investment for each alternative. However, many entrepreneurs in this sector lack the education, training, management experience, and other competencies needed to respond to these issues. Because of their economic and organizational characteristics, many SSEs lack information about technologies and have no way of gauging the appropriateness of those they are aware of (Neck and Nelson 1987).

Macropolicies also affect technology choice at the firm level through the overall socioeconomic, political, and legal forces. It has been suggested that general socioeconomic environment, industry-specific regulations, taxes, subsidies, trade and financing policies, science and technology research, and dissemination policies tend to favour large-scale enterprises (ATI 1987).

Problems hindering the effective choice of technology by SSEs

The literature indicates that SSEs face unique constraints that hinder the effective choice of technology. Many SSE owners or managers lack managerial training and experience. The typical owner or managers of small businesses develop their own approach to management, through a process of trial and error. As a result, their management style is likely to be more intuitive than analytical, more concerned with day-to-day operations than long-term issues, and more opportunistic than strategic in its concept (Hill 1987). Although this attitude is the key strength at the start-up stage of the enterprise because it provides the creativity needed, it may present problems when complex decisions have to be made. A consequence of poor managerial ability is that SSE owners are ill prepared to face changes in the business environment and to plan appropriate changes in technology.

Lack of information is a key problem affecting SSE’s access to technology. Harper (1987) suggested that technologies used by SSEs in developing countries may be inappropriate because their choice is based on insufficient information and ineffective evaluation. Neck and Nelson (1987) suggested that ignorance is a key constraint affecting the choice of technology by SSEs. Further, level of education is relevant, as it may determine the entrepreneurs’ access to information. Generally, the ability to read and write, exposure to a broader world, and training in the sciences enhance one’s ability to understand, respond to, use, and control technologies (Anderson 1985).

Lack of access to credit is almost universally indicated as a key problem for SSEs. This affects technology choice by limiting the number of alternatives that can be considered. Many SSEs may use an inappropriate technology because it is the only one they can afford. In some cases, even where credit is available, the entrepreneur may lack freedom of choice because the lending conditions may force the purchase of heavy, immovable equipment that can serve as collateral for the loan. Another related problem is the lack of suitable premises and other infrastructure.

The national policy and regulatory environment has an important impact on technology decisions at the enterprise level. The structural adjustment programs (SAPs) currently implemented in many African countries are aimed at removing heavy policy distortions, which have been viewed as detrimental to the growth of the private sector. However, much as these policies may in principle favour SSE growth in the long run, concern has been shown about the ability of the SSE sector to increase production and create more jobs under conditions of declining demand (Henk et al. 1991). SAPs tend to severely affect vulnerable groups in the short run and have been associated with the worsening living conditions in many African countries (USAID 1991). Furthermore, severe cutbacks in government services, such as health and education, force many small-business owners to draw more money from their businesses to meet these needs, thus hindering investment in technology and business expansion. In addition, the resulting reduction in employment and real wages leaves many potential customers without the ability to buy, thus reducing demand.

Some evidence from the field

This section highlights the findings of a study carried out on the SSE sector in Kenya. The survey used a random sample of 140 SSE’s operating in the carpentry and hair-care subsectors in Kenya. The two subsectors are largely dominated by small and micro enterprises. Interviews were conducted with owner and managers of SSEs. The literature survey included a review of policy documents outlining government policy objectives for SSE development and technology issues in Kenya (for a detailed report of this study, see Ngahu [1992]).

The findings of the study correspond to those in the literature. Most of the SSE (78%) were individually owned, and the others were partnerships. The SSEs had not grown much over the years. More than 51% had fewer than 5 workers, and only 22% had more than 10 employees. Sixty-three percent of the owners surveyed had secondary education. More than 60% had some kind of training in a technical area of business, but only 13 and 12% had any training in general business management and marketing, respectively.

Most tools and equipment used in the two subsectors were imported from Europe or Asia. In some cases, even simple tools, such as brushes, hammers, and tape measures, were imported. In the hair-care subsector, the chemicals, materials, and equipment were mainly imported. The tendency to rely on foreign sources and the large-scale industrial sector for supply of equipment sometimes led to an incompatibility of the needs and capacities of the SSEs. Wangwe (1993) suggested that SSEs are trying to avoid risk by avoiding unproven technologies.

To get information about products, tools, equipment, and processes to use in business, many SSEs rely heavily on friends, competitors, and training courses. More than 64% of the respondents indicated that friends were their main source of information on available technologies. Other sources include training courses, magazines, and sales people. The high reliance on friends as a source of information may explain the similarities among products and services from this sector. Both subsectors serve markets that are clearly segmented, and technologies in enterprises serving the same market were very similar. The key method for technology choice in these enterprises seemed to be simple imitation based on observation.

Although imitation strategies have unique merits for small firms because they serve to minimize risks, imitation can be risky in the absence of adequate market information. Many SSEs lack information about consumer demand and competition. Moreover, they lack the skills and resources to conduct market research. As a result, many imitators find themselves in a congested market. The similarity of their products, coupled with the tendency to serve the same market segments, erodes any competitive advantage. This forces them to compete by reducing prices, which in turn reduces profits and opportunities for growth. Most SSE owners were influenced by customer expectations and tastes, current trends, and the technology that competitors were using. Generally, the technologies adopted in both subsectors were labour intensive.

Most respondents expressed concern about high prices, inability to determine quality, lack of information about serviceability, and lack of alternatives. They also raised the issue of inadequate infrastructure, high taxation on equipment, lack of access to credit, and lack of appropriate training courses.

The government policy on the use of technology in the production of goods and services is to encourage “the application of technologies that minimize wastes and exhibit recycling possibilities; the use of local and renewable materials; the use of local talents and inputs wherever possible; and the active development of innovations and inventions” (Government of Kenya 1989). Although the policy objectives appear explicit, it is not clear which policy measures or government interventions have been intended to affect the process of technology choice by SSEs.

Policy implications

SSEs are obviously incapable of sourcing, evaluating, and adapting technologies effectively. The government policy should, therefore, aim to develop these capabilities in SSEs through supportive institutions. Policy can encourage the development of assistance programs to facilitate SSEs’ access to resources, information, training, and technology. Further, policy should promote the development of technologies appropriate for SSEs. Although it is possible to develop policies designed to improve the circumstances of SSEs, it may be more feasible to support the development of technologies compatible with the SSEs’ circumstances.

Policies should aim to encourage and promote the development of local technologies. Emphasis should be on the promotion of the local tool industry to reduce reliance on imports. SSEs are said to face a “liability of smallness.” Because of their size and resource limitations, they are unable to develop new technologies or to make vital changes in existing ones. Still, there is evidence that SSEs have the potential to initiate minor technological innovations to suit their circumstances. However, for SSEs to fully develop and use this potential, they need specific policy measures to ensure that technology services and infrastructure are provided. Further, research and development institutions that are publicly funded should be encouraged to target the technology needs of SSE.

The problem of access to information may be attributed to the inadequacy of SSE support institutions. This points to the need for a supportive policy to encourage the establishment of documentation centres and information networks to provide information to SSEs at an affordable price. Market characteristics significantly influence technology choice. The government can facilitate the SSEs’ choice of technology by creating an environment that is conducive to fair competition.

The crucial focus of policy should be an enabling environment for technology decisions at the enterprise level. There is a need to go beyond statements of policy objectives and to take specific and consistent measures to ensure that the policy objectives will be achieved. There is a need to address the overall policy framework to ensure that the policy instruments are consistent with key objectives. In some cases, there appears to be an obvious contradiction between policy and implementation.

Acknowledgments

The author gratefully acknowledges the International Development Research Centre for assistance in the SSE study in Kenya.

References

Anderson, M.B. 1985. Technology: Implications for women. In Gender roles in development projects. Kumarian Press, West Hartford, CT, USA.

ATI (Appropriate Technology International). 1987. ATI’s macro-policy programme. ATI. Annual Report.

Government of Kenya. 1986. Economic management for renewed growth. Government Printer, Nairobi, Kenya. Sessional Paper 1.

Grey-Johnson, C. 1992. The African informal sector at the crossroads: Emerging policy options. African Development, 18(1), 65–91.

Harper, M. 1974. The development of a cost effective extension service for small business: A Kenyan experiment. University of Nairobi, Nairobi, Kenya. PhD thesis.

—— 1987. Small enterprises in the Third World. John Wiley & Sons, New York, NY, USA.

Henk, I.; Uribe-Echeraria, S.; Rommijn, H., ed. 1991. Small-scale production: Strategies for

industrial restructuring. Intermediate Technology Publications, London, UK.

Hill, T. 1987. Small business production/operations management. Macmillan Education Ltd.

House, W.J.; Ikiara, G.; McCormic, D. 1991. Self-employment in Kenya development strategy. In Gray, K., ed., Employment and education: Strategies and opportunities for development. Professors of World Peace Academy, Nairobi, Kenya.

ILO (International Labour Organization). 1989. A strategy for small enterprise development towards the year 2000. Nairobi, Kenya.

ILO (International Labour Organization); JASPA. 1988. African employment report. ILO, Geneva, Switzerland.

Juma, C; Torori, C; Kirima, C.C.M. 1993. The adaptive economy: Crisis and technological innovation. ACTS Press, Nairobi, Kenya.

Moustafa, M.E. 1990. Management of technology transfer. International Labour Organization, Geneva, Switzerland.

Neck, P.A.; Nelson, R.E. 1987. Small enterprise development: Policies and programme. International Labour Organization, Geneva, Switzerland.

Ngahu, C. 1992. Choice of technology in small scale enterprises in Kenya. International Research Development Centre, Nairobi, Kenya. IDRC Research Report.

Stewart, F., ed. 1987. Macro-policies for appropriate technology in developing countries. Westview Press, Boulder, CO, USA.

USAID (United States Agency for International Development). 1989. Private sector diagnosis study. Ernst & Young. Consultancy Report.

——1991. Gender and adjustment. Mayatech Corp.

Wangwe, S. 1993. Small and micro enterprise promotion and technology policy implications. In Helmsing, A.H.J.; Kolste, Th., ed., Small enterprises and changing policies. Intermediate Technology Publications, London, UK.

World Bank. 1989. Sub-Saharan Africa: From crisis to sustainable growth. World Bank, Washington, DC, USA.

CHAPTER 6
Technology Modifications and Innovations: A Case Study of
Rice and Cassava Processing in Sierra Leone

J.G.M. Massaquoi

Introduction

Most developing countries have recently abandoned the old industrial development strategy of import substitution, putting more reliance on development programs that bring about an equitable distribution of wealth and emphasize export performance. Sierra Leone is no exception. The country’s experience with the import-substitution industrialization policy has obviously not brought about the desired development. It is, therefore, expected that whenever a properly and carefully formulated industrial development strategy is adopted it will emphasize the improvement of export performance of both agriculture and industry while increasing the production of consumer goods for the growing domestic market.

One industry that could become very important in such a strategy is food processing. This will readily suit the import-led, free-market strategy: increased agricultural production and income will generate demand for industrial goods and services. Food processing and other agro-industries will obviously enforce a linkage with agriculture. At the moment, there are very few formal large-scale food-processing industries in the country. Most food processing takes place in the informal sector. Some of it isn’t even done on a commercial scale. In the absence of any formal industry for the production of local foods, knowledge of the technological capabilities of the informal sector may provide a planning basis for the formal sector. Indeed, when the formal sector is establishing processing industries for local food products, it needs to tap the indigenous knowledge of the production process. Experience has also shown that the indiscriminate use of certain technology in food processing, although it may result in the same product quality, could have an adverse effect on known “traditional” qualities that the entrepreneurs need to be aware of. Further, the development of future food products, leading to the enlargement of the industry and improvements in quality, will depend on the existence of technological capabilities.

This paper discusses technological capabilities in the informal food-processing industries, focusing on the two most important food products: cassava and rice.

Rice and cassava products in Sierra Leone

Rice and cassava are the two most important food crops in Sierra Leone. In quantitative terms, their processing represents the largest informal food-processing activity. Rice and cassava are grown in every region.

About 600 000 t of rice is consumed annually in the country. At least 2% of this is processed into various products:

• rice pap — a thick porridge prepared from rice flour;

• rice akara — a form of doughnut prepared from rice flour and banana;

• rice bread — similar to akara but baked rather than fried; and

• rice kanya — a blend of roasted rice flour, peanut butter, and sugar.

Rice flour is an intermediate product in every processing operation, and because the shelf life of all the final products is very short, it was recently recommended that rice flour be promoted to encourage the growth of rice processing (Massaquoi et al. 1990).

Large quantities of cassava are also produced in the country. Current estimates put its production at well more than 120 000 t a-1. Because of cassava’s rapid deterioration after harvest and because of the need to reduce the toxicity of the tubers, cassava is usually processed before marketing: nearly 90% of the cassava that enters the market is in the processed form. Thus, cassava processing is a major informal activity. There are three main cassava products:

fufu — fermented cassava pulp;

gari — parched cassava pulp; and

tui — dry cassava flour.

Only fufu and gari are widely consumed in all regions of the country.

Objective

The objective of this study was to acquire some knowledge of the local technological capabilities in cassava and rice processing, with a view to making recommendations on enhancing technological innovations. This overall objective was broken down into various tasks:

1. Identify the technologies used in each of the activities: the equipment required, the skills involved, the sources of skilled human resources, and the methods of acquiring skills.

2. Identify and appraise the levels of technical change and innovation that have taken place in the various technologies.

3. Examine the major constraints facing the development of technologies in the industry.

Methodology

Technology is specialized knowledge used to transform inputs (raw material, labour, and capital) into outputs (products and services). Technological capability is the set of skills needed to

• identify the problems and the relevant technologies for solving the problems;

• adapt and modify the technologies;

• select suitable raw materials;

• make changes in the products; and

• undertake product and production innovations.

In the case of production processes (Cooper and Sercovitch; SPRU 1977), abilities are needed for

• operation;

• modification of a given system;

• initiation (start-up) of a system, based on existing technologies; and

• innovation (or development of new production systems).

Similar classifications were proposed by Westphal et al. (1984).

To assess technological capability, we need to identify its indicators. A strong point emphasized in the literature is that evidence of technical change is indicative of technological capability. Technical change includes modification and adaptation of any technology and the introduction of a new production process or product.

There are two possible study approaches. One is to directly assess the evolution of the technology, taking note of all the changes that have occurred during a certain period and the sources of these changes. The other is to examine the changes in factors that are influenced by technical change. Such factors include productivity, employment, product quality, profitability, and diffusion of technology. The latter method was used by Smith (1984) in assessing the technological capabilities of the Sierra Leone National Petroleum Refining Company.

In this study I take the first approach, which is the evolutionary approach. The activities for achieving my objective included a literature review, administration of a questionnaire, and data analysis. The nature of information I sought in the questionnaire was similar to that sought by Amin (1989) and Khundler (1989). The questionnaire covered the following:

• general background

• machinery stock (How many machines are involved in the operation? What are the sources of these machines?)

• machinery upgrading (What changes have been made to the machines used over the years?)

• changes in raw materials (Over the years, have there been changes in the varieties of rice and cassava used in the operation? What motivated the changes?)

• changes in the production process (Has there been any deviation from the standard method for preparing the products?)

• product innovation (What new cassava or rice products have been added to the list in recent years?)

• human resources potential (Who is a skilful processor? Are skilful processors readily available? How are skills acquired?)

The study covered five villages in the Southern Province. Fifty-four cassava processors participated in the study. The survey on rice was mainly in the Freetown area.

Finally, in the analysis of the questionnaire responses, the emphasis was not on the level (quantitative measure) of technological capability but on the evidence of the existence of such capability. This distinction was necessary because the sampling was only in specific regions and a quantitative measure of the regional level of technological capability could be misinterpreted as national.

Cassava products and processing technology

Fufu

During the investigation, two common, traditional methods of fufu processing were identified. In one method, the cassava is first peeled and then washed. The washed cassava is grated and fermented for a couple of days. During fermentation, the pulp is dewatered by applied pressure. In the other method, the peeled whole cassava is first fermented and then pressed into pulp. The latter method eliminates grating and, it was also learned, leads to poor product quality.

Gari

The processing steps for gari are similar to those for fufu, except that the final stage is the roasting of the pulp. It is possible to produce gari by either of the two fufu- processing methods, depending on whether a grater is used. However, I discovered that all gari processing done in the study area involved some form of grating. This is similar to findings of others in the West African region (Kwatia 1988; Adeboye 1989; Adjebeng-Asem 1989). It was learned that gari produced by simply fermenting whole cassavas followed by pulping and parching had very high fibre content and poor taste.

Tui

To process cassava for tui, the peeled cassava is washed and cut into chips of various sizes. The chips are dried and ground into flour. This product and its production technique are very similar to those in southwest Asia (Steghart and Wholey 1984).

Hardware for cassava processing

The manufacture of cassava products follows procedures consisting of several unit operations, some of which are used for more than one product. The unit operations are peeling, fermentation, (grating or chipping), drying, milling, and roasting or parching (i.e., browning of material over a fire).

Peeling removes the outer coating of the tuber. This is a very important operation because it considerably detoxifies the remaining tuber (80% of the toxic cyanide is concentrated in the outer coating). Peeling is done with a sharp knife.

One method of fermentation is to soak the peeled tubers in a big container for 3–5 days. The only equipment needed for this type of fermentation is a large, open container. The more common, traditional fermentation technique involves the pulpy materials that come from grating. The pulp is put into woven sacks. Stones and logs are placed on the loaded sacks for a period of 3–5 days to squeeze out the water. The only “hardware” is the sack. Recently, modifications were made to this technique. The changes were in the way the sack of pulp was pressed. The innovative method sandwiches the sack of pulp between two wooden planks, which are tightly drawn together.

Three different types of grating hardware were identified. The choice of hardware was determined mainly by the availability of capital. Many cassava processors still use the manual method of pulverizing the cassava by rubbing it against a perforated, rough metal plate. Another piece of hardware is the hand-operated mechanical grater. A motorized mechanical grater is the third type. The only existing hardware for cutting cassava into chips is a sharp knife. It is a tedious operation and is in need of innovation. Chips are usually sun dried on mats spread either on the ground or on an elevated platform. The traditional equipment used for milling cassava chips is the mortar and pestle. This is very labour intensive and the main hindrance to the supply of tui. Motorized grinding mills are also used in urban areas. The equipment used for the roasting operation is an iron tray sitting on a stove. Sieving is done with a perforated iron plate.

Skills required in cassava processing

There is very little skill involved in cassava processing. Only a knowledge of the steps involved and of the duration of the activities is essential. Mechanical grating, which usually involves some technical skills, is done on a contract basis by grater owners.

Selection of raw materials

There are several cassava varieties. The varieties are distinguished on the basis of the colour of the peel and the taste. Some varieties are highly toxic but have a high yield per hectare. Others have low toxicity and low yield. The processors tend to select the high-yielding toxic variety if they are sure that the processing will effectively reduce the toxicity.

Rice products and processing technology

Rice flour

Rice flour is only an intermediate product used in the preparation of other rice products. According to the report by Massaquoi et al. (1990), rice flour is now sold as an intermediate product because it has a longer shelf life than the final products. Mechanical grinding of the grain is the method adopted in the urban area. The traditional method is wet grinding in a mortar: the grain is first soaked in water to soften it, and then it is pounded in a mortar with a pestle. The wet pulp is dried and roasted for preservation.

Rice bread

Rice bread is prepared like the conventional banana bread, with the rice flour replacing the wheat flour in the recipe. The ingredients are rice flour, banana, baking soda, sugar, salt, cooking oil, and water. The recipe is an important resource — a major component of the technology — and determines the quality of the product. The final operation is baking in an oven.

Rice akara

Akara is a form of pancake. It is prepared by frying a dough prepared with rice flour, sugar, banana, baking powder, cooking oil, and water. Once again, the recipe is a major component of the technology.

Rice kanya

Kanya is a delicious blend of rice flour, peanut butter, and sugar. Roasted (parched) rice flour is ground together with roasted groundnuts and sugar in a specific combination. Kanya is the most popular commercial rice product.

Rice pap

Rice pap is boiled rice flour, with lime and water added for taste. The preparation involves little or no skill.

Hardware for rice processing

The following unit operations were identified in processing the various rice products: grinding, mixing, parching, baking, and firing. Two types of hardware are used for grinding: the mortar and pestle for small-scale wet grinding and the mechanical milling machines for large-scale dry grinding (in urban areas). The mill owners do the milling on a subcontract basis. The machines are powered by either an electric motor or a diesel engine. Mixing is usually done with a wooden stirrer in a big bowl. The browning of rice flour or peanuts over a fire usually requires a stove and a shallow pot. The stove is usually a three-stone open fire. The hardware for baking includes a gas or electric oven, converted by the informal-sector metal workers to charcoal, and covered containers, heated on a three-stone stove. Frying is done over an open fire.

Skills required in rice processing

Little or no skill is required in rice processing. The preparation of any of the products involves only the knowledge of the recipes. Even the mechanical grinding is subcontracted to mill operators, who have skilled labour to maintain and repair the machines.

Selection of raw materials

The selection of appropriate raw materials is one of the abilities constituting technological capability. It was discovered during the study that rice processors do not prefer parboiled rice. This occurs because nonparboiled rice can be readily milled. The processor can distinguish the different varieties of rice from their appearance.

Technology adaptations, modifications, and innovations in cassava
and rice processing

This section brings together survey evidence of the nature and extent of technological capability. For detailed analysis, I identified five major indicators of technological capability:

• machinery usage;

• machinery upgrading;

• changes in method and (or) system of production;

• changes in raw materials; and

• skills upgrading.

A summary of the observed level of usage of machines in the various processes is presented in Table 1. A summary of the observed changes in machinery, production, and raw materials is presented in Table 2.

Machinery usage

Table 1 shows the total number of unit operations involved in each process. Nearly all processes are carried out manually. Even those processes that involve the use of a machine use no more than one. The use of machines in some cases is made through a linkage with other informal-sector entrepreneurs who operate mills or graters. They carry out certain operations for the food processors on a subcontract basis.

Table 1. Machinery usage.

 

Cassava processing

Rice processing

 

Gari

Fufu

Tui

Akara

Kanya

Flour

Pap

No. of unit operationsa

6

5

5

3

3

1

2

Max. number of machines in entire process (type)

1(grater)

1(grater)

1(mill)

1(mill)

1(mill)

Locally fabricated machines

Yes

Yes

No

No

No

Evidence of completely manual operations

Yes

Yes

Yes

Yes

Yes

Yes

Yes

a A unit operation is a processing step (e.g., peeling, grating).

Table 2. Summary of findings on technical changes.

 

Cassava processing

Rice processing

 

Gari

Fufu

Tui

Akara

Kanya

Flour

Pap

A. Hardware upgraded

Machines home-made

Yes

Yes

No

No

No

No

No

Any machine(s) altered

Yesa

Yes

No

No

No

No

No

Net result of change

Increased production

Yes

Yes

Improved quality

No

No

B. Method and (or) system of production changed

Method changed recently

Yes

Yes

No

No

Yes

No

No

Net result of change

Increased production

Yes

Yes

 

Yes

Improved quality

No

No

Yes

System reorganized

Yes

Yes

Yes

No

No

Yes

No

C. Cheaper alternative raw materials substitued

New material used

Yes

Yes

No

Yes

Yes

Yes

Yes

Net result of change

Improved quality

No

No

No

No

No

No

Motivation for change

Cost

Cost

Costb

Production method changed to match raw material

No

No

No

No

No

No

a Dewatering press and grater.

b And availability.

Machinery upgrading

In cassava processing, some changes have occurred in the equipment used for grating, fermentation, and dewatering of the pulp (i.e., the press). The graters have changed from manual ones to mechanical ones operated by hand and to mechanical ones operated by internal combustion engines. The press has changed from a sack of pulp under a big stone to a wooden clamp, which sandwiches the pulp. No change was reported in the hardware.

Changes in method and (or) system of production

In cassava processing, the only evidence of changes in production methods was for fufu and gari. The processing methods have changed to achieve increased production rates, without any additional expense. However, the quality of the product has suffered.

In rice processing, the introduction of dry grinding (machine milling) for the preparation of rice flour is an innovation. In the traditional method, rice is produced by wet grinding, followed by drying and (or) roasting. The innovation increases production rates and gives a longer shelf life (J&R Enterprise, personal communication, 1991).

The system of subcontracting certain activities to other informal-sector entrepreneurs is common among urban kanya processors. In particular, the grinding and blending are done by machines, on a contract basis. This is an important technological capability because it demonstrates that the processors were able to recognize grinding as a major problem and were able to develop a solution to it. This solution was obviously selected from a range of other options, which would have included purchasing machines, hiring machines, and subcontracting the activity to other entrepreneurs.

Changes in raw materials

To reduce costs, all the processing operations have, at some time, gone through a change in the variety of raw material used. Cheaper varieties that do not adversely change quality were used.

Skills upgrading

Because the level of skill involved in cassava and rice processing is minimal, there is no need for skills upgrading. However, knowledge of recipes in rice processing is essential. Similarly, the knowledge of production methods and duration of activities in cassava processing is very important; knowledge upgrading to improve product quality and production rates was observed. In the case of rice processing, this upgrading entailed mainly changes in recipes, whereas in the case of cassava, it involved changes in duration of activities and production methods.

Conclusions

Technological capability in the informal food-processing sector is very low. The use of machines is not extensive, and major changes have not occurred in either the hardware or the processing. It can be concluded that cassava processing (particularly of gari and fufu) is more dynamic, with regular and beneficial changes in the processing steps and hardware.

On the whole, the level of technological capability is higher in cassava processing than in rice processing. This high level of technological capability in the informal cassava-processing industry has contributed to the transformation of cassava products from snacks to main meals. Today, processed cassava products contribute significantly to the staple diet of Sierra Leone. Gari and fufu, whose processing was found to have the highest accumulation of technological capability, have become the second most important national foods, after rice grain. On the other hand, rice products have remained occasional party snacks.

Even among rice products, the one that has made the greatest impact is kanya. The processing of kanya was found to have the highest level of technological capability among those of all the rice products. The processing has changed, replacing wet grinding with dry grinding. Where operators cannot afford the machines, they contract out the grinding operation to other entrepreneurs.

Finally, an important conclusion drawn from this study concerned the relationship between the economic significance of the product and the level of technological capability. Without the facts, it may have been easy to conclude that the role of gari and fufu as main meals was the driving force behind the development of technological capability, in other words, that the rate of technical change depends on the economic significance of the product or industry. However, the results of this study have shown the reverse — at the initial stage of development, the level of economic significance attained depends on the rate of technical change. Gari was, until the start of this decade, a simple snack, eaten when it was soaked with sugar and water. Similarly, it was only recently that most people started eating fufu as a staple meal. As the technical changes took place in cassava processing, cassava products were produced in larger quantities at lower cost and, hence, became popular substitutes for rice.

Even though sporadic scarcity of rice forced Sierra Leone to look for a substitute staple, that substitute turned out to be gari and fufu and not tui because there was a level (albeit low) of technological capability required to enhance the production level of tui.

It is quite likely that if tui processors were to introduce innovations to overcome the grinding operation, which has been the main technical constraint, then tui could compete with fufu and rice. For instance, grinding could be done with machines, and if the operator was unable to afford it, he or she could contract out that activity to mill owners.

Recommendations

The purpose of this section is not to recommend policy but to identify some areas where policy efforts could be concentrated to develop the technological capability of the informal food-processing sector. If the sector is to play a major role in the industrial development strategy of Sierra Leone, there must be policies with the objective of increasing the productivity, growth, and income of these processors. This undoubtedly will involve efforts to improve the present low technological capability.

More use of machines

Most processors would like greater mechanization of their operations so as to reduce the demands on human energy and increase production rates and income. The cost and scarcity of smaller machines to suit their level of operation were considered obstacles. A policy package could make such machines available in the processing operation, either by funding the development of small-scale machines or by advising on the reorganization of the operation to enable some activities to be carried out mechanically on a contract basis.

Changes in products

The short shelf life of the products, especially rice products, is a constraint that affects the production rate. An intermediate product (rice flour) could overcome this problem. However, the promotion of this product will not be easy. There is a need to introduce new products into the market or find new uses for existing ones. For instance, the use of cassava flour as a nonperishable substitute for fufu should be encouraged, as was done for gari as a substitute for rice.

References

Adeboye, R.O. 1989. Cassava processing in Nigeria. Appropriate Technology, 16(3), 21.

Adjebeng-Asem, S. 1989. Grating without drudgery. Appropriate Technology, 16(3), 18–20.

Amin, A.T.M.N. 1989. Technological adaption in Bangkoko informal sector. World Employment Programme Research, International Labour Organization, Geneva, Switzerland. Working Paper WP 203.

Khundler, N. 1989. Technology adaptation and innovation in the informal sector of Dhaka (Bangladesh). World Employment Programme Research, Technology and Employment Programme, International Labour Organization, Geneva, Switzerland. Working Paper WP 198.

Kwatia, J.T. 1988. Cassava processing in Ghana: Technology, experience and problems. Presented at IITA/Unicef Inter-regional Expert Group Meeting in Exchange of Technologies for Cassava Processing Equipment and Food Products, 3–9 Apr.

Massaquoi, J.G.M.; Sormana, J.D.; Koroma, A.M. 1990. Technological capability in the informal food processing sector: The case of rice and cassava processing. International Development Research Centre, Ottawa, ON, Canada. WATPS Programme Report.

Smith, A.J. 1984. Technological capability in oil refining: Sierra Leone. Progress Report to International Development Research Centre, Ottawa, ON, Canada.

Steghart, P.B.; Wholey, D.W. 1984. A factory concept for integrated cassava processing: The raw material cassava chips. United Nations Industrial Development Organization, Vienna, Austria. UNIDO 10.582.

CHAPTER 7
Technology Transfer and the Acquisition of Managerial
Capability in Tanzania: Analysis and Policy Implications

Kweku Akoso-Amaa and Charles Mapima

Introduction

The idea of international technology-transfer projects (ITTPs) has become a cornerstone of industrial and entrepreneurial development in Tanzania. Such projects have been implemented through the Small Industries Development Organization (SIDO), a parastatal established to develop small-scale industries (SIs) in Tanzania. SIDO’s role has been (1) to identify the technological gaps affecting the growth of certain industries; and (2) to seek foreign firms willing to establish a similar or slightly modified enterprise in Tanzania and to act as a guarantor for the project. This mode of transferring technology has been widely studied (OECD 1981; Ranisk 1984; Alange 1987), and the evidence suggests that the transfer of capacity to produce specific items in the recipient country was emphasized. But the issues associated with how the transferred production capacity would be effectively used, maintained, and developed (where necessary) seemed to attract less attention.

A few earlier studies (Vitelli 1979; Bell 1984) examined the extent to which managerial capabilities are acquired through ITTPs. Some of the results lacked convincing empirical evidence because of the research methods used. For example, Vitelli used an indirect method for analyzing licence statistics. The method produced data that bore no direct relation to the subject of the study. Our study of reports on technology transfers and our visits to SIs involved in ITTPs convinced us that transferring the hardware or the capacity to produce specific items has its own problems and is definitely inadequate. Using the transferred capacity to make the system work according to technical specifications and to produce the necessary items to meet the identified needs and wants at a profit is a basic function.

Our study of the literature and our visits to the SIs showed that ITTPs definitely played a significant role in developing technical and managerial capabilities. Yet, there seems to be no effective method of measuring acquired managerial capability. The approach taken by Vitelli (1979) proved woefully inadequate. The methods used by Alange (1987) indicated what was or was not learned. In the light of these inadequacies, we set out to examine the extent to which ITTPs facilitate the development and use of managerial capabilities.

Concepts and methodology

Definition of managerial capability

Managerial capability is a management quality essential to running new or established industries. Managerial capability is a person’s ability to perform specific and general management functions; of these functions, we chose to study production, marketing, financial management and control, and leadership. The ability to expertly perform each of these management functions depends on the use of

• the stock of knowledge the manager has;

• the skills the manager has acquired;

• the experience the manager has accumulated in similar endeavours; and

• the type of training the manager has had (for the task to be performed).

Managerial capability is defined as the knowledge, skills, experience, and training a manager has to perform management functions.

Definition and measurement of capability factor

We measured each capability factor — knowledge, skills, experience, and training — by awarding points to empirically measurable variables:

• knowledge — measured by academic qualifications, which varied from a certificate to a degree;

• skills — measured by actual performance of a task, quality of the end product, and possession of a professional award;

• experience — measured by the number of years a person has been exposed to similar management situations;

• training — measured by time spent in training on the job or outside it.

Furthermore, each capability factor was perceived as having two time-related aspects. One of these aspects was what the manager was before joining the Small-Scale Industrial Programme (SIP). The pre-SIP period t0 was taken as the 10 years preceding the time an entrepreneur was selected for the SI project. The post-SIP period tl starts from the point of selection and continues to 1988. This is roughly 10 years with few variations, depending on when an SI was started. Thus, by weighting pre-SIP by the factor w0 = 0.4 and post-SIP by the factor w1 = 0.6 and summing them up, we obtain the value of a capability factor. For example, the knowledge component is measured as

Image

where Kt = stock of knowledge at the present time, t. By computing the scores for each of the capability factors and summing them, we can express the capability value for performing each management function as follows:

Image

where Cf is the functional capability; Kt is the score for knowledge; St is the score for skills; Et is the score for experience; T1 is the score for training; t is time; and i is the capability factor, that is, i = 1, 2, 3, or 4 (knowledge, skill, experience, or training).

The managerial capability of a management team or, therefore, of a given SI is obtained from the following formula:

Image

where CSI is the managerial capability of a management team or of a given SI; j is the selected management function, that is, j = 1, 2, 3, or 4 (leadership, production, financial management and control, or marketing); and the rest of the variables have the same meanings as in eq. [2].

Field survey and application of the measurement model

Three industrial estates managed by SIDO in Dar es Salaam, Moshi, and Arusha were visited. In each estate, five SIs were randomly selected. The SIs in Moshi and Arusha industrial estates participated in an ITTP sponsored by Swedish industrial concerns. The SIs selected from Dar es Salaam industrial estates had access to different kinds of technological assistance from Indian enterprises. These SIs manufactured various products, ranging from metalware to paper and rubber products. In each SI, the following functions of the management team were identified:

• function 1 — general manager, managing director, or the manager who provided leadership;

• function 2 — production manager or director;

• function 3 — financial controller or chief accountant; and

• function 4 — marketing or sales manager.

In Dar es Salaam industrial estate, the five management teams did not fit the list above. In three of the five SIs the team members performed both functions 1 and 2, functions 1 and 3, or functions 3 and 4. In the analysis, they were treated as individual persons performing different management functions, though a single measurement value was used.

Members of the management teams of the 15 SIs were interviewed about their management functions. We obtained data and information on other aspects of the SIs by reviewing the literature and interviewing knowledgeable persons at SIDO headquarters and the Ministry of Industries and Trade. The interviews and data processing were carried out between September and December 1989.

Discussion of the findings

This section assesses the qualitative impact of ITTPs on capability development and the performance of the management teams of the enterprises studied.

Leadership capability

Leadership capability is the ability of the management team to direct the affairs of the enterprise. This requires an entrepreneurial vision that would always place the team leader a step ahead of the team members. Leaders are normally high achievers, risk takers, and original thinkers (innovative, creative, and perceptive) (Meredith et al. 1982). These qualities motivate the team members and other employees of the SI to work effectively. The importance of leadership capability cannot be overestimated, as prosperous organizations like IPP Ltd (Tanzania) and Afrocooling System Ltd (Tanzania) have shown.

In this study, we studied the issue of leadership by conducting in-depth interviews with the managing directors and general managers, most of whom were the entrepreneurs selected and trained by SIDO to start the SIs. The selected entrepreneurs had different levels of knowledge and experience and fairly good skills in leading groups of people to achieve organizational goals. Depending on the different levels of SI need, the duration of training these managers received abroad or in Tanzania also varied. The achievements of the SIs are an indicator of the strength of this leadership. The specific achievements we measured were the following:

• leadership — measured by the ability to think ahead, the ability to analyze present trends, the ability to forecast future trends, and the ability to direct the development of the SI;

• production — measured by the extent to which technical capability was assimilated (expressed by the number of new products added and their quality and quantity);

• financial management and control — measured by the ability to forecast sales and cash flows, the ability to identify new investment opportunities, and the ability to mobilize financial resources from local financial institutions; and

• marketing — measured by the extent to which new products were added to the original set of products assembled or manufactured and the extent to which products were marketed abroad (i.e., export drive).

There was evidence of high levels of leadership traits in all the Sis studied, especially in Arusha and Moshi. The only exception seemed to be Endelea (Dar es Salaam), which had the lowest score, about 5.5. Northern Electrical Manufacturers Ltd (NEM) scored the highest, about 12.5.

Fabricated and Wire Products Manufacturing Ltd is an example of an SI that had the ability to identify new investment opportunities. In a bid to acquire new technology, it sent its managing director to Sweden for training in new investment policies and ventures.

Nearly all the SIs had added at least one new product to the original list of products they had assembled or manufactured. NEM had a desire to market the SI’s products abroad, so it sent the managing director and production director to Sweden for training in export marketing and new product lines.

Production capability

Selected SI entrepreneurs had different levels of knowledge, skills, experience, and training — some of them had been associated with other industries as either owners or employees. The lowest pre-SIP production-capability scores, 2.46 and 2.88, were obtained by Handmade Paper Ltd and Endelea Sheet Metal Company Ltd (both in Dar es Salaam). In a second group, the production-capability scores were slightly better: 3.29 for Tanza Saws Ltd (in Dar es Salaam), 3.29 for Tanzanian Locks and Metal Products Co. Ltd (in Moshi), and 3.88 for AMOCO (in Moshi).

A third group of SIs (three from Arusha, two from Dar es Salaam, and two from Moshi) scored still higher: from 4.18, obtained by Northern Packages Ltd, to 4.88, obtained by Arusha Hot-Dip Galvanizing Company (AGACO). A fourth group of SIs (two from Arusha and one from Moshi) scored on average >5 production-capability points.

The results show that production capabilities differed from one enterprise to the next. This is very much expected because of differences in the technical complexities and in the extent to which operators adapted them to their own capabilities or to the environment (e.g., the opportunity to use different raw materials or to manufacture other products). The results also showed that SIs in the Moshi and Dar es Salaam industrial estates reflected these levels of technical capabilities.

Financial-management and control capability

The management personnel responsible for financial management and control take charge of all the financial and accounting matters of the enterprise. This involves planning its financial requirements and methods for raising and investing funds to achieve the enterprise’s objectives. Control measures involve planned levels of profit, cash flows, and financial ratios (assets turnover, current ratio, and return on equity). These personnel also examine the financial performance of the enterprise and prepare relevant performance reports.

In the SIs studied, we noted that few financial positions were occupied by people with accounting or finance qualifications with an academic or professional degree and considerable experience, NEM and AGACO, though, employed highly qualified (academically and professionally) personnel. The pre-SIP financial-management-capability score of AGACO was 7.08; that of NEM was 6.84, the second highest.

Other SIs employed personnel that were not as highly qualified and had little on-the-job training. In this group, the pre-SIP scores ranged from as low as 2.47, obtained by Endelea (Dar es Salaam), to 7.08, obtained by AGACO (Arusha). Among the three industrial estates, the scores levels were lowest in Dar es Salaam, after Arusha and Moshi. All the SI accounts showed high administrative and overhead costs. This factor seriously undermined the liquidity positions of most of them, especially GIFCO (an ITTP in Arusha), Handmade Paper Ltd (Dar es Salaam), and Kilimanjaro Electroplates Ltd (Moshi). The accounts of these SIs showed losses during the 1980s.

Marketing capability

The products from the SIs were intended to replace those previously imported, so the markets for these products were assumed to exist. However, marketing personnel needed to have some capability to

• recognize his or her role in making the SI a success;

• identify the existing and new markets for the products and services;

• ascertain how such markets were being serviced previously;

• know what other environmental factors need to be considered; and

• develop suitable strategies to match the products and services with the specific market.

The marketing function contributes immensely to the SI’s profitability by maximizing sales and minimizing marketing costs. For sales to be maximized, there must be a good marketing program, which, among other things, considers such policy parameters as the quality of the product, its quantity, its price, the location where it will be displayed for sale, and its promotion. The marketing or sales manager needs to manipulate these parameters to achieve a strategic fit between the enterprise and the target market that is very likely to attract maximum sales.

The pre-SIP marketing-capability scores varied between 2.47, obtained by Endelea Sheet Metal Co. Ltd (Dar es Salaam), and 6.48, obtained by AGACO (Arusha). The scores divide the 15 SIs into roughly three groups. One group included SIs from the Dar es Salaam industrial estate, which on average scored <3 capability points. Another group of SIs, from the Arusha industrial estate, scored >5 capability points.

From the sales statistics, we observed that the trend has been moving upward but differs from one SI to another. In 1988, for example, the sales value ranged between about 180 000 TZS (in 1995, 580 Tanzanian shillings [TZS] = 1 United States dollar [USD]) for Handmade Paper Ltd (Dar es Salaam) to about 56 000 000 TZS for NEM, which scored about 5.5. These sales figures also reflect the extent to which management was involved in developing and using capable marketing personnel. NEM employed skilled and knowledgeable marketing personnel. The director of marketing holds a diploma in business administration (marketing option) and has a long working experience (15 years) in marketing. There is an export manager with the same qualifications but less experience in the marketing field. Both the managing director and the marketing director have had training (in Sweden) in marketing and export marketing. The marketing manager uses the marketing-mix variables to considerable advantage.

The other SIs have different arrangements for applying their marketing capabilities. AGACO has no marketing department; the accounts department is responsible for sales and all marketing activities.

Most SIs in Dar es Salaam depend on both solicited and unsolicited orders. Made-to-order selling practices tended to limit the use of dynamic marketing strategies to expand existing markets and product assortment. These selling practices also limited the exploitation of the potential production and technical capabilities of the enterprise. It was not possible to ascertain the effect of low application of marketing capability on the efficiency of production techniques because different SIs use different measurement units, such as pieces, units, metres, and pounds. But the extent of product mix, which was wider among SIs in Arusha than among those in Moshi and least among the SIs in Dar es Salaam, gave us a good impression of the use of production techniques and technical capabilities. The same indicator also could explain the importance that different management teams attach to the role of marketing capability in enhancing the efficiency of technical capabilities.

Successful use of the marketing capability has tended to move sales higher from one year to the next. For example, AGACO (in Arusha) increased its sales from nearly 3.55 million TZS in 1983 to 12.9 million TZS in 1988; in the same period, NEM (in Arusha) increased its sales from 36.2 million to 56 million TZS. The SIs in Moshi showed an improved sales record, as well. Tanzanian Locks and Metal Products Co. Ltd increased its sales from nearly 2 million TZS in 1983 to an estimated value of more than 11 million TZS in 1988. Handmade Paper Ltd (in Dar es Salaam) increased its sales from less than 120 000 TZS in 1983 to about 300 000 TZS in 1984. Unfortunately, it could not sustain the momentum, and its sales dropped to an estimated value of less than 180 000 TZS by 1988.

Managerial capability

The study approach enabled us to examine the structural components of, and the relationships among, the factors forming a capability trait. These capabilities have been proven necessary for the management of established as well as new enterprises. Managerial capability factors are a person’s knowledge, skills, experience, and training. These capability factors complement each other, eliminate deficiencies, and improve the overall level of a person’s or management team’s capabilities. Ideally, a person is expected to have a complete set of high-level capability traits. But is this actually possible?

Our studies (Mapima 1986, 1987) have shown that management personnel may have different levels (high, medium, or low) of each of the four capability traits (factors). These could be carried over in performing the different management functions, which in turn could affect the efficiencies of the management teams that run the SIs. Lack of esprit de corps among management personnel in some of the SIs (in Dar es Salaam, especially) accounted for different levels of performance. Since individuals have different levels of capability, it becomes obvious for the entrepreneur, who is also the general manager or managing director, in most cases, to build up management teams that serve to make up for individual deficiencies. Research findings on new industry start-ups (Utterback 1982; Alange 1987) revealed the importance of having groups of management personnel with complementary abilities to increase the likelihood of success. These results are not unexpected because the theory and practice of enterprise management emphasize a complementary mix of different capabilities. It has been SIDO’s policy to select a team of SI entrepreneurs with complementary capabilities, although technical knowledge and experience have been emphasized as selection criteria (Alange 1987).

SIP’S contribution to the development of
managerial capability

The literature contains different approaches to assessing the impact of ITTPs on capability development. In this section, to highlight the impact of the SIP on the development of managerial capabilities in SIs, we compare our findings with the results of Alange’s (1987) study.

Results of the present study

The present study estimated the values of managerial capabilities brought into a project (pre-SIP) and those acquired through it (post-SIP). The study showed that four different modes of capability acquisition were prevalent:

• Some managers received formal training in Tanzania and Sweden, where they were exposed to a capability-building process, which emphasized the acquisition of knowledge and techniques.

• Most managers acquired the specific skills and knowledge they needed for solving problems, making decisions, or accomplishing specific tasks (e.g., for manufacturing, accounting, pricing, and maintenance) through learning by doing at the work place.

• Some managers consulted knowledgeable and experienced persons to obtain information or advice. Another way of acquiring information or advice was to consult documents (e.g., manuals, contracts, and technical brochures) about production processes, marketing techniques, and maintenance practices.

• Most SIs hired personnel with the requisite knowledge, skills, and experience to train other employees in the SI and perform specific managerial functions.

For the 15 SIs, we determined the total capability stock by adding together the pre-SIP and post-SIP capability scores. The maximum possible combined score was 80 for the four managerial functions. The level of capability stock in each SI was rated as very high (70–80), high (55–69), medium (40–54), low (26–39), or very low (25 or less).

With this classification, 60% of the 15 SIs had a medium rating, about 26% had a low rating, 6.7% had a very low rating, and a further 6.7% had a high rating. In six industries analyzed, the combined capability stocks varied from a low level of 38.8 (48.5%) at Tanzanian Cyclebells Manufacturing Ltd (in Dar es Salaam) to a high level of 68.9 (86.1%) at NEM (in Arusha).

The main sources of capability acquisition were local industrial and entrepreneurial activities. SIDO played a great role in upgrading the capabilities of the SIs. Quite a number of them, such as Arush Metal Industries, Fabricated and Wire Products Manufacturing Ltd, and NEM, had considerable experience and capabilities in supervisory, accounting, and technical areas.

Like Alange (1987), we also observed that the SIP had made substantial contributions through its training programs in both phase I and phase II (at different times), its initial supervision, and its continued contacts with the SIs. The SIP’S contributions were mostly felt in the build-up of production and administrative capability. In specific cases, the program helped develop other capabilities, such as entrepreneurial and accounting capabilities in Mwalongo and Partners and export-marketing in NEM.

To ascertain the contributions of the SIP to the build-up of individual industrial capability, we evaluated in relative terms the shares of the cooperating industry. The SIP contributed only 40% to NEM’s total capability, the lowest in the cases studied. Its entrepreneurs had higher pre-SIP knowledge, experience, and skills than other SI entrepreneurs and were, therefore, better placed to benefit from the training and advice provided through the SIP. The highest contribution, 62.4%, was observed at Mwalongo and Partners.

Alange (1987) examined four different types of capabilities: production, innovation, administration, and entrepreneurship. Table 1 indicates that the entrepreneurs had different backgrounds and capabilities before joining the SIP. The table shows that NEM had a comparatively capable management team. During the SIP period the management teams acquired various capabilities, which started with production in phase I.

Table 1. Contribution of the Small-Scale Industrial Programme (SIP) to capability acquisition.

 

 

Capabilities contributed by SIP

 

Small-scale industry a

Pre-SIP capabilities

Phase I

Phase IIA

Phase IIB

Missing capability

AMI

PIA

P

PIA

PIA

E

FAWIPMA

PAE

P

PIAE

PIA

 

NEM

PIAE

P

PIAE

PIE

 

TANLOCKS

PAE

P

PA

PA

I

Source: Alange (1987, pp. 140–144).

Notes: P, production; 1, innovation; A, administration; E, entrepreneurship.

a AMI, Arusha Metal Industries; FAWIPMA, Fabricated and Wire Products Manufacturing Ltd; NEM, Northern Electrical Manufactures Ltd; TANLOCKS, Tanzania Locks and Metal Products Co. Ltd.

The most important point to note is that phase II contributed more dynamic capabilities, in most cases, than phase I. To give this aspect more credibility, Alange (1987) computed other values (Table 2), where an SI’s pre-SIP stock of managerial capability was given points based on a continuum of 0–100, and the SIP’s relative contribution was given a score from 0 (no contribution) to 1.0 (total contribution). The last column in Table 2 illustrates the order of magnitude of SIP’ s contributions to managerial capabilities. Both methods of assessment indicated that the SIP made considerable contributions to the capabilities of the entrepreneurs.

Policy implications and conclusion

There is no doubt that the ITTPs transfer technical, managerial, and other capabilities. However, in examining the Tanzanian cases, we had to develop a model that, as the results indicate, made it convenient to measure managerial capability in terms of knowledge and skills. By applying the model to SI cases, we observed that levels of capability vary among individuals in a given SI management team and across different enterprises. The successful application of acquired managerial capabilities would be better achieved through management teams, where members complement each others’ abilities.

Table 2. Numerical values for the contribution of the Small-Scale Industrial Programme
(SIP) to capability acquisition.

Small-scale industrya

Stock of capabilities (x)

SIP contribution (y)

Value of SIP contribution (x × y)

AMI

Medium (60)

Considerable (0.7)

42 (70%)

FAWIPMA

Medium (60)

Considerable (0.7)

42 (70%)

NEM

Very high (100)

Limited (0.4)

40 (67%)

TANLOCKS

Low (40)

Considerable (0.7)

28 (47%)

Source: Alange (1987, p. 144).

a AMI, Arusha Metal Industries; FAWIPMA, Fabricated and Wire Products Manufacturing Ltd; NEM, Northern Electrical Manufactures Ltd; TANLOCKS, Tanzania Locks and Metal Products Co. Ltd.

Our results indicate that the SIP enabled the SI entrepreneurs to acquire additional capabilities in the managerial functions: production, marketing, financial management and control, and leadership. The SIP focused primarily on developing production capability. Production capability includes technical know-how, skills, and knowledge of machinery, equipment, and processes. Capabilities in the other managerial functions were either acquired tangentially or through hiring qualified personnel to meet the capability needs of the management teams.

The results have several implications for policy:

1. Managerial capability is an essential prerequisite for determining the choice and acquisition of technology. Thus, it is correct for SIDO to define enterprise size in terms of the control and management capabilities of Tanzanians. The importance of this fact should be recognized by those formulating policies on technology development, acquisition, and transfer.

2. Policy makers may have to emphasize the importance of including training in all technology deals. The essence of transfer is embodied in the acquisition of the knowledge and skills needed to operate or redesign acquired hardware. Without training and skills development, the transfer of technology may not be effective.

3. The training component should always address specific knowledge and skill deficiencies, which should be identified before a deal is drawn up.

4. The relevance of any technology acquisition or transfer should be appraised, inter alia, on the basis of the transfer project’s contribution to managerial capability.

References

Alange, S. 1987. Acquisition of capabilities through international technology transfer. The case of small scale industrialization in Tanzania.

Bell, R.M. 1984. Learning and the accumulation of industrial technological capacity in developing “countries.” In Fransman, M.; King, K., ed., Technological capability in the Third World. Macmillan, London, UK.

Mapima, C.A. 1986. The impact of SIDA-SIDO Sister Industry Program in Tanzania: The case of small scale business. MBA, Research Report 1.

——1987. Swedish support for small scale business in Azimio industrial estate: An assessment of the managerial capability of the entrepreneurs. MBA, Research Report 2.

Meredith, G.G; Nelson, R.E.; Neck, P.A. 1982. The practice of entrepreneurship. International Labour Organization, Geneva, Switzerland.

OECD (Organization for Economic Co-operation and Development). 1981. North/South technology transfer: The adjustment ahead. OECD, Paris, France.

Ranisk, G. 1984. Determinants and consequences of indigenous technological activity. In Fransman, M.; King, K., ed., Technological capability in the Third World. Macmillan, New York, NY, USA.

Utterback, I.M. 1982. Technology and industrial innovation in Sweden: A study of new technology-based firms. CPA, Massachusetts Institute of Technology, Boston, MA, USA; ST1, Stockholm, Sweden.

Vitelli, G. 1979. Imported technology and development of local skills. Institute of Development Studies, University of Sussex, Sussex, UK.

CHAPTER 8
Formulating Technology Policy in Africa: New Directions

Gilbert Mudenda

Introduction

In 1980, the “Lagos Plan of Action” (LPA) took note of the appalling state of most African economies and attributed this to a lack of industrial development. The LPA further identified science and technology (S&T) as critical elements in economic and industrial development. It has been many years since African countries adopted the LPA as a broad framework for economic and industrial development. Africa’s Development Decade is soon coming to an end, but Africa remains the least developed continent in the world, despite its abundant resources.

This paper will discuss the technology policy for national economic and industrial development. It will argue that the central factor in Africa’s underdevelopment is its failure to formulate and implement the strategic technology policies needed for economic and industrial development. Most development strategies adopted by African countries do not nurture the potential of local technological capacity to sustain both economic and industrial development.

Background

Past and present perceptions of economic and industrial development in most African countries have tended to marginalize or totally ignore the critical role of technology policy. In this section, we shall look at how such notions as national industrial development and technology policy have been perceived or ignored by African countries.

National economic development

Before the demise of colonial empires, most African economies were seen as mere extensions of the economies of the major industrial colonial powers. As a result, the planning of economic development was left to the colonial powers. In the capitalist system, these African economies played specific roles, mostly producing tropical agricultural crops and mineral products for the markets of the colonial powers. Technologies for producing these products were designed by commercial interests and mining companies, which controlled a strategic position in the circuits of production.

However, at independence, African countries attained discretionary power to plan their own economies. During the early decades of independence, modernization became the dominant development paradigm. Put briefly, the modernization theory saw underdevelopment as being largely due to the low levels of capital formation, resulting in a small, modern (monetized) sector and a large subsistence sector. Economic development was seen as the gradual expansion of the modern sector. This was to be achieved through primary production, which would expand to the point where industrial production became the dominant sector in the economy. Indicators of this form of development were measured in terms of growing per capita income and increasing levels of per capita consumption of industrial products, such as steel and cement.

This type of economic development implied levels of planning to reallocate factors of production. It also implied the belief that the barrier to economic development was largely due to the archaic structures of the developing countries. Thus, the process of economic development was to instil modern norms and attitudes not only in the marketplace but also in social, cultural, and political spheres.

However, this perception of development was challenged by those who saw the central problem as the persisting structural relationships between developing countries and the developed countries. These writers developed their own corpus of literature, which became known as the dependency school. This school of thought rejected the view that economic development meant being more like the West. Furthermore, it was argued that as long as these structural relationships continued, becoming more like the West would become more and more difficult. These writers saw no value in economic growth that was not accompanied by equity. According to their vision, economic development rested in the capacity of developing countries to disengage themselves from the West and strike out on their own.

The current perception of economic development has largely been inspired by the past failures of most Third World countries to escape from the poverty syndrome. The poorest countries (most of which are in Africa) have for the past decade been showing negative economic growth rates, experiencing balance-of-payments deficits, and accumulating huge debts with multilateral and private financial institutions. These circumstances have fuelled a new orthodoxy, which holds that economic development in these countries is only possible if market controls are removed and market forces are given a free hand in the economy. The removal of structural rigidities would thereby lead to efficient allocation of resources.

Industrial development

For each of these perceptions of economic development, there is a different industrial development strategy. However, all agree that industry is a critical factor in economic development. For the modernization school, industrial development is seen as the critical factor, which could usher in a state of mass consumption and break down the vestiges of traditional life and the subsistence economy. Import-substituting industrial development is the preferred model. In this model, developing countries are urged to locally manufacture goods: first, by importing capital equipment and semiprocessed materials; second, by substituting locally produced inputs for imported ones; and third, by locally manufacturing the capital goods. Unfortunately, this type of industrial development has not taken place in the manner envisaged. Instead, the efforts to realize import-substituting industrial development stopped at the assembly stage. As a result, there was continuing reliance on externally generated inputs and technical services. This gave credence to attacks from the dependency school on the efficiency of this path of development.

The industrial development strategy of the dependency school is concerned more with the development of industries that use locally generated raw materials and that meet local mass-consumption needs. There is a great emphasis on the need to integrate industrial and agricultural activities, to establish small-scale and labour-intensive industries, and to rationally use already existing industrial capacities. However, despite the brave attempts to implement this form of industrial development strategy in a number of African countries, not much has been achieved in industrial growth or economic development.

The more current view of industrial development places great emphasis on export-led growth. This industrial development strategy is inspired by the notion of comparative advantage; it is suggested that the comparative advantage of the poor countries lies in the cheap labour and raw materials available in these countries. Consequently, the industries that are being encouraged are those that exploit these cheap resources to maximize the country’s comparative advantage in the international market. This approach to industrial development has resulted in an inordinate emphasis on the export market, at the expense of the domestic market. As a result, it is not uncommon to find critical shortages of domestic goods in the countries taking this approach. Also associated with this approach is a high rate of inflation induced by international prices putting excessive pressure on domestic prices.

Technology policy

The failure to achieve higher levels of industrial development in most African countries, despite the different industrial development strategies adopted, has largely to do with the lack of appreciation of the role technology plays in economic and industrial development. This is largely due to the fact that mainstream economics, which has had a major influence on economic and industrial development theories and models, treats technical and institutional change as factors largely exogenous to industrial and economic development. Consequently, there has been no serious attempt to formulate and implement technology policies as integral parts of the development process.

In general terms, a policy is an official statement with a specific purpose, a set of objectives, defined goals and outcomes, and a set of criteria for choosing among competing alternatives. However, what distinguishes a policy statement from mere wishful thinking is the fact that a policy statement is backed by a policy instrument. A policy instrument is made up of three components: a legal device, an organizational framework, and an operational mechanism. The legal device (act, decree, or statute) gives a policy its normative force. The organizational framework (state structure or ministry) ensures the implementation of a policy after it has been adopted. The operational mechanism (government department or directorate) oversees the day-today implementation of a policy. Furthermore, policies take two forms: explicit and implicit. An explicit policy aims at inducing a direct effect to achieve a specific goal, whereas an implicit policy is aimed at another area of activity but has residual effects.

Mlawa (this volume) has pointed out that explicit technology policies have three primary objectives: the management of international technology transfer; the execution and management of technical change; and the acquisition of technological and managerial capability. Implicit technology policies, on the other hand, include all those aimed at inducing the general development of economic, cultural, ecological, and demographic activities in society, with residual effects on the technology transfer process, the management of technical change, and the nurturing of local technological capacity.

Technology and industrial development

Although it is true to say that mainstream economic theory treats technology, especially technical change, as a residual or exogenous factor, the history of industrial development cries out very loudly about the interrelationship between technology policy and industrial development. Students of the industrial revolution have observed that although the industrial revolution was a continuous process, beginning around 1980, four stages can be discerned. Each stage had its key industries (technology) and geographical location.

The first industrial revolution (1780–1840) was based in the United Kingdom, and its key achievements were the steam engine, the textile industry, and mechanical engineering. The second industrial revolution (1840–1900) was based in Europe (England, France, and Germany), and its key achievements were railways and the steel industry. The third industrial revolution (1900–1950) was based in the United States, and its key achievements were the electric engine and industries manufacturing heavy chemicals, motor cars, and consumer durables. The current phase, the fourth industrial revolution (1950–2000), is based in the Pacific Basin (Japan and California), and its key industries are synthetics and organic (petroleum) chemicals.

What is important to note here is that during the third and fourth industrial revolutions, we saw the integration of S&T in the key industries, as well as growing centralization and concentration of the industrial capital and its institutions: the multinational corporations. Consequently, it is legitimate to say that S&T and industrial and economic development became fused in one socioeconomic process.

Technology policy in industrialized countries

Although there was apparently a lack of explicit technology policies in industrialized capitalist countries during the early phases of industrial development, many implicit technology policies were adopted as part of the restructuring of preindustrial society. One illustration of this is the adoption of various educational policies that had a direct bearing on industrial and economic development.

In the United Kingdom, the introduction of a stratified educational system, based on the public and comprehensive schools, ensured the stability of the class system for the development of British industry. The public schools, with their emphasis on leadership and classics, were meant to train those who would become captains of industry, and the comprehensive school system was designed to produce industrial workers.

In the United States, the adoption of a liberal education was instrumental in producing a modern industrial labour force, whereas the technical colleges in Germany, which had very strong links with industry, were instrumental in preparing a labour force suited for the development of scientific industries. Other technology-related policies — including such practices as the control of the movement of skilled personnel; the advocacy of trade liberalization or trade barriers, depending on the relative power in the marketplace; and the various state support schemes for innovators and inventors — helped to foster conditions conducive to industrial and economic development.

However, it was in the late-industrializing nations, such as the former Soviet Union and Japan, that more explicit technology policies were advocated as an integral part of industrial and economic development. For example, in the former Soviet Union, the economic-planning instrument (the 5 year plan) is specifically designed so that economic and industrial development planning can respond to new technical innovations. This is done through the technology plan, which comprises the following components:

• scientific research and experimental-design work;

• introduction of S&T achievements into the national economy;

• enhancement of material and technological aspects of scientific work to ensure that such advances increase mechanization and automation of production;

• financing of S&T research;

• capital investment in the development of S&T; and

• training of S&T personnel.

It could be argued that all industrialized countries, whether they be market or planned economies, have both explicit and implicit technology policies aimed at enhancing their industrial development process.

Technology policy in newly industrialized countries

The newly industrialized countries, such as South Korea and Brazil, have, despite being market economies, also adopted explicit technology policies directed at (1) managing technology transfer, (2) managing technological change, and (3) developing local technological capacity. Because of the international division of labour, these policies have tended to be directed at critical issues.

The management of international technology transfer

The policies for managing international technology transfer deal with issues connected with the search for, and selection of, the most appropriate technical system, as well as the negotiation of the best terms for the relocation of imported technical systems.

The management of technical change

The policies for managing technical change attempt to ensure that once the technical system is relocated, the host country, industry, or firm is able to assimilate and adopt the technical system. Furthermore, the policies also see to it that imported technical systems are easily replicated (diffused) in the national economy and that, in the long run, it is easy to make innovations based on such technology.

Development of local technological capacity

The policies for developing local technological capacity are intended to develop human resources, an S&T infrastructure, and a dynamic industrial infrastructure.

The types of policy are interrelated and cannot be tackled sequentially or piecemeal. However, it is also important to note that it is through state mediation that such policies are formulated and implemented.

Technology policy in African countries

It was only after independence that people in African countries began to talk about the importance of technology development in their plans for national economic development. A number of countries, such as Egypt and Kenya, have formulated explicit national technology policies. It is also true that most African countries have made statements declaring the importance of technology in their development efforts. However, these statements do not amount to national technology policies.

Even in those countries that have adopted explicit technology policies, one finds that such policies are not implemented. This is largely due to

• poor understanding of the relationship between technology and economic and industrial development;

• unrealistic understanding of the nature of the dynamic industries and their technological requirements;

• dependent economies and structural imbalances; and

• a serious absence of strategic indigenous programs of action for overcoming underdevelopment.

This poor showing is due to unresolved technological problems in the areas that form the basis for any realistic national technology policy.

Areas forming the basis for technology policy

To facilitate economic and industrial development, technology policy must take into account three critical areas: human resources, S&T infrastructure, and industrial infrastructure. African countries should formulate policies that will nurture these critical areas.

Human resources

The development of human resources is one the most important preconditions for economic and industrial development. This statement is borne out by the fact that some of the small, natural resource-poor European countries are among the most industrially developed countries in the world (many resource-rich African countries, on the other hand, remain among the least developed nations in the world). The development of human resources requires a modern education system and industrial and management training. A modern education system consists of primary, secondary, and tertiary education and technical, vocational, and professional training. A good modern education provides training in scientific and technological thinking. National policies should ensure that people get a modern education.

Industrial training includes all those less formalized training programs and schemes, such as apprenticeship, on-the-job training, in-service courses, and learning by doing. Industrial training, in general, aims at either equipping the employee with the skills needed for a job (training) or giving the employee a chance to acquire skills in a given industry. This training enhances the local capacity to assimilate, adapt, and diffuse imported technologies.

Management training includes formal and informal training aimed at producing a cadre of professional planners and decision-makers at the enterprise and the national levels. However, because management training combines formal and informal training, it has not been viewed as a discipline requiring serious attention: you either have managerial capabilities, or you don’t.

Consequently, there has not been any systematic program for training managers. For example, a study carried out to assess the quality of managers in the parastatal sector in Zambia revealed that many Zambian managers did not have the necessary qualifications or experience to run their companies. It also showed that most Zambian managers did not see any need to learn the basic principles of the industry they were appointed to run.

The training of managers and planners is seriously needed. More important, this cadre is central to the management of technology transfer.

The scientific and technological infrastructure

One of the main distinguishing features of the industrialization process is the application of S&T to production. The advent of the industrial revolution was, in fact, a product of this marriage. A community of scientists and engineers is a direct result of the educational system, the efficacy of which is greatly enhanced by an institutional framework. This institutional framework often takes the form of a national academy of science or a national council for scientific research (NCSR). Most academies of science serve as centres of excellence, undertaking fundamental (basic) scientific research and acting as honorary organizations for scientists. In some countries, the responsibilities associated with planning an S&T policy are left to the NCSR. The functions of the NCSR may also include basic scientific research. Although most African countries have NCSRs (largely in name only), very few have national academies of science.

Applied research, aimed at immediate industrial use, is often carried out in research and development (R&D) establishments. These establishments are owned by governments, intergovernmental organizations, or private corporations. In addition, some laboratories and pilot plants are owned by universities and NCSRs. Although Africa has agricultural research centres and quality-control laboratories, it is ill equipped in applied research.

The translation of S&T information into operating technical systems is usually accomplished by consulting engineering firms. This work is critical to the implementation of industrial projects, and it is a vital element in the scientific and industrial infrastructure, as it plays a central role in the transfer of technology and the management of technical change. The few consulting engineering firms one finds in most African countries are mainly subsidiaries or offices of international consulting firms.

Lastly, information systems are important in the dissemination of S&T innovations; information systems are a vital element in any S&T infrastructure, including general and technical libraries, documentation centres, and various marketing outlets for books and journals. The main functions of such information systems are to collect and make available information on S&T developments from outside the country and to record and store information on S&T developments and innovations made in the country, thus providing a crucial resource to industrial managers, as well as the consulting firms.

The industrial infrastructure

A dynamic industrial infrastructure comprises numerous strategic industries in the national economy, including basic metals, chemicals, metal-working, and engineering. The basic-metals industry is often divided into two parts: the ferrous metals (iron and steel) and the nonferrous metals, such as copper, lead, zinc, tin, and nickel. Generally speaking, the basic-metals industry involves mining, metallurgy, rolling, extrusion, and drawing and produces intermediate goods, which are inputs to the metal-working industry.

The chemical industry produces a wide range of intermediate products, which become inputs to an equally wide range of industrial processes. Bernal once observed that the chemical industry is second only to the electrical industry in being transformed by science in this century. By manipulating the molecular structure of materials, the chemical industry is able to produce a greater number of materials in greater purity than found in nature. The chemical industry is strategic because it supplies intermediate goods for the other industries; it is difficult to think of any industrial process that does not use products from the chemical industry.

The metal-working industry is broadly divided into three basic parts: metal forming (forging and foundry), metal cutting (milling and machining), and sheet-metal working (fabrication). This industry is strategic in the production of capital goods and spare parts for industrial plants and equipment.

The engineering industry comprises a number of elements, which together provide the industrial infrastructure with machine-building and technical services. These elements include engineering design and development, tool engineering and production, production engineering, materials engineering, and maintenance engineering. Although these categories are self-explanatory, it is important to note that, together, they translate S&T innovations and developments into new, more efficient and more economical machines, plants, and equipment. This industry has the capacity to design, adapt, and manufacture the components of new technical systems, as well as repair, modify, and rehabilitate existing industrial plants and equipment. Thus, the engineering industry forms the central pillar of an industrial economy. Unfortunately, it is also an industry that is noticeably absent from most developing countries.

Formulating and implementing a national technology policy

Developing countries have not adopted the technology policies crucial to economic and industrial development. There is need to formulate national technology policies, to put technology at the centre of development planning. We need to establish institutions to formulate and implement these policies and nurture a national S&T capacity. Such institutions would implement the various technology policies suggested in Chapter 5 of the LPA and be responsible for

• planning S&T inputs to other sectors of the economy;

• planning and developing human resources;

• planning and developing a national S&T infrastructure;

• planning and strengthening a dynamic industrial infrastructure; and

• coordinating national and international factors affecting S&T.

Those who are formulating technology policy ought not to confine themselves to planning for research; they should also plan for the S&T requirements of the other sectors of the economy. The principal sectors are food and agriculture, natural resources, industry, energy, transportation and communications, health and sanitation, housing and urban development, and the environment. The institution charged with planning technological inputs to other sectors of the economy would have to work very closely with other ministries and the national planning office to ensure that most, if not all, the technological requirements are taken into consideration and that they are in line with an overall national development policy. A separate unit in the national planning office should be established to deal with these issues.

The development of human resources is also a very crucial component in the development of a national technological capacity. Policy planners should take an inventory of S&T personnel to identify the areas that have a critical shortage and to suggest training programs to offset these shortages. Furthermore, there may be a need to revise and develop school curricula to strengthen the teaching of science and industrial arts. The development of human resources includes the development and strengthening of industrial and managerial training programs, as well as the training of S&T teachers. A directorate for the development of human resources ought to be created to manage these critical tasks.

Developing a national S&T infrastructure comprises three tasks: (1) nurturing a community of scientists and engineers, (2) strengthening the country’s R&D capability, and (3) establishing local engineering consultancies. A community of scientists and engineers could be nurtured by a national academy of S&T, which would act as a centre of excellence and stimulate domestic S&T activity. Strengthening a domestic R&D capability would include the establishment of applied-research units in various industries, government departments, and other organizations. As well, the NCSR could be charged with the coordination of these activities. An engineering consultancy capability may provide the link between products of the S&T infrastructure and industry.

A dynamic industrial infrastructure would largely supplement the sectoral policies relating to industrial development. However, many strategic industries contribute not only to industrial growth but also to S&T. Also needed are low-cost technologies — not simple or primitive technologies — especially suited to development of rural areas. Specific policies aimed at strengthening the industrial infrastructure should be administered by a department of the ministry of industry.

Lastly, a national technology centre could have both national and international functions. On the national front, the centre would concern itself more with the dissemination of technological information among the different sectors of the economy and institutions and the mobilization of funds to support domestic S&T activities. On the international front, the centre could be charged with ensuring scientific and technical cooperation, coordinating technological policies at regional and subregional levels, and managing and monitoring of technology transfer.

Critics of such institutions may say that they are a typical bureaucratic response, a futile but classic reflex action of throwing money at vexing yet intractable problems. There is no denying that governments are often in the habit of doing just that. However, the recommendations of this study would not require huge government subventions; such institutions could be financed by an independent industrial development fund supported by all the business houses in a country. This could be achieved by collecting a small percentage of sales from all industrial establishments in the country. The fund would not only raise finances for promoting and planning technological development but also help to create in the S&T community a vested interest in the success of industry — the piper would no longer play just any tune, but the one requested by the people who foot the bill.

Conclusion

It should be emphasized that these reflections are not intended as a comprehensive national technology policy package. What has been attempted is an outline of a national technology policy that may create the conditions for economic and industrial development. Policies do require an institutional framework. Without those institutions, any planning or policy will remain a pipe dream, however elaborate or well intentioned.

CHAPTER 9
Exploring the Potentials of Water Mills in the Grain-Milling
Industry in Ethiopia

Dejene Aredo

Introduction

Technology transfer in Ethiopia has meant the importation of largely labour-saving innovations to replace obsolete equipment. Water mills, which used to be the most widespread rural technology, lost their importance when diesel mills entered the rural areas after the Italian occupation of Ethiopia (1936–1941). In large urban centres, water mills were wholly replaced by electric mills. Today, water mills are restricted to virtually inaccessible rural areas. Neglected by policy makers and rural-development practitioners, the technology of water milling survived for decades without access to spare parts or components from the modern sector. Government policy in the 1950s and 1960s encouraged the spread of diesel engine mills by providing cheap, imported fuel. Today, however, water mills are showing some signs of revival in rural areas, following the rise in the prices of fuel and spare parts for diesel mills. It is not yet known how this type of technology has survived the period of massive importation; its immense potential has remained hidden from researchers and rural-development practitioners.

The demand for improved water mills will likely increase when diesel mills become too expensive for the rural poor, whose real per capita income has been declining in recent years. The water mill’s social value is expected to rise when imported fuels become more expensive.

The purpose of this study is to explore the hidden potentials of a microenterprise by identifying and analyzing the complementary roles of water mills and modern mills, with a view to instigating further research in the rural, hydro-based grain-processing industry. The specific objectives of the study were (1) to characterize the grain-milling industry in Ethiopia; (2) to identify and explain the relative advantages of water mills; (3) to identify and explain the major constraints on the expansion of water mills; and (4) to propose that further research be done on alternative designs for water mills for the consideration of promoters of rural technology in Ethiopia.

The data in this study were obtained mainly in northern Shewa. The region was appropriate for this study because the earliest mills are still found there, as well as many partly abandoned water mills. I captured a general picture of water mills by undertaking a survey of 12 woredas (subdistricts) in northern Shewa. A detailed study of the mills focused on two villages. In one of the two villages, Gedilge, a household survey (n = 21) characterized the users and nonusers of the mills. The interviewees were all women. Other sources of information included mill owners, local officials from the Ministry of Agriculture, leaders of peasant associations, and village elders. A mill in the other village, Chaka, was selected to illustrate the mechanics of milling.

Theoretical perspectives

Bagachwa (1991) succinctly reviewed the approaches to technology choice. These were the neoclassical approach, the fixed-factor-proportions approach, and the appropriate-technology approach. The neoclassical approach is based on the model of pure and perfect competition. For developing countries, this implies (1) the adoption of the labour-intensive techniques of production, arising from the assumption that labour is the most important resource in these countries; and (2) the correction of distortions in market prices.

The fixed-factor-proportions approach, which is based on the Leontief-Harrod-Dommar assumption of constant-input coefficients, questions the plausibility of the neoclassical assumption of a near-infinite range of available technologies. This approach rules out the possibility of factor substitution. It draws much of its support from the observation that almost all technological innovations take place in developed countries, where the direction of technological change is toward labour-saving innovations. It is assumed that newer capital-intensive technologies supersede older ones as they become obsolete and unproductive (Romijn and De Wilde 1991, p. 103):

Once modern western technologies are brought into traditional society, they manage to superimpose themselves and compete successfully with local production processes to such an extent that the latter find it difficult to survive.

As a result, developing countries may not have efficient technology alternatives, other than those with the high capital-labour ratios found in developed countries. The efficient-factor combination is considered fixed in the proportions found in developed countries (Eckaus 1955; White 1978; Bagachwa 1991). This type of technology choice creates a state of dependence in which factor proportions in developing countries are determined by patterns of resource endowments in developed countries.

The appropriate-technology approach combines aspects of both the neoclassical and fixed-factor-proportions approaches. The centrepiece of this approach is the assumption that (1) there is a lack of technology tailored to or adapted to the conditions of developing countries and (2) there is a need to develop technologies consistent with the patterns of resource endowment in these countries. An appropriate technology can, in general, be characterized as follows:

1. Appropriate technology should be technically efficient, not wasteful. It should be economically efficient, making the best use of available resources. It should be inexpensive and small scale so that poor people can afford it, leading to a more equitable distribution of incomes and assets.

2. Appropriate technology should be socially and culturally compatible, enhance the quality of life, be satisfying (creativity of work), involve machines that are subordinate to people, use communal rather than individual goods and services, foster social participation, and facilitate deconcentration of power.

3. Appropriate technology should be environmentally sound. It should preferably use renewable rather than nonrenewable energy and raw materials. It should produce durable goods that can be recycled or reused, cause minimal pollution and wastes, and blend into local ecosystems. It should be compatible with the rational, sustained use of the environment.

Hydropower provides a developing economy with opportunities to develop appropriate technologies. It has been noted that “one of the first things a country can do is to assess its opportunities for developing alternative energy sources. In hydropower, the hydrologic studies are basic to the entire process” (NRECA 1980, p. 23).

Hydropower in developing countries (NRECA 1980) has nine distinguishing characteristics: sustainability, dependence on local resources, cost effectiveness, durability, flexibility, simplicity, ability to fit into existing systems, accessibility to isolated rural communities, and ability to meet multiple purposes.

The sustainability of hydropower arises from the fact that it uses a renewable source of energy — water. It is essentially nonpolluting. It is environmentally sound and acceptable. Hydropower makes maximum use of local resources and, thus, compared with thermal-power, is usually much more appropriate for conditions in many developing countries, which face shortages of the foreign exchange required to import fuel oil. Hydropower is largely cost effective and is, to some extent, insulated from inflation. No fuel is required and heat is not involved, so operating costs are low. Approximately 650 kW · h production by a hydropower plant will reduce the requirement for oil (or its fuel equivalent) by 1 bbl (1 bbl = about 0.16 m3). Because of this and the durability of the facilities, a hydropower installation is to some extent inflation proof. Because no heat is involved, the equipment has a long life, and malfunctioning is uncommon. Dams and control works can perform for decades, and limited maintenance is required. Hydropower’s reliability and flexibility of operation, including fast start-up and shutdown times in response to rapid changes in demand, makes it an especially valuable part of a large power system of a developing country. The relative simplicity of a small-scale, hydro-based enterprise makes energy instantly available. Small-scale hydropower fits nicely into the energy balance of a country. It can contribute to interregional equity by meeting the needs of isolated rural communities. It can be made available in small installations and with relative ease in remote areas of developing countries. A small-scale hydropower facility can generate enough power for grain milling, sorghum dehusking, and village-level electrification. Hydropower, of course, presupposes the availability of water. Therefore, it is difficult to reach every part of a country with small-scale facilities.

The total energy of Ethiopia is largely obtained from traditional biomass fuels. It is estimated that biomass fuels account for 95% of the total energy consumption, with only 5% coming from modem energy sources. Deforestation is so pervasive that today less than 4% of the total land area of the country is covered by natural forests, compared with 40% just a century ago.

Ethiopia’s potential for hydroelectric power is considerable. The gross hydro-energy potential is estimated at 650 TW a-1, which is roughly 8% of Africa’s potential. However, the installed capacity of the five major hydroelectric plants is only about 360 MW a-1. Ethiopia’s per capita electricity consumption, at about 25 kW a-1, is among the lowest in the world.

Large-scale use of imported fuel has been precluded by the ever growing shortages of foreign exchange. Today, fuel accounts for about one fifth of the value of total import merchandise. Therefore, it is high time to explore the economic potential of small-scale hydropower facilities in rural industrialization. A study conducted by Tebicke and Gebre-Mariam (1990) clearly indicates that where the resource is available near the locality, small-scale hydroelectricity offers considerable advantages over both the grid-extension and diesel-electric sources. Small-scale hydroelectricity sources offer considerable scope for indigenous technical capacity, contributing to lower investment and supply costs, especially in foreign exchange. The same cannot be expected from the alternatives because of the high level of technical sophistication of the diesel and grid equipment components (Tebicke and Gebre-Mariam 1990).

The grain-milling industry in Ethiopia

In Ethiopia, on-farm consumption accounts for as much as 80% of the total output of grain. Quite a substantial proportion of rural households still hand-grind grains, using a stone grinder, or pound the grain into flour, using a pound and pestle. However, in northern Shewa, grain mills are widely used. An important characteristic of the food-processing industry in Ethiopia is the scarcity of commercial milling. Custom milling, which is done by private or cooperative mills in exchange for payment of milling fees, is still the dominant form of food processing in the country. An Ethiopian woman rarely buys flour from shops or mills.

Four alternative types of technology are available in the food-processing industry: hand grinding (or pounding), water mills, diesel-engine-powered mills, and electric-motor-powered mills. Flour for the bakeries is produced largely by state-owned mills. The state gets the grain from imports or from the agricultural sector. In the past, state-owned mills obtained grain through a parastatal, the Agricultural Marketing Corporation. Many rural households are net purchasers of food. Urban dwellers occasionally buy bread (made from wheat) from bakeries. Otherwise, they buy grain from the market and pay to have it ground into flour. In recent years, the private sector and the market system have played an increasing role in the distribution and processing of food grains.

In Ethiopia, industry plays a limited role in the economy. In 1993, the share of manufacturing output in the gross domestic product was only 11%; that of small-scale industry was 4% (Mulat 1994).

Commercial milling is little practiced. Most of the flour required by households is processed by women using the traditional stone grinder, which is backbreaking and time consuming, or by small-scale custom mills. A foreign traveller, observing the grinding of grain in traditional Ethiopia, described it like this:

Women spent much time, and effort … in grinding. This was often carried out on hand-mills which consisted of a large fat stone of cellular lava, two feet long and one foot broad, raised upon a rude pedestal of stones and mud, about one foot and half from the ground. The rough surface of this stone sloped gradually forwards into a basin-like cavity, into which the flour fell as it was ground. A second stone, which weighed about three pounds, would be grasped in the hand of a grinding-woman who would move it up and down the inclined stone, thereby crushing the grain and gradually converting it into coarse flour.

Commercial milling is limited to 17 state-owned, large-scale mills (CSA 1992), which produce flour for the urban bakeries. These mills produce mainly wheat flour. One survey reported that 88% of the grain used by state mills was wheat, and the rest was maize (CSA 1992).

Agricultural processing in Ethiopia, which has forward-production linkages, is done in small-scale establishments for two reasons: (1) crops are bulky and heavy and are often perishable, and transport costs can be greatly reduced if agricultural processing is done close to the source of supply; and (2) the highly dispersed pattern of settlement requires dispersed milling establishments. Grain milling is the most widespread power-driven small-scale industry in Ethiopia, in both urban and rural areas. A survey of 11 towns in the country reported that grain mills accounted for 55% of all small-scale industrial enterprises (wood works accounted for 9%) (HSSIDA 1979). In a similar survey, conducted later, this was found to be 64% (HSSIDA 1980). In predominantly rural areas or remote places, grain mills may account for 100% of power-driven enterprises. On the other hand, this proportion falls with the size of urban centres. For example, one survey reported that in Addis Ababa, the largest city in Ethiopia, the proportion of grain mills in the total number of establishments was only 34%, compared with 55% for all the towns (HSSIDA 1979).

The number of people employed at grain mills is considerable, though the worker-mill ratio is quite small. A survey of 963 small-scale industrial establishments in Ethiopia reported that grain mills provided jobs for 1823 people; all the establishments, including mills, employed 9695 people. In other words, employment in grain mills accounted for 19% of the total employment in industry (HSSIDA 1979). In another survey, grain mills accounted for 51% of the total employment in privately owned small-scale industries (HSSIDA 1985). But this proportion tends to fall with growth in urbanization. For example, in Addis Ababa, where there are many other industries, grain mills accounted for only 9% of the total employment in private industries (Ministry of Industry 1992).

A recent comprehensive survey of small-scale industries in Addis Ababa provided the following information about private grain mills: the average worker-mill ratio was 2.9 (1–12 paid workers); the average capital per mill was 19 826 birr; and the capital per worker was 6771 birr (in 1995, 6.3 Ethiopian birr = 1 United States dollar [USD]). Cooperative mills, however, were found to be quite large: the worker-mill ratio was 14; the average capital per mill was 154 518 birr; and the capital per worker was 11 109 birr. But cooperative mills, most of which are likely owned by urban dwellers and their associations, accounted for only 2.4% of the total number of mills in Addis Ababa (Region 14 Administration 1994).

The number of workers per mill is quite small compared with that in other small-scale industries, as evident from many surveys. In one survey, the average number of workers per mill was 3.4, compared with 10 per establishment for all types of industries (HSSIDA 1979). Another survey suggested that employment in the milling industry averaged 3.3 persons, compared with 6.3 persons per establishment for all types of enterprises (Ministry of Industry 1992). On the other hand, this ratio has been found to be high for commercial mills, which are largely state owned. A survey of enterprises employing more than 10 workers reported that there were 222 people per establishment (CSA 1992).

Wages in the grain-milling industry are small. One survey reported that 86% of the workers employed in the milling industry earned less than 100 birr per month, whereas in the food industry, as a whole, 72% of the workers earned less than 100 birr per month (HSSIDA 1985).

Women’s rate of participation in the milling industry is lower than that of men. One survey reported that women accounted for 20% of the total employment in the industry (Ministry of Industry 1992). Also, it appears that women earn less than men. A survey of large-scale mills indicated that women’s wages were 82% of men’s (CSA 1992).

The contribution of grain mills to the gross value of output of the small-scale industries is quite small, compared with their relative size within the small-scale industrial sector. According to one survey, grain mills accounted for only 6% of the value of the total output of small-scale industries but for 55% of the total number of establishments in the industry (HSSIDA 1979). In another survey, the value of the services provided annually by grain mills amounted to an average of 19 665 birr per mill (Ministry of Industry 1992). The gross value added in the milling industry is also low, compared with that of other small-scale industries. For example, one survey reported that the gross value added in this industry was only 20% of that of coffee-and grain-clearing enterprises (HSSIDA 1979).

Operating surplus is the difference between value added in national account concept at factor cost and total wages, salaries, and benefits (Ministry of Agriculture 1992). The operating surplus of the milling industry was estimated at 48% of that of the food and beverage industry (Ministry of Industry 1992). In other words, profit per establishment is very likely to be lower in the milling industry than in other types of small-scale industry.

Small grain mills are privately owned. Public ownership is restricted to large-scale commercial mills. This is an area where the private sector played a very important role during the socialization drive of the military regime. In a survey of 11 towns in the country, it was estimated that 86% of the milling establishments were owned by individuals; 10%, by partners; and 4%, by cooperatives (HSSIDA 1979). In another survey, it was estimated that 82% of them were owned by individuals; 8%, by partners; 5%, by cooperatives; and 5%, by training institutions, etc. (HSSIDA 1980). Among cooperatives, peasant service cooperatives play a very important role. Funds for the establishment of grain mills come mainly from the informal sector. Owners of mills make little use of the banking system because banks are not available in rural areas, where 85% of the population lives. In addition, the banks require borrowers to present their books of account to get credit for expansion or new investment; however, 79% of the small-scale industries in 1978/79 did not keep books of accounts. Most of the funds for the milling industry come from the informal financial sector. One survey reported that 97% of the total investment funds come from the owners of the mills (HSSIDA 1980).

Grain mills seem to need small investments. In one survey, grain mills, representing 64% of small-scale establishments, accounted for only 21% of the value of fixed assets (HSSIDA 1980). Working capital requirements are also small. According to one survey, the ratio of working capital to fixed assets in the privately owned industries was 0.12 for the milling industry and 0.35 for the food and beverage industry (Ministry of Industry 1992).

The cost of running a mill is much lower than the cost of running other small-scale industrial enterprises. According to one survey, “industrial” and “nonindustrial” costs of running an average mill were 13 069 birr and 28 975 birr for the whole of the food industry (HSSIDA 1985). Industrial costs, in particular, were found to be very small. Industrial costs included cost of energy, water consumption, repair and maintenance, rent, wages and salaries, benefits, and raw materials consumed. Nonindustrial costs included postage, telecommunications, and advertisements. The same survey reported that industrial costs per establishment were only one third of that for the food industry as a whole. In contrast, nonindustrial costs were higher for grain mills than for the food industry, amounting to an average of 5014 birr for the grain industry and 4723 birr for the food industry (HSSIDA 1985). The high non-industrial costs of running grain mills could be largely attributed to government policy, which makes the mills pay high taxes. The various types of taxes the mills paid in 1984/85 amounted to 84% of their total nonindustrial costs (HSSIDA). (It is, however, possible that mill owners, like other taxpayers, deliberately overstate the amount of tax they pay when they are interviewed.) The major cost component in the grain mill industry is fuel. According to one survey, about 49% of the total industrial costs of milling establishments is for electricity and diesel fuels (HSSIDA 1985). In urban areas, electricity is used as a major source of power for grain mills. A survey of private industries in Addis Ababa indicated that expenditures on electricity accounted for 71% of the total industrial costs of milling, with diesel fuels accounting for 5% (Ministry of Industry 1992). In large urban centres, diesel fuel is little used in grain milling. Electricity consumption also increases with the size of the enterprise. One report indicated that 55% of the total expenditure of the large mills was for electricity, 23% was for wood and charcoal, and 22% was for other fuels (CSA 1992).

On the other hand, diesel fuel is an important source of power for mills operating in rural areas where electricity is not available. However, the cost of fuel has been steadily rising since the 1970s. Large mills try to overcome this problem by switching to electric power. Nevertheless, the proportion of the total industrial cost of large mills given to energy steadily increased from 5.6% in 1977 to 8.7% in 1981 (CSA 1992).

The milling industry encounters a lot of problems (Mulat 1994), with the result that enterprises operate much below capacity. One survey indicated that grain mills operate at about 40% below capacity (HSSIDA 1980). According to a detailed study of mills in three areas in Ethiopia, actual capacity as a proportion of theoretical capacity was 46% (Lirenso and Aredo 1988). The major problems encountered by the industry can be classified as supply-side problems or demand-side problems. The socialist-oriented military regime, which ruled Ethiopia from 1974 to 1991, discouraged the expansion of small-scale industries. Private mills encountered shortages of spare parts and components. The demand for milling was constrained by shortages of grain and by limitations in household incomes.

A closer picture of the milling industry can be captured by considering the distribution of different types of mills in northern Shewa. In a survey of 122 “peasants’ associations,” it was found that the average size was about 185 households. A peasants’ association was usually established in an area of 800 ha. A group of three to seven peasants’ associations formed a service cooperative, often with its own grain mill. However, many of these mills were destroyed at the downfall of the military regime in 1991. There were no peasants’ associations without at least one grain mill. The most common type of mill was the diesel-engine mill (1.4 diesel mills per peasants’ association), which accounted for 66% of the mills covered by the survey. But most of these mills were installed in small towns and market places, areas accessible by vehicles. Next to diesel mills, water mills were the dominant type of technology, accounting for 29% of the mills. The corresponding proportion in southwestern Ethiopia was 25% (ONCCP 1980). However, the distribution of water mills among woredas was uneven, depending on the availability of water and accessibility. Most of the water mills were found in two relatively inaccessible woredas, Hagere-Mariam and Mafound. Of the 23 water mills found in Mafound woreda, 15 belonged to a single peasants’ association, Gedilgie. The average distance from a water mill to the main town was estimated to be a 3 h walk. Electric mills, which accounted for only 5% of the establishments, were limited to areas located near highways. Further details of the milling technology in Ethiopia are given in Aredo (1987), Lirenso and Aredo (1988, 1989), and Aredo and Abebe (1991).

The advantages of water mills

The origins of water mills in Ethiopia can be traced to the mid-19th century, when King Sahle-Selassie of Shewa installed a mill along the Airara River, with the assistance of foreigners. However, its use was prohibited by the clergy of the local religion, who considered the innovation the work of a demon. Water mills had their heyday in the first half of this century, when water mills were the most widespread power-driven industry in Ethiopia. They were also one of the important sources of tax revenue. One testimony to the past importance of water mills is the exceedingly large numbers of abandoned mills in many locations in central Ethiopia. For example, at the village of Gedilge, some 15 km from the town of Debre Sina, six partly abandoned mills were found at a single site along a stream. Today, only one of them functions for commercial purposes.

The importance of water mills declined with the introduction of diesel mills after World War II. Their importance further declined as hydroelectric power stations made electric mills possible in urban areas. However, water mills are far from a dying industry. Recent years have seen their revival in some inaccessible areas. This is, perhaps, because of the sharp increases in the price of diesel fuel and spare parts for diesel engines and also an increase in electricity tariff rates.

Table 1 compares the production capacity, costs, income, number of workers, import dependence, profitability, capacity utilization, and working time of the three types of flour mills (i.e., water mills, diesel mills, and electric mills). Water mills have the lowest capacity; they produce about 9 quintals of flour in a day; diesel and electric mills produce 25 and 45 quintals, respectively. This is based on the assumption that the mills operate at full capacity. Water mills operate relatively slowly. However, the waiting time at a water mill is usually nil because customers tend to leave the grain with the mill owners and collect the flour at a convenient time. Strong personal relations exist between customers and mill owners. In the case of modern mills (diesel and electric), users often come from distant places or from urban centres, where the density of population limits personal relations with owners. The travel time saved by users of water mills is considerable. In the study area, the average number of daily visitors to water mills was 9, whereas that to diesel mills and electric mills was 60 and 210, respectively.

Table 1. Comparative performances of three types of mills.

Variable

Water mills

Diesel mills

Electric mills

Throughput (quintals/day)a

9

25

45

Book value of equipment (birr)b

1 500

20 000

35 000

Average number of clients (persons/day)

9

60

210

Service charge (birr/quintal)

2

4

5

Daily income (birr/working day)

20

120

178

Number of mill operators

2

3

3

Working hours (h/day)

6

10

12

Waiting time at mill site (min)

Nil

60

60

Running cost (birr/year)c

120

12 400

10371

The degree of capital use (%)d

60

28

56

Rate of return (%)e

23

16

37

Ratio of net income to gross income

94

20

56

Import component (%)f

Nil

79

20

a Throughput is the quantity of grain that would be processed into flour daily if the mill were operating at full capacity. The working day is assumed to be 8 h.

b Book values are estimated for different years. The water mills were purchased more than 60 years ago, whereas the diesel- and electric-engine mills were installed very recently.

c Running costs are recurrent costs, such as wages, taxes, and costs of fuel, electricity, and lubricants.

d The degree of capital use was estimated by dividing the average amount of flour actually processed by the potential output (throughput) for each type of mill.

e The rate of return was estimated by dividing net income by the value of fixed capital. In the case of water mills, current value of a mill was taken. The value of the shelter was excluded from the estimate of fixed capital.

f The import component is the ratio of the value of imported materials to the total recurrent expenditure incurred in a year.

Water mills cater to the needs of the very poor rural households, as evident from the very low service charges these mills demand. In the study area, owners of water mills charged about 2 birr per quintal for processing grain into flour, whereas owners of diesel mills and electric mills charged about 4 and 5 birr per quintal, respectively. The slow speed of water mills could be offset by the low service charge. Moreover, water mills can service inaccessible regions.

Investment outlays on water mills can be within the reach of the better-off peasant farmers. Table 1 shows that the book value of water mills is very low. Moreover, water mills present an investment opportunity in rural areas, in contrast to modern mills, which tend to be in urban centres. The cost of installing a new water mill is much lower than the cost of installing a modern mill. In one of the study villages, 300 birr was required to install a water mill. On the other hand, to install a diesel mill in the same area would require about 1100 birr. Another advantage of water mills is their very long life span. Most of the currently operational water mills are 60 or more years old. The recurrent cost of maintaining them is very low. The annual recurrent expenditure for water mills averages 120 birr, whereas that for diesel mills and electric mills averages 12400 and 10 371 birr, respectively. Diesel mills, in particular, are very costly to maintain.

A big advantage of water mills is their greater ability to rely on local resources, making use of almost no direct imports. On the other hand, diesel mills heavily depend on imported fuel and other imported inputs. According to the case studies, the ratio of the value of imported inputs to the total annual recurrent expenditure was nil for water mills. But in the case of diesel mills, imported inputs accounted for 79% of the total recurrent expenditure. This is because of the high cost of imported fuel. Water mills also have high social value because of their use of local materials.

Simple ratios suggest that water mills are profitable. For example, the rate of return to fixed capital for water mills was estimated at 23%, whereas it was 16% for diesel mills and 37% for electric mills. However, the net income from operating a water mill is too small to attract urban-based investors.

Capacity underutilization is common for all types of mills. Diesel mills, in particular, operate much below capacity, mainly as a result of frequent breakdowns and shortages of fuel and spare parts. This study found that diesel mills operate, on average, at 28% of full capacity. Water mills, although they face relatively low demand, perform better (about 60% of full capacity) because they depend on local materials for their spare parts and because their parts and components are much more durable. The shaft, for example, lasts for about 38 years. Its current price is only about 150 birr. The grinder (which is made of a special type of stone) costs about 60 birr and may last up to 6 years.

A water mill can be an important source of income for the farmer. The typical Ethiopian farmer is subsistence oriented and has little cash for purchasing modern inputs and consumer goods or for meeting other types of outlay. A daily income of 20 birr from operating water mills (see Table 1) is vital for the Ethiopian peasant. Income generated by small-scale rural enterprises, such as water mills, can contribute to increased demand for products from the agricultural and other sectors.

Water mills can create off-the-farm employment opportunities for some farm households. In the study area, an average of two people were needed to operate a water mill. In the case of a diesel mill or an electric mill, on average, three people were needed. Fixed schedules are rarely used by owners of water mills because of the often irregular demand they face. The mill owner is assisted by family members or neighbours when there is a peak in the demand for flour. Cash payments are rarely offered to assistants in a society where farm households are little integrated into the market. Modem mills, on the other hand, often pay cash to mill operators.

Water mills are almost invariably located near streams, rivers, or springs because, obviously, they require water as a source of power. Today, they are largely restricted to inaccessible areas. An additional factor in the location of water mills is population density: a reasonable population density is needed to make a mill financially feasible.

The opportunity cost of the land used for a water mill is small. The site is often unsuitable for cultivation or for grazing because of the terrain, which is often very steep. The actual area used as a mill site measures about 50 m2. The water discharged from the mill is often used for small-scale irrigation. The area around the mill is typically woody and luxuriant.

The relative advantages of water mills can also be analyzed from the point of view of the customers canvassed in the household survey. The major reasons for using water mills (in order of importance) are (1) personal relations with the mill owner, (2) proximity, and (3) low service charges. Users and mill owners are often neighbours or relatives with strong personal and social ties. Owner-customer relations sometimes involve reciprocity and similar nonfinancial dealings. A woman may frequent a particular water mill simply because she feels that it is her obligation to do so. She may not want to harm the feelings of the owner, who may process her grain for free when she runs short of money.

The catchment area of a water mill is often restricted to its neighbourhood. The lack of transportation to distant places may preclude the use of modern mills, which are located in towns or market places. Poorer households cannot afford the pack animals they would need to transport the grain to town.

Water mills are also attractive to poorer households because the service charges demanded by owners of water mills are lower than those demanded by the owners of the modern mills. It is likely that the demand for cheaper milling technology will increase as the decline in real per capita income in rural Ethiopia continues. Several studies have suggested that modern mills operate much below capacity because of the rural people’s shortages of cash (Aredo 1987; Lirenso and Aredo 1988; Aredo and Abebe 1991).

In addition to the regular users, other people visit water mills only occasionally, mainly when a diesel or electric mill is malfunctioning because of a breakdown or shortage of power, especially fuel. The demand for water mills peaks when a diesel or electric mill stops work. In this way, water mills complement modern mills. Water mills are more reliable and flexible than modern mills.

Modern mills are preferred for their high speed. About 42% of the sample households reported that they had frequented electric mills for this reason. People often combine their visits to modern mills with other tasks they are undertaking. About 21% of the women visited mills on their way to the market.

How do we characterize the regular users of water mills? According to the household survey, people who frequent water mills are younger than those who frequent electric or diesel mills. The average age of those who frequent water mills (of the household head) was 37, whereas that of the users of electric and diesel mills was 41. The number of people in the households that used the water mills averaged five, and that of the households that used the electric and diesel mills averaged six. The average size of land holdings per household of the frequent users of water mills was 0.68 ha, and that of the frequent users of modern mills was 0.95 ha. Clients of water mills live a few minutes’ walk from the mill site. In general, it seems that regular users of water mills are poorer and younger households, residing near the mill.

Water mills, however, have their disadvantages:

1. They are very slow to operate. The long waiting time may discourage households from using water mills. One way of overcoming this problem is to leave the grain with the mill owner and collect the flour at a convenient time. There is mutual trust between mill owners and clients.

2. They are subject to water problems. During the rainy reasons, their sites could be flooded, which may cause work interruptions. In the extreme case, the entire structure could be destroyed and carried away by floods, which happened to a mill in the village of Chaka recently. During dry seasons, on the other hand, there could be too little water to run the mill. It is also at this time that people demand more water for irrigation. Conflict between mill - owners and neighbours is not unheard of. In short, irregular supply of water is a major technical problem faced by mill owners. A topic for further research is, therefore, a way to ensure regular supplies of water for grain processing, as well for irrigation. So far, there has been no attempt to address this problem. In fact, there are cases where detrimental measures were taken; for example, water in the village of Gedilge was diverted to the town of Debre Sina by a small dam in the very place where there were many water mills.

3. They operate very little on cloudy days, especially in the rainy seasons, because there is not enough heat from the sun to dry the grain brought for milling. Water mills process only dry grains.

4. Their wide is precluded by the fact that their location depends on the availability of water. However, they could be promoted in the southern part of Ethiopia, where there are numerous streams, rivers, and springs.

The relative advantages of the three types of mills are summarized in Table 2. Water mills rank first for all the desirable characteristics of an appropriate technology, except for waiting time, product quality, and location flexibility. One major weakness of a water mill is that it is location specific: its uses are restricted to places where water power is available. Electric mills, admittedly, are restricted to places where electric power is available, but diesel mills can be established anywhere there is sufficient population density and reasonable transportation facilities. Of all the characteristics listed in the table, the highest weight should be attached to reliance on local resources.

Table 2. Ranking of milling technologies according to their relative advantages.

Advantage

Water mills

Diesel mills

Electric mills

Dependence on local resources

1

3

2

Fit with local farming system

1

2

2

Capacity utilization

1

3

2

Location flexibility

3

1

2

Customer waiting time

2

1

1

Accessibility to the poor

1

3

2

Contribution to interregional equity

1

2

2

Product quality

2

1

1

Working conditions

1

3

2

Contribution to environmental protection

1

2

2

Water mills fit into the local farming system by (1) making water available for small-scale irrigation, (2) using the spare labour of the farmer, (3) making use of the skill of local artisans (such as blacksmiths, who repair and improvise components), and (4) making use of materials available within the locality. The lower capacity of water mills is in harmony with the capacity of the local economy, which has characteristically low-level output and limited cash income. Modern mills operate with high excess capacity because of shortages of grain and the limited ability of customers to pay service charges. But modern mills require less waiting time at the mill site. Water mills are accessible to poorer households and to people living in remote areas. Although consumers prefer the texture of the flour from modern mills, there are those who say that these mills “burn” the flour, meaning, perhaps, that the strong heat released by these mills tends to shorten the shelf life of the flour. Working conditions at water mills are appreciated because of the cool, noiseless, fresh environment. Also, water mills contribute to environmental protection, using a renewable source of energy and recycling water for irrigation.

Water mills could, therefore, complement modem mills if their designs were improved and policy makers appreciated their importance. They could be of immense use in relatively inaccessible areas with sufficient hydropower.

The case of Chaka

The village of Chaka is located in one of the most inaccessible regions of Ankober woreda, some 42 km from Debre Birhan, the capital city of northern Shewa. After less than an hour’s drive from Debre Birhan to the town of Gorebella, one has to walk (and sometimes crawl and roll down) along a steep gorge and then cross the Airara River to reach the village of Chaka. The people of Chaka grow wheat, barley, horse beans, and other crops. There are about 400 households in the village. Numerous streams flow from the chains of mountains overlooking the Airara Valley.

It was along these streams that water mills were established many years ago, within a few kilometres of each other. The village of Chaka, itself, is located a few kilometres away from the historic town of Ankober, the seat of kings of Shewa. Minilik II moved his capital city from Ankober to Addis Ababa. Some of these mills were established by foreign residents (Greeks and Armenians). For example, the oldest mill (and yet the most powerful one in the village) was installed by a certain Mr George, some 75 years ago. In those days, hand grinding (using a stone grinder) was the most effective technique for processing grain, and slave labour was available. Households sought milling services at the water mill only on important occasions, such as a wedding, an annual holiday, or a grand feast, when a lot of flour was needed to prepare the food. Payment for milling services was made in kind (e.g., eggs and grain). Gradually, water mills gained in popularity among the local people. At peak times, mills operated 24 h a day. Customers waited in line for as long as 8 h at mill sites. However, those water mills gradually lost their market to the diesel mill that was established in the nearby town of Gorebella. Foreign residents switched to other activities as water mills became relatively unprofitable. Mr George, the owner of the oldest mill in Chaka, sold his mill to a local farmer and left the area. But the mill is still operational (Fig. 1).

The mill was bought for a few hundred birr by the present owner, Mr H, who was a part-time mill operator for the original owner. Mr H. established a workshop and undertakes all the repairs and maintenance of the equipment. He has made a number of innovations, including manufacturing from local materials the iron block on which the shaft is mounted (see Fig. 1). The only skill he doesn’t possess for his business is the skill of manufacturing the grinders, for which he pays 600 birr every 4–6 years. The two grinders are made of a special type of stone by local crafts people. As a by-product of his milling business, his services as a blacksmith are provided to

Image

Figure 1. Water mill in the village of Chaka.

the village people. Both his workshop and his house are located near the Airara River. Up the hill, he grows barley, wheat, horse beans, and other crops, and he grows vegetables, enset, and hopper, using the water discharged from the mill. He gets a substantial income from the sale of these products, and he has planted eucalyptus trees along the river. From his old mill, he earns about 1800 birr annually. He demands a service charge of 1–1.50 birr per 50 kg of grain. Sometimes, he provides free milling services to close relatives and neighbours. These people often help him a great deal when he has difficulties. One of his relatives helps him with mill operations. Mr H says that his business has been constrained by a lack of market and some technical problems, such as shortages of bolts and barrels for the mill. His mill does not function from June to September, as this is the time when the sky is cloudy and it is difficult to get sun-dried grain for processing. Some of the reasons why he lost his market to diesel mills were that (1) his mill was slow to operate, (2) the bran was not ground into powder, and (3) better-off households considered his mill an “inferior” form of technology and the diesel mill a status symbol. On the other hand, his mill has many loyal clients, especially neighbours and relatives. Peak demand for his mill coincides with the frequent interruptions in the operation of the diesel mill in Gorebella. He knows each one of his regular customers and has close personal relationships with them. Many of them are poor, so he rarely uses the scale for weighing grain brought for milling. Weight is determined roughly: he just looks at the amount of grain. He will start the mill no matter what the size of the load of grain or the number of customers. A loyal customer is not turned back simply because there is not enough business that day. He may interrupt farm work to start mill operations.

The working principles of a typical water mill in Ethiopia are as follows (see Fig. 1). The water jet, coming through the nozzle, causes the turbine to rotate, which drives the grain mill. The grain enters the mill through the hopper, and the flour is delivered at the flour exit. The quality of the flour can be adjusted by varying the clearance between the grinding stones.

The maximum output of the turbine, shown in Fig. 1, can be estimated at about 6.3 HP (4.7 kW). If he installed a more efficient turbine, then an output of 15–20 HP (11–15 kW) could be obtained.

Water mills tend to have mechanical problems, which could be avoided through simple improvements. Mr H. identified these problems:

• Grain dust may damage the bearings. Therefore, the bearings should be properly sealed. The same applies to other bearings exposed to grain dust.

• Millstones need special care: They must be replaced or re-dressed after acertain period. To increase the life of the millstones, the mill speed should be kept at or below the normal operating speed and the millstones should be adjusted properly. Production and re-dressing of the millstones should be done locally to reduce costs.

• Solid bodies, like leaves and stones, may get into the penstock and the turbine. Although leaves and smaller floating bodies can flush easily through the turbine without creating any problems, stones damage the vanes of the turbine rotor and the penstock. To avoid this, a suitable forebay should be set up at the end of the open channel, before the intake of the penstock, and a fresh rack should be placed at the inlet to the penstock.

• Although not a mechanical problem, flooding of the mill house may occur during rainy seasons. The location of the mill should be selected to avoid the danger of flooding. A spillway should be constructed at the end of the water-entrance channel. In case of heavy rains, the excess water will flow through the overflow ditch and have no access to the mill house.

• The thrust bearing wears out quickly. The thrust bearing consists of a metal block fixed to a thick wooden plate; the end of the turbine shaft has a rounded or a sharpened edge and is mounted on this metal block. The problem occurs if the metal block is made of forged steel. To increase the life span of the bearing, bronze or cast iron plates should be used. These materials can be obtained locally. Another way to solve the problem would be to modify the design of the bearing.

When a properly designed turbine is used, there are no major difficulties during operation. Some modern turbines were installed by the Evangelical Church of Ethiopia, and so far no major problems have been observed. The cross-flow turbine has proven especially durable.

There are several possibilities for developing modified designs of water mills, using local resources. In the Ethiopian context, there are three possibilities: (1) improving the common water mills that already exist, (2) developing new water-propelled mills, and (3) making other improvements. The multipurpose mill is another possibility.

Conclusions

This study attempted to throw light on a neglected postharvest technology and the role it could play in responding to the rising costs of imported diesel fuel and the growing shortages of cash incomes in rural areas. The strengths of water mills are that they make use of locally available materials and are accessible to poor households in remote and inaccessible areas. Water mills provide a striking but a rare case of a foreign technology that has been almost fully “indigenized” in rural Ethiopia. The technology fits nicely into the local farming system.

By exploring the economic and technical feasibility of water mills in selected rural areas, this study has suggested the possibility of raising the efficiency of the water mill by about 20–25% and tripling its horsepower through design improvements, using local materials. Researchers and promoters of rural technologies can develop the alternative designs proposed in this study. An engineering study, in particular, is highly recommended to further investigate and develop alternative designs and the other proposals of this study.

Policy-makers and rural-development practitioners may appreciate the immense potential of hydropower-based technology, water mills in particular. The Science and Technology Commission and the Rural Technology Promotion Department of the Ministry of Agriculture may encourage the expansion of improved water mills in selected areas. Appropriate policy instruments should be designed to encourage the expansion of water mills in areas where water is available. Some of the measures that could be taken are (1) removing the taxes imposed on water mills, (2) establishing a water-mills promotion project within the Rural Technology Promotion Department of the Ministry of Agriculture, and (3) commissioning feasibility studies.

References

Aredo, D. 1987. An economic study of the establishment of sorghum mills and dehullers in Ethiopia. Institute of Development Research, Addis Ababa University, Addis Ababa, Ethiopia. Research Report 29.

Aredo, D.; Abebe, S. 1991. A socio-economic impact assessment of farmers’ service co-operative grain mills. Institute of Development Research, Addis Ababa University, Addis Ababa, Ethiopia. Research Report 39.

Bagachwa, M. 1991. Choice of technology in industry: The economics of grain-milling in Tanzania. International Development Research Centre, Ottawa, ON, Canada. IDRC Manuscript Report 279e.

CSA (Central Statistical Authority). 1992. Results of the survey of manufacturing and electricity industries 1981 E.C. (1988/89). Addis Ababa, Ethiopia.

Eckaus, R.S. 1955. The factor proportion problem in underdeveloped countries. American Economic Review, 45, 539–565.

HSSIDA (Handicraft and Small-Scale Industries Development Agency). 1979. Report on the survey of small-scale industries in eleven towns (1976/77). HSSIDA, Addis Ababa, Ethiopia.

—— 1980. Report on the survey of small-scale industries in twelve towns (1977/78). HSSIDA, Addis Ababa, Ethiopia.

—— 1985. Report on the survey of private small-scale manufacturing and repair service establishments 1977 E.C. (1984/85). HSSIDA, Addis Ababa, Ethiopia.

Lirenso, A.; Aredo, D. 1988. A socio-economic study of service cooperative grain mills users. Institute of Development Research, Addis Ababa University, Addis Ababa, Ethiopia. Research Report 31.

—— 1989. The utilization of post-harvest technology: A case study of three service co-operative grain mills in Ethiopia. Eastern Africa Social Science Research Review, 5(2), 52–72.

Ministry of Industry. 1992. Preliminary report on the survey of private industries in Addis Ababa 1984 E.C. (1991/92). Addis Ababa, Ethiopia.

Mulat, T. 1994. Institutional reform, macroeconomic policy change and the development of small-scale industries in Ethiopia. Företagsekonomiska Forskningsinstitutet vid Handelshögskolan i Stockholm (Business Research Institute at the Stockholm School of Economics), Stockholm, Sweden. Working Paper 23.

NRECA (National Rural Electric Cooperation Association). 1980. Small hydroelectric power plants: An information exchange on problems, methodologies, and development. NRECA, Washington, DC, USA. Mimeo.

ONCCP (Office of National Committee for Central Planning). 1980. Report on the development efforts undertaken through mass organization and contributions [in Amharic]. ONCCP, Djima, Ethiopia. Mimeo.

Region 14 Administration. 1994. Directory of industry and handicraft. Industry and Handicraft Bureau, Addis Ababa, Ethiopia.

Romijn, H.; De Wilde, T. 1991. Appropriate technology for small industry. In Thomas, H. et al., Small-scale production. IT Publication, London, UK.

Tebicke, H.; Gebre-Mariam, H. 1990. A case study of small hydro and grid extension for rural electrification: Alternatives and complements. In Africa Energy Research Network, ed., Africa energy: Issues in planning and practice. Zed Books Ltd, London, UK.

White, L.J. 1978. The evidence of appropriate factor proportions for manufacturing in less developed countries: A survey. Economic Development and Cultural Change, 27–50.

PART III
Technical Change,
Innovation, and Diffusion

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CHAPTER 10
Technological Change and the Textiles Industry in Tanzania

H.M. Mlawa

Introduction

A number of studies in this book have underscored the role of technological change in sustainable industrial developments. This study examines the relation of technological change to productivity in the manufacturing industry in Tanzania. The cotton textiles sector (Mlawa 1983) provides the basis for this case study.

Textile manufacturing

The manufacture of cotton textiles involves three main processes: spinning, weaving, and processing. The analysis in this study is limited to the first two.

The technology used in the mills is simple. Raw cotton, often compressed in bales, is mixed and blended, goes through various processes, (spinning, blowing, carding, drawing, roving, etc.), and emerges as yarn. The yarn is transmitted to the loom shed (weaving shed), where further processing produces grey cloth (unprocessed cloth). The grey cloth then goes to the processing shed for desizing, bleaching, dyeing, printing, and so on. The processed cloth is finally cut into suitable sizes and packed for sale. A crew of line operatives and helpers, supported by maintenance personnel and supervisory staff, forms the core of the labour in each of these steps.

The analysis in this paper is based on five spinning sheds and four weaving sheds. All the spinning sheds produce a uniform product (coarse yarns, mostly of count 20s), and all the weaving sheds produce a uniform product (standard plain weaves). These plants were established in the mid-1960s, and all are publicly owned.

Performance measures

Proxy measures of performance (indicators of performance) were computed to reflect levels of X efficiency (operating performance) of the sheds. This computation was based on a set of data the Production Statistics departments in the mills recorded and used to measure production performance in the sheds. On the basis of these data, the following set of physical performance measures were computed. (The tight measures reflect the efficiency when the mills were actually running, thus minimizing the effects of exogenous variables, such as power failures and material shortages, on operating efficiency.)

Labour productivity

Labour productivity was measured as physical output (kilograms, for spinning; metres, for weaving) per person–hour. However, two performance indicators were used: (1) labour productivity based on actual person–hour inputs and (2) labour productivity based on potential person—hour inputs.

Capacity utilization

Capacity utilization is indicated by the ratio of machine–hours (i.e., spindle–hours or loom–hours) to the total stock of installed equipment (i.e., spindles or looms). In the case of spinning, the stock of equipment in the mills did not change during the period of the study. Change in the number of spindle–hours was, therefore, used to measure capacity utilization in the spinning sheds.

The situation was different in weaving: capital stock in Kiltex-Dar and Kiltex-Arusha remained constant during the 1973–1979 period, but additional looms were installed in Urafiki sheds 1 and 2. The technical characteristics of these additional looms were identical to those of the original equipment, so the number of new looms was simply added to the number of the old looms to indicate the size of the capital stock. Change in the ratio of loom–hours to looms installed was, therefore, used to measure change in capacity utilization in the weaving sheds.

Machine productivity

Machine productivity reflects the efficiency of machine operation. For spinning, it was measured as spindle productivity: the volume of output (kilograms) per spindle—hour. For weaving, it was measured as loom productivity: output (metres) per loom–hour.

Changes in output and labour productivity

Spinning

Table 1 summarizes the output change in the individual spinning sheds and in the sheds as a group over the 1973–1979 period and shows two main features of the output growth: (1) within individual sheds, growth was mixed (ranging from 2.44% annually in Urafiki shed 2 to 4.96% annually in Kiltex-Dar); and (2) the overall the rate of growth in the group was modest (0.01% annually).

Table 1. Change in output in the spinning sheds (1973–1979).

 

Output (1000 kg)

Annual change

 

1973

1979

(%)

Urafiki-1

3218.0

3 693.6

2.11

Urafiki-2

1651.0

1 933.2

2.44

Mwatex

2 891.4

2 778.7

-0.56

Kiltex-Dar

1 728.1

1 128.3

-4.96

Kiltex-Arusha

897.2

860.0

-0.59

Group

10 385.7

10 393.8

0.21

Source: The Production Statistics departments of the mills studied.

Table 2 shows (1) the level of person–hour inputs (actual and potential) in 1973 and 1979; (2) the levels of labour productivity for both years; and (3) the average annual rate of change in person–hour inputs and in labour productivity. The table shows that actual person–hour inputs for the group increased by 6.4% annually. The potential person–hour inputs increased at a faster rate during the period. The change in labour productivity (based on actual person–hour inputs) was marked — productivity fell in all the sheds by about 4–9% annually. The rate of productivity decline was higher on the basis of potential person–hour inputs.

Table 2. Change in actual and potential person–hour inputs and labour productivity in the spinning sheds (1973–1979).

 

Person–hours (thousands)

 

Productivity (kg person–hour-1)

 

 

1973

1979

Annual change (%)

1973

1979

Annual change (%)

 

Actual person–hour inputs and labour productivity

Urafiki-1

1952.1

2817.3

6.3

1.65

1.31

–3.7

Urafiki-2

930.5

1509.7

8.4

1.77

1.28

–5.3

Mwatex

1488.9

2528.4

9.2

1.94

1.10

–9.0

Kiltex-Dar

1006.9

909.7

–1.7

1.72

1.24

–5.3

Kiltex Arusha

548.9

824.4

7.0

1.63

1.04

–7.2

Group

5927.4

8589.5

6.4

1.74

1.19

–6.0

 

Potential person–hour inputs and labour productivity

Urafiki-1

2054.3

3299.3

8.2

1.70

1.12

–5.5

Urafiki-2

989.8

1728.1

9.7

1.67

1.12

–6.4

Mwatex

1628.3

2857.0

9.8

1.78

0.97

–9.6

Kiltex-Dar

1097.2

1051.9

–0.7

1.07

1.07

–6.3

Kiltex-Arusha

600.1

914.4

7.3

1.50

0.94

–7.5

Group

6369.7

9850.7

7.5

1.63

1.05

–7.1

Source: The Production Statistics departments of the mills studied.

Weaving

Table 3 summarizes the output change in the individual weaving sheds and in the sheds as a group over the 1973–1979 period. It shows that the group rate of growth of grey-cloth output was greater (i.e., 2.1% annually) than that of yarn (0.01% annually).

Table 3. Change in grey-cloth output in the weaving sheds (1973–1979).

 

Output (1000 m)

 

 

1973

1979

Annual change (%)

Urafiki-1

13 767.1

16 354.4

2.9

Urafiki-2

7 748.3

11 456.3

6.7

Kiltex-Dar

10 533.2

6 132.4

–8.6

Kiltex-Arusha

4 394.2

7 264.0

8.7

Group

36 442.8

41 207.1

2.1

Source: The Production Statistics departments of the mills.

Labour-productivity measures were based on both actual and potential person–hour inputs. Table 4 shows (1) the levels of these inputs in 1973 and 1979; (2) the levels of labour productivity in both years; and (3) the average annual rate of change in person—hour inputs and in labour productivity.

Actual person–hour inputs for the group as a whole increased at an average rate of about 9% annually. Among the individual sheds, the rates of increase varied widely. The rates of increase in person–hour inputs were roughly associated with rates of growth in grey-cloth output, but in all cases the growth in person–hour inputs was much greater. Consequently, the level of labour productivity for the individual sheds fell (albeit at different rates) during the 7 year period.

Table 4. Change in actual and potential person–hour inputs and labour productivity
in the weaving sheds (1973–1979).

 

Person–hours (thousands)

 

Productivity (m person–hour–1)

 

 

1973

1979

Annual change (%)

1973

1979

Annual change (%)

 

Actual person–hour inputs and labour productivity

Urafiki-1

6468.1

8972.3

5.6

2.13

1.13

–2.6

Urafiki-2

3 842.7

7440.2

11.6

2.02

1.54

–4.4

Kiltex-Dar

4271.8

5216.5

3.4

2.47

1.18

–11.6

Kiltex-Arusha

1844.3

6059.3

21.9

2.38

1.20

–10.8

Group

16426.9

27 688.3

9.1

2.20

1.49

–6.4

 

Potential person–hour inputs and labour productivity

Urafiki-1

6885.4

10 315.0

7.0

2.00

1.59

–3.8

Urafiki-2

4070.3

8 962.2

14.1

1.90

1.28

–6.4

Kiltex-Dar

4271.8

6082.6

4.9

2.31

1.01

–12.9

Kiltex-Arusha

1961.3

6 723.4

22.8

2.24

1.08

–11.5

Group

17474.1

32 083.2

10.7

2.09

1.28

–7.0

Source: The Production Statistics departments of the mills studied.

Changes in capacity utilization and machine efficiency

Spinning

Table 5 shows (1) the number of spindle–hours (our measure of capacity utilization) in the mills in 1973 and 1979: (2) the average annual rate of change in spindle–hours; and (3) the average annual rate of change in output for the same period, for comparison. The table shows that in all but one of the mills, spindle–hours increased during the study period; for the group as a whole, they increased by about 3% annually.

Table 5. Change in spindle–hours worked in the spinning sheds (1973–1979).

 

Spindle–hours worked (n)

Annual change in spindle–hours

Annual change in output

 

1973

1979

(%)

(%)

Urafiki-1

265.47

374.90

5.9

2.11

Urafiki-1

125.44

186.52

6.8

2.44

Mwatex

235.85

250.37

1.0

–0.56

Kiltex-Dar

140.23

115.65

–3.2

–4.96

Kiltex-Arusha

76.42

79.56

0.7

–0.59

Group

843.41

1007.00

3.0

0.01

Source: The Production Statistics departments of the mills studied.

As might be expected, differences in the rate of change in capacity utilization among individual mills were associated with differences in the rate of change in output. For the group as a whole, spindle–hours increased at a much faster rate (3.0% annually) than output (0.01% annually). Clearly, then, output per spindle–hour was not rising; in fact, it was falling (Table 6).

Table 6. Change in spindle productivity in the spinning sheds (1973–1979)

 

Productivity (kg spindle–hour–1)

 

1973

1979

Annual change (%)

Urafiki-1

0.0121

0.0098

–3.5

Urafiki-2

0.0121

0.0104

–2.5

Mwatex

0.0123

0.0111

–1.6

Kiltex-Dar

0.0123

0.0097

–3.9

Kiltex-Arusha

0.0117

0.0108

–1.4

Group

0.0123

0.0103

–2.9

Source: The Production Statistics departments of the mills studied.

Evidently, although management increased the person–hour inputs in order to expand capacity utilization, this move did not raise the productivity of the running machinery. Indeed, machine productivity was not even held constant as capacity utilization increased. Because output during the period of study was more or less constant for the group as a whole, increasing capacity utilization (expanding by about 3.0% annually) was required simply to compensate for decreasing machine efficiency (falling by about 2.9% annually).

Weaving

Table 7 shows (1) the number of hours the looms in the weaving sheds were running in 1973 and 1979; (2) the change in the ratio of loom–hours to looms installed (our measure of capacity utilization); and (3) the average annual rate of change in grey-cloth output during that period.

Table 7. Change in the ratio of loom–hours operated to number of looms installed in the loom sheds (1973–1979).

 

Loom–hours

 

 

 

 

 

Change in ratio of loom–hours to looms (%)

Annual change in grey-cloth production (%)

 

1973

1979

 

 

Urafiki-1

14 922

18 675

3.8

2.9

Urafiki-2

11 279

13 976

3.6

6.7

Kiltex-Dar

12 065

13 986

2.5

–8.6

Kiltex-Arusha

8241

26 257

21.3

8.7

Group

46 507

17 203

6.1

2.1

Source: The Production Statistics departments of the mills studied.

In all the weaving sheds, individually and taken as a group, capacity utilization increased. Differences in the rate of change among individual mills were loosely associated with differences in the rate of change in output. Although capacity utilization was rising, output per loom–hour was not; in fact, it was rapidly decreasing (Table 8).

Table 8. Change in loom–hour productivity in the weaving sheds
(1973–1979).

 

Productivity (m loom—hour–1)

 

 

1973

1979

Annual change (%)

Urafiki-1

2.05

1.38

  –6.4

Urafiki-2

2.08

1.42

  –6.2

Kiltex-Dar

2.09

1.05

–10.8

Kiltex-Arusha

2.04

1.06

–10.3

Group

2.07

1.28

  –7.7

Source: The Production Statistics departments of the mills studied.

Evidently, then, although some of the increase in capacity utilization resulted in an increase in output, a much larger proportion was simply required to offset rapidly falling loom–hour productivity.

Benchmark efficiency levels

These data provide a very clear overall picture: according to almost every indicator of production efficiency, performance was declining in most of the mill sheds during the period examined. In contrast to the mass of evidence about learning curves in industrial production and development in industrializing economies, these data, plotted against time (or cumulative total output), would show an array of “unlearning” curves. Evidently, then, this infant industry was rapidly unlearning during this 7 year period.

This path of development in one of the country’s leading manufacturing sectors should perhaps be set in context. This analysis does not cover the initial startup or running-in phase of production in the mills. By 1973, all the mills studied had been operating for at least 5 years, so the decline in productivity does not reflect a decline from design-level efficiencies that had been attained in the start-up phase.

It was possible to establish benchmark efficiency levels for the types of equipment installed in the mills. With the assistance of the staff of the Shirley Institute, based in Manchester in the United Kingdom, I estimated benchmark efficiency levels for two performance indicators (labour productivity and machine–hour productivity) as being 65% of the specified design-level efficiencies for the type of equipment used in Tanzania. The downward adjustment of 35% from the specified design-level efficiencies allows for start-up discrepancies and provides a reasonable norm for Tanzania.

Spinning

Because, in a broad sense, the technical characteristics of the spinning equipment were similar across the plants, I established identical benchmark levels for each piece of equipment:

• labour productivity = 4.55 kg person–hour-1; and

• machine productivity = 0.035 kg per spindle–hour-1.

Table 9 shows the productivity levels actually achieved in the Tanzanian spinning mills in 1973 and 1979 and compares them with the norms. In 1973, actual efficiency levels were slightly more than a third of the benchmark levels. By 1979, the process of unlearning had reduced relative efficiency in the spinning sheds to only a little more than a quarter of the estimated benchmark levels.

Table 9. Actual productivity levels achieved in the spinning sheds compared with the
benchmark productivity levels (1973–1979).

 

Actual productivity levels

 

 

 

 

 

Ratio of actual to benchmark (%)

 

Labour (kg person–hour–1)

Spindles (kg spindle–hour–1)

Labour–hour

Spindle–hour

1973

 

 

 

 

Urafiki-1

1.65

0.0121

36

35

Urafiki-2

1.77

0.0121

36

35

Mwatex

1.94

0.0123

43

35

Kiltex-Dar

1.72

0.0123

38

35

Kiltex-Arusha

1.63

0.0117

36

35

Group

1.75

0.0123

38

35

1979

 

 

 

 

Urafiki-1

1.31

0.0098

29

28

Urafiki-2

1.28

0.0104

28

30

Mwatex

1.10

0.0111

24

32

Kiltex-Dar

1.24

0.0097

27

28

Kiltex-Arusha

1.04

0.0108

23

31

Group

1.21

0.0103

27

29

Weaving

The technical characteristics of the weaving equipment varied among the mills. The benchmark efficiency levels I established, therefore, also varied. Table 10 shows the productivity levels actually achieved in the Tanzanian weaving sheds in 1973 and 1979 and compares these with the norms.

In 1973, the actual efficiency levels in the weaving sheds were about a third of the benchmark levels (with the exception of Kiltex-Dar, where it was nearly half). By 1979, the process of unlearning had reduced relative efficiency to around 25% of the estimated benchmark levels, even in the case of Kiltex-Dar, and to only about 15% in the case of Kiltex-Arusha.

In effect, then, after some 10–15 years of cumulative production experience, the mills were producing as if they were still in the start-up or running-in phase of development. Production efficiencies were still far below design-level efficiencies. The cumulative production experience had not automatically generated the efficiency improvements needed to bring performance up to even the benchmark levels. In fact, performance was moving away from, not toward, those levels.

Evidently, increasing production experience and the passage of time were associated not with improving production efficiency, but with decreasing production efficiency.

Table 10. Actual productivity levels achieved in the weaving sheds compared with the benchmark productivity levels
(1973–1979).

 

Actual productivity levels

Benchmark productivity level

Ratio of actual to benchmark (%)

 

Labour (m person–hour–1)

Looms (m loom–hour–1)

Labour (m person–hour–1)

Looms (m loom–hour–1)

Labour–hour

Loom–hour

1973

 

 

 

 

 

 

Urafiki-l

2.13

2.05

6.5

5.85

33

35

Urafiki-2

2.02

2.08

6.5

5.85

31

36

Kiltex-Dar

2.47

2.09

5.2

4.55

48

46

Kiltex-Arusha

2.38

2.04

7.8

6.50

31

31

1979

 

 

 

 

 

 

Urafiki-I

1.13

1.38

6.5

5.85

28

24

Urafiki-2

1.54

1.42

6.5

5.85

24

25

Kiltex-Dar

1.18

1.05

5.2

4.55

23

23

Kiltex-Arusha

1.20

1.06

7.8

6.50

15

16

Conclusions

This paper examined the growth experience of Tanzania’s textile industry during the period 1973–1979 and looked for evidence of productivity improvement resulting from technological change.

The main finding was that from 1973 to 1979, productivity (x efficiency) in this industry, far from improving, actually declined. Labour productivity and machine productivity, two of the performance measures used to indicate efficiency levels and trends, showed a persistent decline. Capacity utilization, on the other hand, increased in almost every mill.

This suggests a general deterioration in efficiency in use of the imported technology. Clearly, then, this industry shows no evidence of technological learning in the sense of endogenous execution and management of incremental technological changes or productivity improvement. Instead, the industry appears to have rapidly unlearned.

The above conclusions suggest that very limited assimilation, absorption, and mastery of imported technology took place in this sector of the importing economy during this period. It also suggests that there wasn’t much effort in Tanzania to build up the technological and managerial skills, expertise, and related capabilities needed to improve productivity and efficiency in the industry.

Recommendations for further research and analysis

There is little systematic research on, or analysis of, technological change and industrial development in Tanzania. This observation implies two things:

1. Our knowledge about how technological change bears on the process of industrial development of Tanzania is very limited.

2. There are few empirical data on Tanzanian realities to inform future policies, plans, strategies, and management of technological change and industrial development.

However, it is possible to recommend further research to improve the analytic and empirical bases of our understanding. Such an understanding will benefit future policy and planning.

Systematic and in-depth studies

This study, like many others on technological change and industrial development in developing countries, is a general and preliminary one. There is an urgent need to design and carry out systematic and in-depth studies focusing on specific sectors, industries, or firms. The main objective should be to uncover the evolution of technological change in these sectors, industries, and firms. Such studies are likely to be particularly useful in a developing country like Tanzania.

Studies on the determinants of technological change

Most studies on technological change and industrial development in developing countries focus on the value characteristics (e.g., quality) of products, processes, and procedures. It would be useful to think of more specific and comprehensive productivity measures that would capture both the physical and the value characteristics of products, processes, and procedures.

Comparative studies

The vast majority of studies on technological change and productivity in developing countries (such as this study) are case studies of single sectors, or even firms, drawn from single countries. Such studies are extremely useful and informative, especially in describing technological change in these sectors and firms. However, such studies often are unhelpful in explaining causality. Nor are they helpful in prediction. Carefully designed comparative studies of firms from different sectors, countries, and historical periods would help our understanding of technological change and performance growth.

Studies linking technological change and technology transfer

The rate and direction of technological change and productivity performance in a given plant or sector depend on, among other things, the characteristics of the production techniques used. The production techniques used in many plants in Tanzania and similar developing countries are not locally supplied but imported through international technology transfer. A clear understanding of technological change and productivity improvement in a particular sector, industry, or firm presupposes some knowledge of how the technology in the plants was acquired in the first place.

Studies on technological change and productivity improvement should address linkages between technology transfer and technological change. Realistically, in technologically underdeveloped economies, technology transfer and technological change form a continuum, rather than a series of discrete, unrelated processes. It is important, therefore, that studies of technological change in such countries take into account this rather obvious point.

Reference

Mlawa, H. 1983. The acquisition of technology, technological capability and technical change: A study of the textile industry in Tanzania. Science Policy Research Unit — Institute of Development Studies, University of Sussex, Sussex, UK. DPhil thesis.

CHAPTER 11
Diffusion of Precommercial Inventions from Government-Funded Research Institutions in Nigeria

Titus Adeboye

Background

Nigeria faces many problems. There is massive unemployment, partly as a result of retrenchment in government and business. The fluctuations in international oil prices mean that Nigeria has had its share of financial crises — not because of the size of its debt but because of the country’s decreasing ability to repay it. There is a crisis that results from dependence on imports and dwindling reserves of foreign currency. With the massive underuse of present production capability, the national government has been pressed to seek ways of reducing waste by cutting down on imports, putting idle resources to productive use, eliminating or reducing the serious price distortions that plague Nigeria, and, indeed, restructuring the entire economy.

The crisis that has resulted from excessive reliance on imports seems to have worsened in the last few years. Nigeria not only imports the bulk of its manufacturing machinery but also depends on imports for

• most of the agricultural raw materials for manufacturing, such as oil seeds and sugar;

• all the intermediate inputs required in industry, such as chemicals, petrochemicals, dye stuffs, soft-drink concentrates, barley malt, and citrus-fruit concentrates; and

• all the components used in the assembly plants, which have mushroomed in the country.

The foreign-exchange crisis has seriously reduced the availability of these industrial inputs. Foreign-exchange licencing and quantitative restrictions have forced many factories to shut down, and those still operating carry unacceptable levels of excess capacity (a survey shows that capacity utilization in manufacturing was only 30% in 1985). In 1980, the manufacturing sector grew by 17.6%. This was its best year of growth — it was 9.5, 2.7, and 12.3% in 1981, 1982, and 1983, respectively.

Early in 1986, the Nigerian government announced that it would phase out imports of certain industrial raw materials, on the grounds that local substitutes had been developed. Prominent among these were wheat flour and barley malt for beer brewing. Maize and rice imports were banned. All import-dependent manufacturers now have to go to new second-tier foreign-exchange markets to acquire the inputs they need. Costs will likely escalate.

Through the years, however, the federal government, some state governments, the universities, the polytechnical institutes, and even private establishments have been funding research on the country’s problems, and all have been developing technically feasible solutions. It is of great interest, therefore, to determine the extent to which the manufacturers’ problems (especially the problems with imported inputs) have been solved by these researchers and the extent to which their solutions have been adopted by the manufacturers. To what extent has this research offered better alternatives to traditional technologies?

Objective

The narrow objective of this investigation was to determine the extent to which “precommercial inventions” developed through Nigerian government-funded research have been adopted in Nigerian industry. By explaining the extent of this diffusion, we hope to reveal policy implications.

By precommercial invention, we mean a product or process that is patentable but has not yet reached that stage described in the economic literature as “innovation,” that is, the stage at which it is commercialized. Precommercial inventions have been proven feasible. Our definition of precommercial invention does not apply to minor improvements because these are usually not patentable.

The manufacturing technologies examined were developed at three Nigerian research institutes: the Federal Institute of Industrial Research at Oshodi (FIIRO), the Leather Research Institute of Nigeria (LERIN), and the Project Development Institute (PRODA).

Methods

The first step in the investigation was to examine the precommercial inventions and summarize the important ones. The study began with desk work. I examined the annual reports of the three institutes were examined, along with other published materials covering their activities, including periodicals, journals, briefs, workshop and seminar papers, technical information bulletins, and special research reports.

At this stage, I classified the inventions in two broad categories. The first category, “product invention,” included introductions of new products, radical transformations of existing local products, indigenous substitutes for imported raw materials, and new uses for otherwise unused resources. The second category, “process invention,” included new equipment and processes for performing existing manufacturing tasks and radical modifications of existing inventions.

The fieldwork consisted mainly of interviewing research personnel and the users or prospective users of the inventions. The objectives of the interviews were

• to examine the problems that the inventions solve, the cost of development, the technical problems encountered during development, the sources of solutions, the various disciplines involved, and the ways these factors have affected the rate of diffusion;

• to determine, for each invention, the years elapsed after the demonstration of its technical feasibility and the number of adoptions of the invention or the extent of diffusion, defined as growth in market share;

• to evaluate performance problems, raw-material availability, equipment, specifications, input-output efficiency, and utility-use efficiency in the experience of users and prospective users;

• to identify the bottlenecks to greater diffusion, such as product- or process-engineering, administrative, institutional, commercial, or other problems; and

• to discover policy implications for better rates of diffusion.

I measured diffusion at two stages: (1) I specified the inventions and the number of years since the demonstration of their technical feasibility. From research-institute responses, I obtained the number of businesses started on the basis of patents or agreements reached with the research institutes to use their technology. (2) Where no such business was started, I related diffusion to percentage of market share. The rate of diffusion of technology at this second stage was defined as the increase in any given product group.

As all three research institutes run programs to aid prospective commercial adopters of their technology, part of the diffusion process could be assumed to take the form of training courses. For accuracy, it is necessary to distinguish the following elements of diffusion:

• attendance at courses designed to train prospective investors or their staff in the use of the technology;

• purchase of a patent licence or process technology for commercial operation;

• purchase of equipment and other fixtures and devices, based on a research institute’s design or licence; and

• emergence of a commercial-scale operation on the basis of a research institute’s technology.

I was also interested in diffusion that occurred when research-institute personnel decided to start their own businesses using the technology they developed. This is known as technological entrepreneurship. I did not use questionnaires.

The institutes

The Federal Institute of Industrial Research at Oshodi

FIIRO was established in 1956 to conduct applied research in the area of manufacturing. At the time of this report, the institute’s staff numbered 515. Of the 515 employees, about 125 had university degrees or the equivalent. Of these, 35 had graduate degrees. The disciplines include mechanical, chemical, civil, electrical, and industrial engineering, chemistry, physics, biochemistry, biology, food technology, and systems engineering. An experienced design engineer was recently hired by the institute.

FIIRO’s functions are

• to conduct applied research on Nigerian raw materials to discover their potential industrial uses;

• to develop processes to most effectively convert these raw materials into finished products;

• to carry out pilot-scale trials of processes found to be technically feasible in the laboratory;

• to assess the feasibility of such processes on a commercial scale; and

• to develop import-substituting products and, thus, conserve foreign exchange for Nigeria.

FIIRO is the most developed of the three institutes. It has more graduate-level, more personnel research and development (R&D), a larger scope of activity, and better engineering facilities (the engineering capabilities of the three institutes are compared in Tables 1 and 2). Situated on about 5 ha of grounds at Oshodi, FIIRO has

Table 1. Metal-working facilities in FHRO, LERIN, and PRODA.

 

 

Number available

Type of machine

Function

FIIRO

LERIN

PRODA

Welding equipment

 

 

 

 

High-pressure oxy-acetylene

For welding metals and alloys

1

1

1

Electric-arc

 

1

1

Universal nibbling machine

For circular cutting, dishing, straight and rectangular cutting, round and square notching, louvre cutting, pipe beading

1

1

Hydraulic press (16 t, with bits, dies, punches, 10–20 mm)

For press-shop operations

1

Hydraulic guillotine shearing machine (3200 mm)

For shearing mild steel 13 mm thick and cutting stainless steel 9 mm thick

1

Universal punching, notching, cropping machine (18 mm shears)

For punching, notching, cropping, rod shearing

1

Plate-bending and -rolling machine

For forming drums up to 310 mm diameter

1

Mechanical press (with square die)

For producing angle iron of various sizes

11

Machine tools

 

 

 

 

Heavy-duty centre lathe

For turning, cutting, boring, milling

1

1

Medium-duty lathe

For planing

1

1

1

Precision turn and screw-cutting lather

For gear cutting, lapping, honing, etc.

1

1

1

Universal mill

1

1

Vertical type

1

1

Grinding machine

2

1

Other

For shaping, bench drilling, cylindrical boring, power hacksawing

6

2

Total

 

31

4

9

Notes: FIIRO, Federal Institute of Industrial Research at Oshodi; LERIN, Leather Research Institute of Nigeria; PRODA, Project Development Institute.

wide engineering capability, including design, detailed engineering, fabrication, installation, trouble shooting, and maintenance. FIIRO also interacts with many manufacturing subsectors through contracts for technical services, such as analysis of materials, material testing, engineering, fabrication of parts, electroplating, training, and workshop courses and patent services for Nigerian inventors.

Table 2. Foundry and other fabrication capability at FURO, LERIN, and PRODA.

 

 

Number available

 

 

FIIRO

LERIN

PRODA

Foundries

Melting 1 t iron

1

1

 

Melting 250 kg brass and other nonferrous metals

1

1

 

Lift-out type for ferrous and nonferrous metals

1

Heat treatment

Electrically heated salt bath, oil bath, air furnace

2

 

Magnetic particle tester

1

 

Hardness tester

1

Electroplating

Cadmium, copper, brighter nickel, bright chromium, and zinc plating

1

Total

 

8

2

Notes: FIIRO, Federal Institute of Industrial Research at Oshodi; LERIN, Leather Research Institute of Nigeria; PRODA, Project Development Institute.

The Leather Research Institute of Nigeria

LERIN started operations in 1964, under the United Nations Food and Agriculture Organization (FAO), at the request of the Government of Nigeria. The FAO project came to an end in June 1972. The institute then functioned as a division of the federal livestock department between 1972 and 1976. As part of the federal government’s national science policy, the Ministry of Science and Technology was created. In 1980, LERIN came under it, along with other institutes.

LERIN had a total staff of 248 at the time of our survey. Of this number, 56 had graduate qualifications in the physical sciences and leather technology. There was one mechanical engineer.

LERIN was formally established by a decree in 1973. Its main objectives are

• to collaborate with the relevant government departments and organizations to provide raw materials, labour, leather, and standardization in production;

• to conduct basic and applied research in leather science and technology for Nigerian leather industry and its allied industries so that they can maximize the quality of their domestic and export products;

• to conduct periodic market surveys at home and abroad to gain market intelligence for use by the Nigerian leather industry and its allied industries;

• to investigate vegetable tanning materials and other auxiliary chemicals indigenous to Nigeria to develop a strong base for their supply to the leather industry;

• to build up a national information system on leather science and technology; and

• to develop into a full-fledged regional centre for leather and leather products.

LERIN is organized around five divisions: administration, research and extension, training, production, and maintenance. It has 14 research programs: hides and skins improvement; collagen; tanning agents and mechanisms of tannage; leather auxiliary; tanning and finishing; foot wear and leather goods; quality control and standardization; leather trades engineering; slaughterhouse and tannery by-products; control and treatment of effluent; economics and marketing; technical training; research extension; and library, publications, and documentation.

LERIN has the weakest engineering base of the three institutes. Maintenance is constrained by lack of spare parts, and, at the time of our study, its few machine tools were unserviceable.

The Project Development Institute

PRODA is an industrial R&D organization established by the now defunct East-Central state government. It was taken over by the central government in 1976, and it came under the federal Ministry of Science and Technology in 1980. At the time of the study, PRODA employed 535 people. About 180 were graduates, PRODA was then developing its new 55 ha site at Enugu; several laboratories at the staff quarters were already built.

PRODA’s main aim is to develop industrial projects using local raw materials and indigenous human resources, through laboratory and pilot-plant investigations. Its range of activities includes

• chemical and physical analyses of products, chemicals, drugs, and industrial raw materials;

• the manufacture of scientific equipment for educational and industrial establishments;

• geological investigations, including soil testing for engineering purposes, drilling for mineral deposits, water-well drilling, and hydrological investigations;

• ceramic research, including research on white ware (pottery), heavy clays, refractories, and physical and chemical characteristics of clays and raw materials for ceramics;

• engineering design, fabrication of miscellaneous machine parts, production of castings in aluminum and brass, and preinvestment surveys; and

• investigations of raw materials for pulp and paper.

I first examined the broad range of inventions developed at the three institutes and categorized them as product inventions or process inventions.

Table 3 shows that 21 of the 25 inventions from FIIRO were product inventions, whereas only 4 were process inventions. FIIRO, however, sees all inventions as products. On the other hand, all the inventions from LERIN were process inventions, which is how LERIN also sees them. Of PRODA’s 30 inventions, 8 were product inventions and 22 were process inventions. It is clear that the bulk of the inventions were agricultural. Both FIIRO and PRODA have done extensive R&D on cassava, which provides derivative staple foods. Five product and two process inventions from FIIRO were developed from cassava, as were seven of PRODA’s process inventions.

Measure of diffusion

To determine the diffusion of these inventions, I counted the number of users of each invention. Two types of diffusion must be distinguished. The first type relates to the outright purchase of the R&D institute’s invention as a final product. The second type is the starting of production facilities on the basis of an institute’s invention.

Only 7 of the 25 inventions from FIIRO (mechanized gari-making, portable alcohol, bottled palm wine, Nico cream, smoke curing of fish, sparkling wine, and soap making) have been diffused to outside manufacturers and, therefore, qualify as innovations. Soy-ogi, perhaps one of the oldest of FIIRO’s inventions, has not been successfully commercialized by any outside group, FIIRO is discussing commercialization of this product with two large multinational companies. The first three inventions in Table 4, soy-ogi, gari flour, and fufu, are currently produced by FIIRO, itself, in pilot plants. They are, however, products that have been commercialized by the institute. The institute also produces and sells gari on a limited scale at its pilot plants.

The two most widely diffused inventions from FIIRO are palm-wine bottling and soap making, with 40 and 60 commercial clients, respectively. Calculations show that only these two inventions have significant shares of the market. FIIRO-technology users have the entire bottled palm-wine market in Nigeria. Despite the large numbers of users of FIIRO technology in soap making, their share of the laundry and bath-soap markets at the time of this report was about 5%.

Five of the 30 PRODA inventions have been diffused and, therefore, qualify as innovations. The most important of these relate to gari making. The laboratory equipment factory, set up at Enugu, was responsible for more than 40% of all science equipment distributed to schools by the federal government in 1986. Traffic lights are still produced by PRODA, but no factory has been started. The PRODA inventions were diffused by the direct sale of equipment and machinery.

To date, not too many patent licences have been taken out for the use of technologies developed by PRODA. Nonetheless, several licencing agreements have in fact been concluded, although the technologies have not yet been put into operation. Table 5 shows the licencing agreements made for FIIRO technologies.

However, despite these agreements and the extent of the diffusion that has already taken place, we have to conclude that most of the inventions from the research institutes remain unused. In particular, those that appear to address the important problem of dependence do not appear to have been diffused (Table 6).

Because of the ban on imported wheat and the proposal to phase out barley malt imports, one is surprised to find that neither sorghum malt nor the composite flour products have been adopted by the industries most affected. The importance of these questions is further underlined by Nigeria’s import dependence (Table 7). Why were these inventions, which seem to directly address the country’s import-dependence problem, not diffused?

Several studies on diffusion of new technologies have uncovered factors in diffusion. Where innovation was a direct response to an expressed need, especially a need expressed by the ultimate user of the product or process, diffusion is swift (Schmookler 1966). When R&D is contracted in response to a user’s request, it is more likely to be diffused than inventions produced independently of an identified user (Freeman 1974). Inventions that demonstrate a clear advantage over existing alternatives are diffused more easily than those with no clear advantage (Rogers 1971). Usually the advantage results in higher profitability for a better product. Where

Table 3. Precommercial inventions in three Nigerian research institutes (1971–1986).

Institute

Product inventions

Process inventions

FIIRO

Cassava flour

Cassava peeling and grating

 

Cassava starch

Detoxified cassava

 

Gums, glues, adhesives from cassava starch

Gari-making machinery

 

Gari and gari flour

Gluco

 

Fufu

 

 

Maize flour

 

 

Soy-ogi baby food

 

 

Composite flour

 

 

Sorghum flour

 

 

Femos beer

 

 

Potable alcohol

 

 

Bottled palm wine

 

 

Pitto (local beer)

 

 

Table vinegar

 

 

Tomato puree, ketchup, powder

 

 

Peanut butter

 

 

Salad cream and mayonnaise

 

 

Full-fat soy grits and oil

 

 

Nico skin cream

 

 

Laundry soap and bath soap

 

 

Smoked fish

 

LERIN

 

 

 

Tanning agent from Acacia nilotica (bagaruwa) pods

 

 

Tanning agent from Anogeissus schimperii (marker) leaves

 

 

Tanning agent from Partkia clappertoniana (dorowa) husks

 

 

Local lime upgrading for modern tanning

 

 

Local fat liquors for leather

 

 

Dehairing and bating agents from Adenopus breviflorus (tagiri)

PRODA

Laboratory equipment, wood-work products, glass products, thermometers

Cassava peeling machine

 

Steam cooker

Cassava grating machine

 

Air blower

Pulp-dewatering screw press

 

Traffic lights

Depulping machine

 

Multipurpose grinder

Gari-frying machine

 

Foundry products (bearing bars, bearing housing, water valves, pulleys, metal ingots)

Gari-screening machine (rotary or shaker)

 

Refractory bricks

Gari cyclone unit

 

Industrial adhesive

Seed planter

 

 

Maize shelter

 

 

Palm-oil mill (with bunch stripper, palm-fruit cooker, digester, etc.)

 

 

Kero-oil press

 

 

Shelf dryer

 

 

Solar dryer

 

 

Solar hothouse

 

 

Industrial blender

 

 

Low-cost oven

 

 

Bread oven

 

 

Ceramic pottery equipment (blunger, vibrating

 

 

sieve, spray booth, potter’s wheel)

 

 

Alcohol-distilling plant

 

 

Water-distilling plant

 

 

Industrial washing machine

 

 

Sorghum malt

Notes: FIIRO, Federal Institute of Industrial Research at Oshodi; LERIN, Leather Research Institute of Nigeria; PRODA, Project Development Institute.

prospective commercial clients perceive the effects of an invention as positive, they are more likely to adopt it (Agarwala 1972). The lower the risk involved in the new technology, the higher the chances of diffusion: inventions involving risk, real or perceived, tend not to be diffused. On the other hand, the inventions that cater to existing values, needs, or habits tend to be diffused more widely. Finally, the type of innovation decision affects the rate of diffusion.

Table 4. Diffusion of inventions from three Nigerian research institutes.

Institute

Invention

Number of users

FIIRO

Soy-ogi baby food

1

 

Mechanized gari flour production

I

 

Mechanized fufu production

1

 

Mechanized gari production

6

 

Potable-alcohol production

4

 

Palm-wine bottling

40

 

Smoke curing of fish using FIIRO kiln

1

 

Nico cream production

2

 

Sparkling-wine production

1

 

Soap making

60

PRODA

Automated gari-processing factory

4

 

Village gari unit

2

 

Moi moi factory

1

 

Laundry and washing machine

2

 

Traffic lights

2

 

Laboratory equipment factory

1

LERIN

Nil

Notes: FIIRO, Federal Institute of Industrial Research at Oshodi; LERIN, Leather Research Institute of Nigeria; PRODA, Project Development Institute.

Table 5. Patent agreements based on FIIRO technology.

Invention

Patent fee (NGN)

Royalty due (% of sales)

Agreements a (n)

Nico skin cream

  15 000

2

1

Soy-ogi baby food

  30 000

2

1

Femosbeer

100 000

2

1

Ginger powder, oleoresin, and concentrates

 89 625

2

1

Tomato puree, ketchup, and powder

  1 500

1

Refined kaolin and gypsum

  7 500

2

1

Notes: FIIRO, Federal Institute of Industrial Research at Oshodi. In 1995, 78.5 Nigerian naira (NGN) = 1 United States dollar (USD).

a In negotiation.

Table 6. Inventions relevant to import dependence.

Invention

Import

Industry affected

Sorghum malt

Barley malt

Beer (38 brewers)

Composite flour

Wheat flour

Baking (15 large users)

Soy-ogi baby food

Weaning baby foods

Food industry

Ginger powder, oleoresin, concentrates

Soft-drink concentrates

Soft drinks (41 bottlers)

Table 7. Imports by major sectors, Nigeria.

 

Imports (million NGN)

 

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

Food and live animals

155

298

441

736

1021

767

1438

2 115

1 756

1 341

152

Beverages and tobacco

9

48

64

133

71

50

12

17

11

9

7

Crude materials

64

74

79

79

108

112

157

202

172

168

144

Mineral fuels

55

100

175

129

175

207

155

176

151

132

111

Oils and fats

4

9

25

47

73

52

115

123

129

97

85

Chemicals

191

333

397

498

648

540

914

1 256

1013

963

852

Manufactured goods

523

1 008

1 136

1 565

1 850

1 524

1 982

2 641

2 165

1 928

I 242

Machinery and transportation equipment

612

1 562

2 445

3 387

3 588

3 792

3 650

5 407

4 653

3 666

3 257

Miscellaneous manufactured articles

114

278

372

510

665

415

645

953

711

582

418

Miscellaneous

11

12

15

9

14

14

29

29

11

18

11

Total

1 737

3 722

5 149

7 094

8212

7 473

9 096

12919

10771

8 904

7 178

Notes: 1982 figures revised; 1983 and 1984 figures estimated. In 1995, 78.5 Nigerian naira (NGN) = 1 United States dollar (USD).

The question of what conditions led to diffusion of the inventions of the three Nigerian research institutes was approached first from the point of view of the researchers and then from the point of view of the users.

Respondents at the research institutes felt that the successful diffusion of palm wine and soap was due to the client’s perception that these products were highly profitability and the fact that the institute was prepared to train entrepreneurs and supply the equipment and technology required to operate the new business. Moreover, fees were required, and the initial equipment costs were low, about 32 000 NGN (in 1995, 78.5 Nigerian naira [NGN] = 1 United States dollar [USD]) for soap and 30 000 NGN for palm wine.

Ten soap makers and eight palm-wine bottlers were interviewed, as well as five mechanized gari manufacturers. The most frequently given reasons for adoption of the institutes’ technologies were their relative technical advantage, the low investment risk, and the absence of technical problems. Respondents said that their training made them very conversant with the technology involved in palm wine and soap; the only problem was the availability of raw materials. Low investment cost was also underscored by the recipients. The responses are summarized in Table 8.

Table 8. Critical factors leading to diffusion of research institute inventions.

Factor

FIIRO innovation

PRODA innovation

Demand pull

Nico cream

Laboratory equipment

Relative advantage (technology push)

Mechanized gari (3)
Sparkling wine (1)

Automated gari process Village gari unit (1)

Perceived advantage

Palm-wine bottling (8)
Soap making (6)

Washing machine (2)

Low risk (technical or economic)

Palm-wine bottling (10)
Soap making (8)
Potable alcohol (2)

 

Compatibility with existing habits, methods

Smoke curing of fish (1)

 

Notes: FIIRO, Federal Institute of Industrial Research at Oshodi; PRODA, Project Development Institute. Figures in parentheses represent number of respondents who gave the factor as the reason for adoption.

Explanation for nondiffusion

To explain the nondiffusion of the bulk of FIIRO’s inventions, particularly those that would help the import-dependence problem, I will discuss the inventions in greater detail, particularly those most important for saving foreign exchange.

Sorghum malt and beer brewing — FIIRO

Traditionally, malt has been obtained from barley. The malt is produced by steeping the grain in water, allowing it to germinate, drying it in kilns, and grinding it into flour. Lager beers are normally brewed from barley malt. Nigeria was spending more than 140 million NGN on imports of barley malt, annually. But foreign-exchange constraints were putting pressure on barley imports. After several years of research, FIIRO developed malt from a variety of sorghum, which is a staple food in the whole of northern Nigeria and is widely grown. Short kaura sorghum was found to have very good malting qualities. Although the development of sorghum malt was started in the early 1970s, it was only after the Brewing Industry Research Foundation, Nutfield, made malting and brewing equipment available to FIIRO in 1976 that the work made progress. Seven sorghum cultivars were malted, and the malts were combined to create one portion of sorghum–barley composite malt (i.e., at a ratio of 1:1) for the first trial production of the seven cultivars: YG5760, L-1412, FDI, FFBL, MDW, RZI, and SK5912. The malt worts and the beers were fully analyzed (Table 9). The lager beer was acceptable and had a shelf life of 26 weeks. Short kaura sorghum (SK5912) was chosen as a result of these tests. In 1984, commercial-scale brewing was done by a major brewer, who used SK5912 sorghum malt at two replacement levels: 25 and 50%. The two products were branded Femos Special and Femos Extra.

Table 9. Analysis of PRODA and FIIRO beers.

 

 

FHRO beers

 

PRODA Dawa

Femos Extra

Femos Special

Colour at 430 mm (SRM)

3.30

5.00

10.25

Specific gravity (20°C)

1.01608

1.00351

1.00034

Apparent extract (%)

3.10

0.90

1.25

Real extract (%)

5.80

2.79

3.33

Alcohol (wt.%)

3.10

4.11

4.40

Alcohol (vol.%)

4.70

5.16

NA

Extract of original wort (° plateau)

13.00

10.81

11.86

Real degree of fermentation (%)

55.50

74.00

71.92

Apparent degree of fermentation (%)

76.40

92.00

89.46

Total acidity (%)

0.44

NA

NA

pH

5.00

3.75

4.40

Notes: FIIRO, Federal Institute of Industrial Research at Oshodi; PRODA, Project Development Institute. SRM, standard reference material.

Eventually, higher sorghum-substitution levels of 60, 70, and 100% were achieved in FIIRO laboratories. For 100% sorghum malt, the false-bottom filtration system, with a press filter, was the only modification to the process equipment required.

After the initial success with both brands of Femos beer, the products were market tested in 1984. The criteria were taste, flavour, aroma, after-palate strength, aftereffect, clearness, and foaminess. The markets were Lagos, Jos, Makurdi, Port Harcourt, Aba, and Benin, the main beer-consuming centres of the country.

The pilot report was not accepted by the brewers, who argued that sorghum was different from barley malt in chemistry, taste, stability, and fat, tannin, and nitrogen contents. Only one major brewer showed any serious interest in sorghum or composite malt, even after acceptance tests for Femos had showed some of these arguments to be unfounded.

Interviews with personnel from the two leading beer brewers, Nigerian Breweries Ltd and Guinness Nigeria Ltd, revealed that their most serious reason for resisting sorghum malt was that any beer not made from barley malt cannot, technically speaking, be called a lager. They also asserted that sorghum malt does not contain husks, and, therefore, the enzymes required in the brewing process have to be sought separately. Also, the brewers resist making any major investment on the basis of laboratory results not replicated by commercial-scale production. Lastly, the brewers see sorghum malting as an innovation still in its infancy, requiring several years of genetic engineering to replace barley as a malting medium.

From the point of view of the researchers at FIIRO, the real reason for industry resistance is the commitment of the different brewers to brewing specific brands of lager in the Nigerian market. In their view, an outright ban on the import of barley malt would force brewers to use local resources.

The brewers’ perception of sorghum malt is different from that of the researchers. The brewers see it as experimental, with many problems still unsolved, such as those concerning cultivars, chemistry, requisite changes in equipment and tooling, and market testing of 100% sorghum malt beers and the effects of these on branding. Unlike the other diffused inventions, sorghum malt is not perceived as having passed through all the stages of development, from demonstration of technical feasibility to full commercialization, but a ban on barley malt imports would certainly hasten the process. It will not obviate the necessity for further work, as brewers still have the final consumer to deal with.

Composite flour — FIIRO

FIIRO introduced composite flour in response to the high demand for wheat flour in Nigeria and the country’s inability to produce more than 5% of the requirements of the many large flour mills in the country. Composite flour is the name given to wheat flour that is diluted with other types of flour, such as those made from cassava, maize, and sorghum, which are more readily available in the country. Breads and confectionery are usually made from wheat flour, as wheat contains gluten, a good source of protein. The challenge in replacing wheat is finding a suitable substitute for the gluten.

After several experiments in which wheat flour was diluted with flours from maize, sorghum, and cassava, several baking tests and consumer-acceptance surveys were carried out. It was found that the composite flour most suitable for straight dough was 20% cassava starch, 5% soybean flour, and 75% wheat flour. For mechanical dough, the respective proportions were 25, 5 and 70%. Thus, the amount of wheat was still substantial, and the saving in foreign exchange was less than 25%.

Unfortunately, bakers have resisted the composite flour because it involves a major change in their baking habits. The majority of Nigerian bakers do not use the mechanized dough process. Composite flour, being weaker than wheat flour, is more susceptible to gluten damage with the process that most Nigerian bakers use. This risk probably explains the nondiffusion of this innovation.

The total elimination of wheat was recently achieved in laboratory trials for composite flour, but the new product is still experimental.

Certain conclusions can be drawn from the composite-flour project. The invention requires a major change in the baking habits of bakers and involves a high risk of loss. It is not surprising that this invention has remained largely undiffused. In the 0% wheat form, it is an invention with too many unresolved problems. It requires a change of taste by the consumer. As long as pure wheat flour is available, this invention is unlikely to be diffused, as no price advantage seems to accompany its use.

Soy-ogi— FIIRO

Soy-ogi was developed in response to the problems of low-income Nigerians feeding their infants on pap, a corn meal that is high in starch and low in protein. This has resulted in a high incidence of kwashiorkor, a disease that retards the mental and physical growth of children. On the other hand, the enriched, imported baby foods that are high in protein are not affordable to the poor. The FIIRO price for soy-ogi is about 60% of that of imported equivalents.

Soy-ogi was developed to be both affordable and high in protein, minerals, and vitamins. It is made from corn, soy beans, vitamins, and essential minerals. It was first introduced and test marketed in 1972–1973. Production has continued at FIIRO’s pilot plant. Unfortunately, none of the big baby-food manufacturers in Nigeria has been licenced to produce it. Currently, discussions are on with Nestlé and Food Specialties to commercialize the product.

The nondiffusion of soy-ogi seems to be due to the initial problem encountered with toxicity after it was introduced. It had to be withdrawn from the market. This technical problem has since been resolved, but consumer resistance remains, likely because of the availability of inexpensive imported baby foods of known brands, marketed by highly efficient multinational companies.

Despite soy-ogi’s low cost and high nutritional value, it has remained largely a pilot project, produced and marketed by FIIRO.

Ginger powder, oleoresin, and concentrates — FURO

At the time this paper was written, there were 41 soft-drink-bottling factories operating in Nigeria, all using imported soft-drink concentrates. Although only five of these bottlers make ginger-based soft drinks, the market potential for this invention has been estimated at about 8 million NGN.

Ginger in its raw form has a taste and aroma that are appealing, but the ginger has to be processed to be edible. The purpose of processing ginger is, therefore, to extract its desirable properties and store these in concentrated form — as powder, oleoresin, or concentrates — to be reconstituted later. FIIRO has invented a process to do this.

The various extracts are obtained through cleaning, drying, milling, and extraction. Products that can be made from ginger include ginger ale, and ginger beer. However, all the concentrates used in the Nigerian industry are at present imported, despite Nigeria’s being a leading and preferred producer of raw ginger and despite the FIIRO invention.

As well as having invented the product, FIIRO can fabricate most of the equipment for processing ginger-washing troughs, picking tables, and cold extractors. Mitchell-type trays, air dryers, apex hammer milling machines, and solvent strippers have to be imported.

I asked soft-drink bottlers why they had not adopted the FIIRO invention. They gave two main reasons. First, ginger drinks represent only about 5% of the soft-drink market, and many bottlers do not make them; those who do, produce them under licence. Second, they view the FIIRO invention with caution.

Perhaps the technical barrier to diffusion is that the bottlers would have to make new investments because their facilities are geared to production from concentrates. The most promising avenue of diffusion might be to erect legal barriers to the import of ginger in any form.

Tanning agents — LERIN

LERIN showed that Acacia nilotica (bagaruwa) pods make a technically feasible tanning agent. Trials yielded the following results: tannins, 60–65%; nontannins, 25–30%; moisture, 7–8%; insoluble matter, 2–3%; and Ph, 4.4. The institute’s researchers were able to set up improved conditions for leaching and filtration and improved retention of active ingredients during storage.

Preliminary assessments showed that a commercial plant for producing tanning extracts would be crucial for the successful commercialization of this product. Another prerequisite would be the availability of A. nilotica pods on a commercial scale. At present, they grow as wild plants, and for commercialization, it would be necessary to develop plantations. In other words, the project is still far from the commercialization stage.

The initial assumption was that the pod was widely available throughout northern Nigeria and that it was a wasted resource. However, even for the quantities required for a pilot plant, getting a regular supply would be a problem. Our initial inquiries showed that bagaruwa pods were sold commercially but not in quantities that could be relied on by a commercial producer of extracts. Availability is also seasonal. So far, two plantations have been developed, in Kaduna and Niger. However, they are not yet ready for harvesting. Storage is not a serious problem after the pods are dried in the sun or otherwise dehydrated.

Methods of producing extracts from the tannin have been developed on a pilot scale, but commercial-scale equipment for large-scale production could not be developed locally. A European firm is currently developing this equipment.

If extracts could be commercialized, then as much as 5 million NGN could be saved in foreign exchange, as a result of replacing imported tannins. The conclusion that seems clear is that critical conditions for commercialization of the A. nilotica invention are largely unmet.

Anogeissus schimperii (marker) leaves and Parkia clappertoniana (dorowa) husks are also feasible sources of tanning agents. The constraints to commercialization are LERIN’S lack of design and fabrication capabilities for this. It is crucial to produce the tannins in extract form, rather than using the vegetables directly.

Research at LERIN on fat liquors for leather has concentrated on edible oils. Products from these edible oils are technically acceptable but uneconomic because of competition with human consumption. Groundnut oil was developed first but proved too expensive. Oil from the rubber tree has also been developed for use as a fat liquor in the tanning process. It is promising because it is not edible, but it has not been commercialized. Also, the mangrove tree has been shown to produce fat-liquor oil. It is a scientific success as a substitute for edible oils, but this development has also not been commercialized.

Work on a bating agent, Adenopus breviflorus (tagiri), is in a similar state. R&D is virtually complete, and industrial trials have been done.

Sorghum malt and beer brewing — PRODA

The PRODA sorghum malt project was undertaken in the 1970s, at about the same time as the FIIRO efforts. Sorghum grain was steeped, drained, and malted. A three-stage decoction mashing method was used. Gelatinized maize starch and sucrose were used as adjuncts. Bottom-fermenting yeast (Saccharomyces uvarum) was used for fermentation, and the beer was decanted and lagered.

The malt obtained from initial experimental work gave these results: moisture, 5%; cold-water extract, 5.2%; hot-water extract, 22.8%; protein, 10.85%; nitrogen, 1.74%; extract (as is), 25.88%; extract (dry basis), 30.3%; apparent extract (° plateau), 4.65; diastasic power (° L), 10. The experimental beer was analyzed, as indicated in Table 9.

The PRODA beer was made from 100% sorghum and was branded Dawa. The construction of a small pilot plant to brew 1000 bottles of Dawa a day for taste tests was started in 1983 and completed in 1986. Also, a pilot malting plant, capable of malting 700 kg of sorghum grain, was built to carry out pilot malting for Premier Brewery Ltd. However, the project has remained essentially experimental. Interviews revealed the same kind of industry resistance that the FIIRO beer project faced.

Alcohol distilling — PRODA

Because of Nigeria’s substantial expenditure on imports of industrial ethanol and potable alcohol, PRODA developed an alcohol-distilling plant that could convert fermented raffia sap to ethanol; extract ethanol from molasses; and purify the local gin, ogogoro, into potable alcohol by reducing to a minimum the methanol, fusel oil, and aldehydes in it. The plant comprised rectifying towers, a deodorizing tower, boilers, a centrifugal pump, process-control facilities, etc. PRODA is able to deliver this plant in three sizes: 180 L day-1 capacity (price, 40 000 NGN); 500 L day-1 capacity (price, 72475 NGN); and 1000 L day-1 capacity (price, 90 000 NGN). Despite excellent test results, however, there have not been any orders for the plants. The PRODA plant is technologically superior to the local distillers’ facilities, so it is surprising that it was not adopted.

The noncommercialization of this invention seems to be due to the relatively low cost of the traditional process and unawareness of the superiority of the PRODA process. One PRODA researcher also suggested that many traditional distillers distil very cheaply because they do not pay the high excise tariffs that they would have to pay if they adopted the large-scale, more efficient PRODA machinery. This was not verified for this study, as I did not interview the traditional distillers.

Palm-nut processing — PRODA

At the time of our investigations, Nigeria’s oil-palm resources were estimated at 4 ξ 106 ha of scattered plantations and wild growth. Before the discovery of oil in commercial quantities in Nigeria, palm produce was the third major source of export earnings, after groundnut and cocoa. All the exported palm and kernel oils were extracted by traditional hand-operated mills, until the Dutch-designed Pioneer oil mills were imported in the 1950s. But these were found unsuitable by the small, peasant farmers, who formed the bulk of the oil processors. The mills broke down frequently, were plagued with lack of spare parts, and were inefficient and inappropriate for producing oil from the newer, high-yielding oil-palm varieties introduced to the plantations.

PRODA palm-oil mills were developed to replace the Pioneer oil mills in the rural communities. The PRODA mills comprised a bunch stripper, which spikes out the nuts from bunches; a palm-fruit cooker, capable of holding as much as 200 kg of loose palm nuts; a digester, which is a cylindrical container with a rotating shaft that mashes the oil pericarp; an oil press to extract the oil; a kernel-nut cracker, which cracks the dried palm kernels; and a screen.

If this invention were diffused, it could save Nigeria about 10 million NGN annually in imported machinery. It seems that the invention was not commercialized for many reasons. PRODA did not have the resources to fabricate the various components of the mill; it had the specifications only for the components and the prototypes. The only unit available for sale was the kernel-nut cracker. The large plantations seem to prefer imported machinery, and the peasants continue to use traditional methods.

Bread oven — PRODA

There were more than 10 000 bakeries in Nigeria in 1984. Most were using either mud ovens or imported gas or electric ovens. The small-scale bakeries relied predominantly on imported ovens. The PRODA researchers set out to design an inexpensive oven with even heat distribution and efficient heat use. They built and tested prototypes. The present oven has four decks; each deck measures 2.1 m × 1.22 m × 0.23 m and has its own inlet pipe from the heating unit. The heat is supplied to the oven by a 320 000 Btu h-1 oil burner (1 British thermal unit [BTU] = 1.05 kJ). The oven bakes bread evenly, without burning. It takes about 20 min to bake 300 loaves, 450 g each, PRODA saw its bread-oven invention as a welcome relief for bakers, as it was inexpensive and efficient and made from local raw materials.

The bread oven is said to be in commercial use in many parts of Nigeria. However, I was not able to visit any of the bakers who have purchased the ovens from PRODA. The invention was not yet commercialized in the sense of being produced by an established, commercial-scale factory; this was for technical and financial reasons.

Noncommercialization: A summary

This paper has just discussed some key inventions that were not commercialized, so it seems useful at this point to summarize the reasons for the noncommercialization of these inventions.

The process of technological innovation has the following stages:

1. Idea generation

2. Recognition of a need that requires a technical solution

3. Research leading to invention or demonstration of technical feasibility

4. Development of a product or process: raw materials; a prototype; design, fabrication, and erection of equipment; product or process debugging and modification; test marketing; and product or process promotion

5. Commercialization: design, fabrication, erection, installation, commissioning, and operation of a commercial-scale plant

The conditions for success are different for each of these stages. The competence required at each stage is also different. The least expensive of the stages is idea generation. Costs escalate as one moves along to later stages. The literature on innovation is replete with evidence that the first three stages are the cheapest and represent only a small fraction of the total cost. Usually, the last two stages — product development and commercialization — represent 60–90% of the total cost of innovation. All the stages are required.

However, very few organizations have the capacity to provide all the ingredients of innovation in-house. For instance, the largest and most versatile R&D organization in the world is Bell Laboratories in the United States, and some of the greatest technological breakthroughs came from it. But most of the development work and the eventual commercialization were done by outside firms, and some of these came into being merely to exploit the inventions.

Only a small fraction of inventions end up as successfully commercialized innovations. Several studies show that the proportion is between 5 and 25%. The pruning usually takes place in the development stage.

We reviewed a total of 61 inventions from the three institutes (see Table 3). Of these, 13 were commercialized, meaning that new production facilities were started on the basis of these innovations. This is 21% of the total number of inventions. This is consistent with previous findings.

Furthermore, we have seen that the best equipped of the three institutes also had the highest frequency of diffusion of its innovations. However, even FIIRO, with its extensive design and fabrication capabilities, was ill-equipped to bring all of its inventions to the commercialization stage. In fact, evidence shows that to do that would be inefficient and probably a misallocation of resources. Most inventions do not survive the development process, and this is borne out by the cases discussed in this research. The development problems ranged from perceived technical risk to market resistance, along with the sheer absence of development capability.

Also, commercialization was closely linked to the process of selection of research programs. R&D programs are based on the broad mandates tied to the legal instruments used to establish the research institutes. Within these mandates, individuals seem to concentrate their research according to their personal interests. There seems a complete absence of government R&D contracts like those that stimulated Bell Laboratories. It seems that each of the three institutes conducted R&D according to what it perceived was needed, and this probably explains the duplication of projects in the two most developed institutes (for instance, the gari innovations at both FIIRO and PRODA). Chances are that if more R&D programs with clear mandates and budgets were given to the institutes, better coupling would be achieved.

Finally, all three institutes seemed to be starved of the funds to keep even present programs alive. The best-funded programs apparently had enough money to pay salaries and purchase some basic consumables, according to the interviews I held with the researchers; however, the issue should be investigated more concretely.

Policy implications

The policy implications that come out of this research must be qualified. First, the study did not concentrate on the dynamics of the innovation process. It would have been enriched had I observed the various stages of the innovation process at each of the institutes, including the generation of innovative ideas; the collaboration of research teams to solve particular problems; the various constraints and hurdles; the various actors in the process; and the rivalries, intrigues, and infighting that often characterize R&D organizations. Second, for this research I made no attempt to assess the cost of each invention and the cost of running each of the institutes. I collected data only on budget and plan allocations, which may have little bearing on the actual expenditures. I therefore avoided assessing the direct or indirect benefits of their activities. These were not the aims of the research, but data on these could have enriched the study.

The policy implications of this study are the following:

1. Government-funded research should be drastically rationalized. The research programs at the institutes need to be evaluated to achieve the following ends:

• eliminating duplication, by merging similar programs and assigning each duplicated program to a single institute (this may require some exchange or transfer of personnel in the case of important programs);

• pooling the institutes’ meagre resources, which are fragmented by duplicated projects (funds come from the Ministry of Science and Technology; therefore, it should be easy to effect this pooling with minimum disruption);

• discontinuing projects and programs when other institutions have similar inventions (examples of these are the ceramic projects at FIIRO and the sorghum-malt project at PRODA); and

• cancelling programs and projects that are carried forward from year to year without adequate resources, unless these programs and projects are seen to be related to national needs.

2. The government should not fund R&D activities until it identifies specific social, economic, technical, and other kinds of problems that need R&D solutions. The next step should be to develop research programs with specific objectives and, after dialogue with R&D institutes, to evolve means for achieving the desired results. Funds should then be tied to specific research programs. R&D institutes should be made to sink or swim on the basis of the number of feasible need-oriented research programs they can attract and what they can do with the programs. This means putting an end to blanket funding for institutes.

3. The R&D personnel be rewarded on the basis of the ultimate utility of the solutions they devise, rather than for their inventiveness or the number of feasible technical solutions they can devise for problems.

4. The government and the institutes should stop trying to commercialize inventions in-house; they dissipate their meagre resources when they set themselves up as manufacturing outfits, trying to market their inventions. The best of these institutes lacks the range of capabilities needed for successful marketing. However, the Nigerian entrepreneur will require substantial technical input from the R&D institutes to commercialize the inventions. The commercialization role of R&D institutes should be limited to the following:

• running training programs for entrepreneurs wishing to commercialize the institute’s inventions (FIIRO already runs several courses, such as those on soap making, gum-arabic production, palm-wine bottling, potable-alcohol distilling, and peanut-butter making);

• acting as technical consultants, paid by entrepreneurs to provide detailed designs, specifications manuals, and other technical services;

• encouraging their inventive personnel to branch out on their own and develop their own production facilities; and

• solving (for fees) the various developmental problems encountered in commercialization.

5. The R&D institutes should use restraint in presenting their inventions to the public and policy-makers; they can otherwise give the misleading impression that the demonstration of technical feasibility in itself constitutes a sufficient condition for commercialization. Nondiffusion tends to be seen, then, as deliberate resistance to the use of the invention, rather than a result of attempting to make commercialization precede development. When inventions are mistaken for innovations, the required investment in further development is not made, and commercialization is further delayed.

6. The climate for the commercialization of inventions in Nigeria should be substantially improved to achieve better diffusion. For this, several steps need to be taken:

• The need to commercialize the inventions has to be created in, or forced on, the nation, which is a fact borne out by the rushed introduction of many brands of sorghum beer soon after the government announced that barley-malt imports would be banned. Once a need of this kind has been forced on the nation, the need must be sustained for a long time for it to be worthwhile for investors to commit resources.

• Government policies that deter self-reliance must be scrapped to bring about the commercialization of useful inventions. These policies include the liberalization of imports; the blanket interest rates for all classes of investment; indiscriminate withdrawal of subsidies for agricultural inputs, which may badly affect local raw materials; and the deregulation of interest rates. The deregulation of interest rates penalizes delayed returns, and, because R&D projects involve various delays, they are the hardest hit by interest-rate deregulation.

7. A specialized institution should be developed to provide nursery beds for R&D institutes’ inventions. This institution should be funded and made independent to enable it to

• collect as many promising inventions as possible;

• evaluate each of them and determine the ones with sufficient promise;

• select and fund the development of promising inventions;

• send the successfully developed and commercially feasible designs to willing entrepreneurs (the new entrepreneurship-development program of the federal Ministry of Labour should be tied to these activities); and

• underwrite the losses from developed inventions that prove commercially unfeasible.

8. The R&D institutes should be allowed to sell their services to the private sector and thus become more relevant to the needs of the country. The institutes should be allowed to compete for research projects initiated in the private sector. For this to be effective, the government needs to provide the private sector with an incentive to use R&D services. A climate of liberal imports does not provide this incentive. The incentive should take the form of special tax rebates or outright matching of funds for private-sector users of indigenous R&D institutes.

References

Freeman, C. 1974. The economics of industrial innovations. Penguin Books, Harmondsworth, UK.

Rogers, E. 1971. Diffusion of innovations. The Free Press, London, UK.

CHAPTER 12
Technological Capability in Oil Refining in Sierra Leone

Augustine J. Smith

Introduction

This article investigates the accumulation of technological capability within a petroleum refining company in a Third World country, Sierra Leone. However, technology transfer, technological capability, and technical change are all important because they directly affect development.

One view advocates technology transfer through free operation of transnational corporations (TNCs) in developing countries. The foreign capital brought by the TNC would generate more capital, entrepreneurship, tax revenue, foreign exchange, employment, and output (Lewis 1958). However, several recent studies showed that foreign-exchange crises are more common. The transfer of technology is not automatic. The recipient country must work hard to acquire it.

As a result of a successful transfer, technological capabilities may be built up within a country. These capabilities are apparent when its nationals can effect technical change. It is important to understand the contextual factors affecting the accumulation of technological capability in each country and in each region. This article concerns the study of such processes in Sierra Leone.

Science and technology policy in Sierra Leone

Like most other developing countries, Sierra Leone undertook industrial development without an explicit science and technology (S&T) policy. Developing countries once felt that substituting imports with direct foreign investment was an appropriate industrialization policy that would eventually lead to an automatic transfer of capital, management skills, and technical knowledge. Such transfers never took place in Sierra Leone. It is now widely accepted that effective transfer of technology requires a deliberate S&T policy in the recipient country to ensure that various technologies are compared; the appropriate one is selected for transfer; and the effectiveness of the transfer, assimilation, and adaptation of the selected technology is monitored. In Sierra Leone, the realization of the importance of such policies led to the recent establishment of the National Commission of Science and Technology. One immediate task of this body will be to coordinate the S&T ventures in the country. At present, various ministers regulate different aspects of industry, which is inefficient because there is little consultation among them.

The Sierra Leone Petroleum Refining Company

The Sierra Leone oil refinery was opened in 1970 as a joint venture between the Government of Sierra Leone (GOSL) and the subsidiaries of several transnational oil companies: BP, Mobil, Texaco, Shell, and Agip. The refinery is owned and operated by the Sierra Leone Petroleum Refining Company (SLPRC), in which GOSL has a 50% interest; the remaining 50% is held in various amounts by the subsidiaries. BP provides technical advice to SLPRC.

Although the Ministry of Trade and Industry has overall responsibility for SLPRC, the board chairman is the minister of Finance and contracts are ratified by the Ministry of Justice. The three ministries — Trade and Industry, Finance, and Justice — have their own mandates, and there is little consultation.

Although the refinery is capable of processing 450 000 t of crude oil per year, it processes only 220 000 t. The refined products include premium motor spirit (PMS), dual-purpose kerosene (DPK), aviation turbine kerosene (ATK), automotive gas oil (AGO), fuel oil (FO), bunker fuel oil (BFO), lead-free naphtha (LFN), liquid petroleum gas (LPG), marine diesel oil (MDO), and special distillate (SD).

The refinery has 138 established positions, all held by Sierra Leoneans. There seems to be some evidence of the accumulation of production capability within the refinery. The purpose of this study was to examine these indigenous capabilities and the ways they have developed.

Objectives of the Study

The main objectives of the study were to examine the technological capabilities of SLPRC staff and determine the extent to which these capabilities resulted from the transfer of technology from the oil TNCs. The constraints affecting the relationship between the TNCs and Sierra Leone were also examined to determine which aspects of this complex relationship resulted in the apparent success of the oil refinery. The specific objectives were to determine the following:

• the nature and extent of technological capabilities within the Sierra Leone oil refinery by identifying static and dynamic capabilities;

• the mechanisms for accumulating these capabilities within the firm;

• the extent to which increasing technological capabilities of the Sierra Leonean staff are reflected in increased innovation and technical change; and

• the internal and external constraints on the firm, such as government policies, TNC control, and management contracts.

Methodology

This is a case study of the accumulation of technological capability in Sierra Leone. SLPRC was selected for the study after a success story was told at a workshop on West African S&T policy held in Monrovia, Liberia, in 1982. The story is this: A boiler at the refinery broke down, and the management wanted to hire an expatriate boiler expert. However, the national maintenance engineering team decided to repair the boiler using facilities at the local railway workshop. Evidently, the repaired boiler performed better than it had before. This story clearly indicated that there was some local technological capability at SLPRC; hence, the company was selected for study.

Data acquisition

Data were collected on three aspects of the refinery: history, technological characteristics, and performance. The method of data acquisition was similar to that of Farrell (1979), but this study placed more emphasis on quantitative data collection and analysis. The research team used a combination of direct observation, interviews, archival research, and a questionnaire.

The research team visited the refinery site to observe the plant and its personnel. Taking part in the preliminary exercise, I observed the 1983 annual plant overhaul, which proved to be a valuable learning experience. Information was collected on the refining process, the various components of the plant, and the functional organization of the personnel. From the initial visits, an interview list was drawn up to include all senior personnel, as well as representatives from the four groups of workers. Transcripts of the interviews were included in the first draft of the report (Smith 1984), and information from that report is used throughout this paper.

The research team also studied files, reports (e.g., Jones and Purves 1982; Koroma 1982), memoranda, newspaper articles, statistics, and other sources of information about the refinery. The main sources of data were the Ministry of Trade and Industry, which has overall responsibility for SLPRC; the Ministry of Development and Economic Planning, which collects periodic industrial statistics; the Bank of Sierra Leone, which deals with all the foreign-exchange transactions in Sierra Leone; and the Central Statistics Office and the Statistics Division of Sierra Leone Ports Authority, both of which collect import-export trade statistics.

The research team then studied the company’s annual and monthly engineering reports to identify technical changes at the refinery, their causes, and their consequences. Senior and long-serving staff members were interviewed about their recollections of technical changes, and a detailed questionnaire was distributed to management and senior employees. Government representatives on the SLPRC board were interviewed about government policy regarding the refinery and the board’s efforts to ensure implementation of the board’s policies on oil refining.

Ten interviews were held with leaders of the national oil corporation PDVSA in Caracas, Venezuela, to find out about their efforts to ensure the transfer and assimilation of dynamic technology. In Venezuela, the oil industry, including the exploration, production, transportation, refining, and petrochemical sectors, was nationalized 10 years ago.

Interviews were also held in London with officers of BP and Shell connected with the refinery in Sierra Leone, as well as with board members. At BP, questions posed at the interviews focused on the methods for selecting general managers, technical advisers, and contractors for SLPRC, as well as on BP’s attitude toward the technical services agreement and the skills and technological capabilities at SLPRC. At Shell, the major topics were (1) the relationship between the oil company directors and GOSL directors; and (2) the SLPRC problems with the debt for crude oil. The London interviews were far less fruitful than those in Venezuela. The people interviewed spoke only in general terms; no specific information about SLPRC could be obtained.

About the data collected

The reasons for collecting particular kinds of data provide an overall picture of the methodology. The archival data on the history of the refinery were collected in an effort to determine the extent to which SLPRC’s preinvestment and investment decisions led to learning opportunities during the operating phase. The choice of technology and the refinery’s management arrangement were also studied.

The principal and technical services agreements were studied to determine the extent to which training of local personnel for senior technical and management positions was a factor in negotiations. Some restrictive clauses preventing effective transfer of technology were also identified.

The literature search was carried out to establish the basic technology required to convert crude oil to refined petroleum products. A breakdown of its required skills dictated by the search was compared with the company’s breakdown of its required skills. Personnel with essential roles, including engineers, accountants, technicians, and scientists, were interviewed to determine the nature of their duties and the ability of Sierra Leoneans to perform them.

The annual reports, audited and unaudited accounts, minutes of board meetings, and other documents relating to the refinery, as well as engineering reports (import-export data), were analyzed to determine the extent of technical change and the refinery’s ability to solve its major problems without relying on outside expertise.

A brief history of the refinery

In 1962, Shell, London, offered to build and operate a refinery in Sierra Leone for 2.8–3.0 million SLL (in 1995,595 Sierra Leone leones [SLL] = 1 United States dollar [USD]). However, Shell and GOSL could not reach an agreement, and negotiations broke down.

In 1964, Haifa Refineries Ltd (HRL), a government-owned Israeli company, offered to help GOSL build a refinery to be owned and operated by a limited liability company incorporated in Sierra Leone and managed by HRL. The offer included a cash loan of 800 000 SLL, or up to 25% of the construction cost, as down payment for equipment and machinery. HRL representatives came to Freetown in March 1965 for negotiations with GOSL, and it was agreed that the HRL loan would be repaid from the earnings of the refinery, with interest payments starting 6 months after completion and repayment of the principal starting 12 months after completion, and the construction would be financed by the supplier’s credit. As a result of these negotiations, three agreements were signed. The premanagement agreement covered HRL’s activities and responsibilities during the preinvestment and investment phases of the project. HRL was to issue international bids for machinery and equipment; accept tenders; check designs and flow sheets; supervise materials, equipment, and construction; check compliance with timetables; and monitor the bills, accounts, and suppliers. GOSL would help HRL by issuing entry and residence visas for HRL personnel and their families, exempting them from Sierra Leone taxes, allowing repatriation of their emolument in US dollars, allowing duty-free importation and exportation of all required apparatus, equipment, and furniture, and paying HRL a fee for its services. Any disputes would be settled at the International Court in The Hague, The Netherlands.

Under the management contract, HRL was to manage the refinery after it was completed. The refinery would be owned by a limited liability company incorporated in Sierra Leone, and the power of the managers was outlined. GOSL was to provide the site and land title, electrical power, fresh water, licences, and other requirements for the efficient running of the refinery. GOSL was also obliged to construct the Kissy Jetty and make it available to the refinery and to maintain essential harbour services, including adequate pilotage and customs facilities. The refinery was to be granted development company status and was to enjoy maximum benefits under the Development Company Act.

Under the loan agreement, HRL was to lend GOSL up to 1.2 million USD but not more than 25% of the total cost of construction. Repayment would be in 14 equal semiannual instalments, starting 12 months after the completion of the project. The loan carried an interest of 6% before the completion of construction and 7% after. The loan, which would be taken over by the refinery, was covered by promissory notes guaranteed by GOSL.

With these agreements signed, HRL invited bids from 12 international companies in May 1965. Four bids were submitted, but these were rejected because of unacceptable financing. Nissho, a Japanese construction company, was invited to tender, using a design submitted by the Litwin Engineering Company. Nissho offered to construct the refinery at a cost of 5.46 million USD, and in April 1966 Nissho and GOSL signed a contract: 25% of the cost was provided by the loan agreement with HRL and 75% by Nissho, through a loan agreement. Nine promissory notes (annual payments) were issued and guaranteed by GOSL. The contract allowed for inspection and testing during manufacture. GOSL would provide labour, electricity, fuel, and water free of charge. The constructor was allowed to hire subcontractors without the prior consent of GOSL, and all equipment was to be purchased tax free.

HRL assured GOSL that the value of the refinery products would not at any time exceed the cost, insurance, and freight value of similar imported products, and GOSL would not at any time be expected to make funds available to “operate” the Nissho loan.

Construction started in November 1966, and by the end of February 1967, a progress report, prepared by HRL, indicated completion figures for process engineering (97%), civil engineering (85%), mechanical engineering (55%), electrical engineering (60%), and instrument engineering (80%). The civilian government was then deposed by the National Reformation Council (NRC), a military junta, and the NRC chairman personally took charge of the refinery project. After some investigation, the economic adviser to the NRC made the following recommendations:

1. The management fees for HRL should be changed from 2% of the turnover to a fixed 50 000 USD per annum, in addition to 10% of the profits after operation costs and depreciation.

2. HRL should raise 10 000 SLL of the estimated 16 000 SLL needed to train refinery operators.

3. HRL engineers should determine whether the Kissy Jetty would be operational for the next 2 or 3 years.

4. Registration of the refinery company should be deferred because construction was not yet finished.

5. An independent firm of engineers should be selected to carry out a feasibility study.

HRL raised 5000 SLL and GOSL raised 16 189 SLL to train 80 students locally, and 73 successfully completed a 6 month course at the Technical Institute; 12 of the 73 were selected for further training in Haifa, and the other 61 were to be employed at the refinery. Construction of the refinery was still incomplete, and unsuccessful attempts were made to place these students in other industries. As a result they were asked to wait, and the further training in Israel was deferred.

The HRL engineers confirmed that the Kissy Jetty would be operational for at least 2 more years, and in November 1967 the King-Wilkinson Company (K-W) was selected to carry out a feasibility study. The feasibility study, submitted in February 1968, highlighted several technical and financial shortcomings of the refinery project. Having no catalytic reformer, the refinery would have to regularly import expensive blending materials to raise the octane number of the gasoline it produced. GOSL needed to provide 850 000 USD for crude oil, chemicals, engineering, spare parts, and salaries before start-up, and the loan-repayment scheme, based on irrevocable letters of credit due on fixed dates, would be an unrealistic financial burden on the refinery and would require GOSL subsidization to maintain its liquidity.

The report suggested that the capital structure of the refinery be reexamined, with emphasis on the starting capital and the loan-repayment scheme; it also suggested the formation of a refinery company jointly owned by GOSL (50%) and the oil-marketing companies operating in Sierra Leone (50%), rather than a company wholly owned by GOSL. The suggested equity capital of the new company would be 2 million USD. GOSL could insist on the right to subscribe later. The report also suggested that the promissory notes to HRL and Nissho be cancelled and replaced by a long-term loan of 5 million USD, repayable in 15 years.

In March 1968, GOSL decided to accept the option of a refinery jointly owned by GOSL and the oil companies, and HRL was informed of the policy change. HRL agreed with this policy and urged GOSL to speed up negotiations for the formation of the joint company prior to the completion of construction in September 1968. GOSL decided that two officials of the Ministry of Trade and Industry would go to London in May 1968 for negotiations with the oil companies.

On 26 April 1968, there was yet another change of government. The new civilian Minister of Trade and Industry was immediately involved with the refinery project. In May 1968, the minister suggested that the cabinet should adopt the K-W recommendations, without paying cash for its 50% share of the new company. Instead, GOSL’s contribution would be limited to the government’s expenditure thus far.

At this stage, the government’s main concern was to relieve itself of the financial burden it had inherited from the former civilian government. As a result of the K-W report, the HRL’s activities were under scrutiny, and the Cabinet formed a high-level ministerial committee to look into the project. A letter was sent to HRL in July 1968, informing it that GOSL would stop honouring promissory notes. The committee had discovered that, although HRL had recommended the appointment of Litwin International as a consultant (which was approved by GOSL), HRL later appointed itself as consultant and drew up and negotiated bids, even inviting Litwin to bid, without asking GOSL to revoke the Litwin appointment. This was a violation of the premanagement agreement. The committee recommended that GOSL seek legal advice and referred the matter to the attorney general.

The Ministry of Trade and Industry then drew up guidelines for the London negotiations with the oil companies:

• Equity capital of the new company should be 3 million USD (2.5 million SLL, according to the then current rate of exchange) to ensure liquidity.

• GOSL and the oil companies would each own 50%, and the chair would be appointed by GOSL.

• Payment of the GOSL contribution would be made through capitalization of the amount already spent, together with the value of the site and other items; the rest of the repayment should be through the royalties due to GOSL.

• The price of products would not exceed the CIF value of imported petroleum products.

• There would be an excise on refinery products; this would be equivalent to the existing import duty on similar imported products, so that there would be no loss of revenue.

• Liabilities, such as the promissory notes to HRL and Nissho, would be transferred to the refinery company.

• There would be a timetable for takeover of the refinery.

The ministry guidelines also stipulated

• how the refinery would be managed;

• how many Sierra Leoneans would be employed at all levels, especially the 73 students trained at the Technical Institute at GOSL expense; and

• the terms of the development certificate of the refinery company.

Construction was eventually completed at the end of 1968, and the plant was commissioned in January 1969 by BP Trading, London, which brought in a team of 42 expatriates under the terms of the technical services agreement signed in May 1969. The BP team was to start refinery operations and recruit and train Sierra Leoneans, who would eventually take over.

The imperfections in negotiations

GOSL did not undertake a feasibility study after HRL offered to build the refinery in Sierra Leone. GOSL relied completely on HRL’s promises that the refined products would not cost more than imported ones, the refinery would be able to pay for itself, and GOSL would not have to spend any more money on it. Both HRL and the economic adviser seemed to have interests contrary to those of GOSL. The economic adviser knew that HRL was in contact with Shell as early as April 1967, with a view to withdrawing from arrangements with GOSL. The economic adviser also knew that K-W was an engineering firm working for Badger, a company known to HRL and formed just to evaluate the refinery project, and that HRL had on many occasions inflated prices and the cost of products to produce positive cash flows. The economic adviser did not share this information with GOSL. The request for K-W to conduct a feasibility study and the change in proposed HRL fees from 2% of total turnover to 10% of the profits were two very positive steps taken by GOSL.

The K-W study may have been financed and, therefore, influenced by Shell (London). In particular, the recommendation that the oil TNCs become partners with GOSL in forming the new refinery company was not necessarily the best one. A truly independent study would have recommended other possibilities, such as a long-term loan from the World Bank, to pay off the short-term loan commitments of GOSL and the start of a refinery wholly owned by GOSL.

GOSL did show an interest in training, although this was restricted to 80 operators who were sent on a 6 month course at the Sierra Leone Technical Institute. A similar training program for engineers and senior oil experts should have been instituted. During negotiations, there was some discussion about training Sierra Leoneans to take over the refinery; however, there was no money allocated for this, and there were no firm timetables established. Thus, training was left entirely in the hands of the oil TNCs.

Performance of SLPRC

Data on SLPRC’s performance for 1971–1983 were drawn mainly from audited and unaudited company accounts and other tables obtained from the Bank of Sierra Leone and the Central Statistics Office. Most of the data were collected between 1982 and 1984.

Productivity

Productivity figures for various products from 1971 to 1983 (Table 1) indicate that there was product diversification over the years, an example of technical change to be discussed more fully. Production of RMS was discontinued in 1982. RMS, with a research octane number (RON) of 83, was discontinued because the company could no longer obtain foreign exchange from GOSL to import platformate. Production of

Table 1. Refinery output (1971–1983).

Output (long tons)

 

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

PMS

24 916

27 816

29 901

30 489

34 490

33 246

33 020

39 536

42 942

35 720

36 854

26 421

34 085

RMS

10 333

9 055

10 760

12 187

7 502

6 114

4 455

4 956

4 884

5 284

530

DPK

16 056

17 836

18 282

19 425

19 870

23 706

25 215

24 653

28 633

27 151

27 446

19 203

24 990

AGO

55 489

50 722

51 477

49 564

52 668

50 295

54 129

55 624

68 096

66 871

70 952

45 024

56 788

IDO

13 069

14 306

12 978

12 332

10 235

971

FO

25 307

25 218

28 712

26 170

23 815

21 758

17 039

22 785

16 928

28 372

30 985

33 041

30 430

LFN

118

77

71

108

148

118

126

208

269

235

234

223

129

LPG

216

817

880

633

662

743

656

751

SD

12

42

30

21

22

15

10

ATK

15 414

16 844

14 609

17 828

12 991

13 936

17 393

14 232

17 512

16 280

16 340

10 294

15 185

BFO

104 922

130 522

96 434

53 032

36 280

37 625

44 111

37 592

36 744

22 518

26 244

10 516

10 243

BGO

1 278

2 976

404

1 856

9 047

8 612

6 238

14 700

4 064

15 822

MDO

2 919

4 635

5 875

2 940

6 217

2 407

2 443

1 966

LN

2 911

10 949

1 364

995

Total

268 535

304 623

262 334

222 499

201 970

191 308

202 808

215 430

227 423

213 646

227 457

151 900

190 399

Notes: AGO, automotive gas oil; ATK, aviation turbine kerosene; BFO, bunker fuel oil; BGO, bunker gas oil; DPK, dual-purpose kerosene; FO, fue l oil; IDO, industrial diesel oil; LFN, lead-free naphtha; LN, leaded naphtha; LPG, liquid petroleum gas; MDO, marine diesel oil; PMS, premium motor spirit; RMS, regular motor spirit; SD, special distillate. 1 long ton = 1.016 tonnes.

IDO and LN was discontinued because of a lack of demand. During the smae period, some new products were introduced: bunker gas oil (BGO), in 1975; LPG, and MDO, in 1976; and SD, in 1977. These products were introduced to respond to increased demand.

PMS production increased from 1971 and peaked at 43 000 long tons (1 long ton = 1.016 t). It then fluctuated at an average of about 35 000 long tons. The lowest level, 26 000 long tons, in 1982, was caused by a general reduction in the supply of crude oil to SLPRC because of its accumulated debts. That year was marked by production shortages and the accompanying hoarding and by exorbitant prices on the illicit market.

Production of DPK and ATK has increased steadily over the years, peaking in 1979. Production of AGO, another product in high demand, remained practically constant throughout 1971–1983.

The production of these products — PMS, DPK, ATK, and AGO — for local consumption was the main task of SLPRC, and the production of each has either increased or remained constant. The production of other products, such as FO, BFO, BGO, and MDO, has decreased significantly in relation to the production of desired products. This reduction has been achieved with fairly constant crude-oil import levels.

Capacity utilization

The SLPRC plant was designed to produce 10 000 barrels per steam day (bpsd) (1 barrel = about 0.16 m3). However, the only time it ran at full capacity was during testing. Table 2 shows the capacity utilization for 1972–1976. The operations department insists that processing Nigerian tests at a throughput of 5000 bpsd is all that is needed to meet local demand. This means that staff members do not have to consider technical changes leading to capacity expansion.

Table 2. Capacity utilization at SLPRC (1972–1979).

Year

Crude blend

Crude oil
(long tons)

Unit time
utilization

Production average
(bpsd)a

1972

75/25 Nig/Manjid

332 000

84.4

8000

1973

80/20 Nig/Manjid

1974

70/30 Nig tees/Med

237 000

70.4

5400

1975

80/20 Nig tees/Med

1 833 000

70.4

5400

1976

80/20 Nig tees/Med

180 000

71.2

5200

Source: T.W. Russel (United Nations).

Note: 1 long ton = 1.016 tonnes.

a Barrels per steam day; 1 barrel = about 0.15 m3.

In recent years, the supply of crude oil has been erratic, causing slowdowns in the operations department. The refinery has no control over batch arrival times, so whenever oil does become available, the operations department has to process at high throughput to alleviate shortages as quickly as possible. Even when this happens, rates are well below 10 000 bpsd.

Financial performance

From 1976 to 1983, total product sales increased continuously, from 60 million SLL to 112 million SLL, but the exchange rate changed from 0.83 SLL = 1 USD to 2.54 SLL = 1 USD. Although there were increases in sales costs (cost of crude oil and platformate) and operating costs, the company had a net profit before taxes until 1981 (Table 3). In 1982 and 1983, however, there were losses. These were mainly caused by interest payments on crude-oil debts, which are owed because of the lack of foreign exchange.

Table 3. Taxes and dividends paid by SLPRC (1975–1981).

 

Declared profit (1000 SLL)

Year

Before tax

After tax

Dividend paid
(1000 SLL)

1975

1200

579

579

1976

1200

579

597

1977

1000

720

382

1978

1600

720

770

1979

1461

789

1483

1980

na

na

na

1981

2456

970

970

Note: In 1995, 595 Sierra Leone leones (SLL) = 1 United States dollar (USD).

Although the company enjoyed profits from the beginning, it did not start paying dividends until 1975. The tax record showed that no dividends were paid in 1982 and 1983, but they were paid again in 1984, following the appointment of the first Sierra Leonean general manager. Profit was the main reason for the formation of SLPRC, at least from the point of view of the oil companies.

To ensure the continued profitability of the company, the principal agreement detailed a pricing mechanism: at the end of each year, SLPRC would estimate the next year’s revenue requirements and product realization at the current price. If there were any shortfalls, an advisory committee would be set up to recommend new prices to offset the shortfall and make the company profitable again. After approval by the board, the new prices would go into effect. With the exception of 1978, there has been at least one ex-refinery price increase each year (Table 4).

The price the consumer pays is determined by the ex-refinery price, the excise duty, and marketer’s margin. Table 5 shows ex-terminal prices (ex-refinery price plus marketers’ margin), together with excise duty and the actual prices paid by consumers for some major products.

In general, GOSL in the past tried to avoid large fuel price increases, only allowing them when they would not have an immediate, direct effect on the public. The national economy is sensitive to increasing fuel and food prices, which eventually lead to demand for higher wages, and so on. Some fuel price increases in recent years have led to rioting in many of the major cities. In some cases, fuel prices were subsidized in Sierra Leone (not the reduction of excise duty on PMS, RMS, and DPK, which occurred in 1976 and 1977).

In 1982, prices for petroleum products in Sierra Leone were among the lowest to be found in countries not producing oil. However, GOSL started negotiating with the International Monetary Fund (IMF). As a result, between July 1982 and July 1983, pump prices for PMS rose from 3.40 SLL IG-1 to 5.00 SLL IG-1 and thence to 6.75 SLL IG-1 (1 Imperial gallon [IG] = about 4.54 L). Early in 1984, there was an

Table 4. Inland Petroleum product price trends (1969–1981)

 

Price/Imp erial galion (SLL)

Date

PMS

RMS

DPK

AGO

IDO

FO

LFN

10–01–69

10.6

8.6

7.5

9.1

8.1

6.6

3.1

01–05–72

13.6

11.6

10.5

13.1

11.1

10.6

5.0

01–02–73

21.6

21.6

10.5

17.1

15.1

14.6

5.0

01–12–73

38.6

38.6

22.5

31.1

29.1

28.6

5.0

01–02–74

46.6

44.6

33.5

41.1

39.1

38.6

5.0

03–01–75

56.6

54.6

34.5

43.1

41.1

39.6

20.0

09–12–75

62.6

60.0

39.5

48.1

46.1

43.6

45.0

25–05–76

72.6

70.6

49.5

48.1

46.1

43.6

45.0

01–02–77

87.6

85.6

64.5

48.1

—   

43.6

45.0

01–04–79

98.6

96.6

75.5

89.1

—   

49.6

na   

01–03–80

153.6

50.6

104.5

83.1

—   

61.6

na   

01–02–81

48.6

—   

104.5

199.1

—   

147.6

na   

other price increase, this time to 8.00 SLL IG-1. There were similar price increases for all other petroleum products.

In interviews, SLPRC management reported that in 1973, GOSL, instead of reviewing SLPRC’s price-increase proposals with the intention of minimizing the increases, tended to maximize them. GOSL wanted to use the increases to reduce consumption and, thus, heavy import bills. A one-step price increase from 3.40 SLL IG-1 to 8.00 SLL IG-1 was contemplated in 1982, but the increment must have been politically unpalatable to the government.

The efficiency and performance of SLPRC did not directly affect the availability or price of petroleum products. Other factors, such as marketer’s margins, excise duty, IMF, and the availability of crude oil, petroleum products, and foreign exchange seem to have had greater influence on the prices paid by consumers.

Effect of external factors

Foreign-exchange shortages mean not only a shortage of crude oil but also a reduction in spare-parts stocks, and the company has to wait longer for major replacement parts. These shortages have so far postponed general overhauls for up to a year, but they have not caused a total production stoppage. This illustrates the careful manner in which SLPRC carries out scheduled plant inspections during the annual overhauls. All major parts of the plant, such as pumps, vessels, and the crude oil - gas oil heat exchanger, were replaced in the 1982 general overhaul (ultrasonic measurements of pipe thicknesses, made the previous year, had revealed the rate of corrosion). The plant inspection team suggested that the exchanger need not be inspected again until 1989.

The inspection date is obviously made with 1 or 2 years to spare so that annual overhauls do not unduly hinder the operation of the plant. In other words, a systematic inspection program exists, and it minimizes the impact of foreign-exchange shortages on SLPRC operations. A plant inspector and coded welder are the only two

Table 5. Sierra Leone light petroleiurn product price trends.

Cost/Imperial gallon (SLL)

 

 

PMS

RMS

Kerosene

AGO

Date

Exterminal

Duty

Price

Exterminal

Duty

Price

Exterminal

Duty

Price

Exterminal

Duty

Price

01–04–72

36.50

31.00

67.50

32.50

31.00

63.50

27.50

12.00

39.00

26.50

24.00

50.50

01–06–73

44.50

28.00

72.50

40.50

28.00

68.50

29.50

14.00

43.50

30.00

24.00

54.00

08–12–73

63.50

21.00

84.50

59.50

21.00

80.50

41.50

10.00

51.50

46.50

19.00

65.50

01–02–74

72.00

28.00

100.00

68.00

28.00

96.00

53.00

14.00

67.00

57.00

24.00

81.00

30–01–75

82.00

28.00

1 10.00

78.00

36.00

106.00

54.00

14.00

68.00

59.00

24.00

83.00

27–06–75

82.00

36.00

118.00

78.00

36.00

1 14.00

54.00

14.00

68.00

59.00

32.00

91.00

09–12–75

89.00

36.00

125.00

85.00

31.00

121.00

60.00

14.00

74.00

65.00

32.00

97.00

25–05–76

99.00

31.00

130.00

95.00

31.00

126.00

70.00

9.00

79.00

65.00

32.00

97.00

01–01–77

14.00

31.00

145.00

110.00

31.00

141.00

85.00

9.00

94.00

65.00

32.00

97.00

28–01–77

14.00

40.00

154.00

110.00

40.00

150.00

85.00

9.00

100.00

65.00

32.00

97.00

01–07–77

20.00

31.00

151.00

116.00

31.00

147.00

91.00

9.00

101.00

71.00

32.00

103.00

19–02–79

125.00

31.00

156.00

121.00

31.00

152.00

92.00

9.00

76.00

32.00

108.00

Source: BP Sierra Leone Ltd.

Notes: Teirminal prices are paid by oil company marketing affiliates; duty is paid to GOSL; and price is what the consumer actually pays. AGO, automotive gas oi1; PMS, premium motor spirit; RMS, reguliar motor spirit. 1 imperial gallon = about 4.5 L. In 1995, 595 Sierra Leone leones(SLL) = 1 United States dollar (USD).

experts SLPRC now requests from BP for the refinery’s regular overhauls. Coded welding and plant inspection are required for insurance purposes.

Other economic problems do not seem to have had much effect on SLPRC performance because the company does not directly market its products — all the products are sold directly to TNC subsidiaries. Such factors as overvaluation of the leone, the existence of a thriving black market for petroleum products, particularly during shortages, and the poor state of infrastructure, especially the road network, do not affect SLPRC’s operations directly. The country has been experiencing electric-power shortages recently because of fuel shortages and machine breakdown, but this has not affected SLPRC because its generator switches on automatically within 30 of a power failure.

Technical change and technological capability at SLPRC

In this study, technical change is regarded as the ultimate manifestation of technological capability within a firm. We looked for evidence of incremental technical change in SLPRC; we also looked for any creation of an indigenous technology and tried to relate the performance of technical change to learning.

Technical change may affect output-volume, output-mix, output-quality, and throughput parameters. We attempted to evaluate the effects of technical change at SLPRC, and to determine the direction of change.

Change that results from a deliberate effort by personnel to make the plant more efficient or to stretch its capacity is indicative of some rudimentary research and development (R&D) capability. Such capability may eventually generate new and indigenous technologies.

In contrast, technical change that is externally motivated, such as that carried out in response to increased demand or falloff in product quality, does indicate a capability for running and maintaining a production plant. This type of capability is really the beginning of the last stages in a sequence: (1) transfer and acquisition of technology; (2) development of a technological capability, including capability for adopting foreign technology; and (3) generation of a local technology.

The research team observed that a host of technical changes are carried out at SLPRC rather routinely. Most are minor and are done in response to some minor bottlenecks encountered in maintenance. Monthly engineering reports from the maintenance engineer to the chief engineer describe all engineering duties undertaken during the month and detail many modifications and fabrications of small and major replacement parts. Many of these modifications and fabrications qualify as technical changes when performed for the first time. Routine technical change occurs continuously at SLPRC, especially within the engineering departments.

Major technical changes

Major technical changes are those that have wide personnel participation or measurable effects on refinery performance. Table 6 displays a list of major refinery assets. By 1972, SLPRC had acquired from GOSL the plant, land, and water tanks. The extension of the refinery clinic in 1973 was a scale-multiplying change. The technical changes started with the installation of the standby generator and included all items marked with a superscript b in Table 6. The following sections give examples of the major technical changes, grouped according to their objectives.

Table 6. Schedules of main assets of the refinery.

Assets

Year of
purchase

Cost
(SLL)

Exchange rate
(USD/SLL)

Cost
(USD)

Land

1969

16 500

1.2000

198 000

Water

1969

14 400

1.2000

17 280

Process planta

1972

5 034 907

1.2000

6041 888

Extension to clinic

1973

3 560

1.1980

4 265

Standby generator''

1974

144 640

1.9800

178 279

PPD schemeb

1974

3 338

1.1980

3 999

Tank-farm lightingb

1974

5 858

1.1980

7 018

Refinery power installation

1974

24 180

1.1980

28 968

Crude transfer pump*

1974

16 536

1.1980

19 810

Extension to laboratory

1975

3 225

1.1980

3 864

LPG production unit

1976

332 480

0.8190

272 600

Storekeeper's office

1976

330 684

0.8190

270 830

Fire station

1976

2 333

0.8190

1 911

Gate

1976

78 332

0.9457

74 079

Air-circulating system

1979

2 350

0.9295

2 148

Crude-blending manifoldb

1974

6 527

1.1980

7 819

Notes: LPG, liquid petroleum gas; PPD, pour-point depressant. In 1995, 595 Sierra Leone leones (SLL) = 1 United States dollar (USD).

a Includes distillation facilities with a capacity of 10000 barrels per steam day (1 barrel = about 0.16 m3); merox unit for kerosene and naphtha; storage for crude oil and products; laboratory stores; and workshop buildings.

b Major technical changes.

Objective: to introduce new products

In response to local demand for LPG, a feasibility study for an LPG production unit was carried out. The study indicated that the project was economically feasible, so the capital costs were approved by the directors. Installation of the LPG production unit was carried out by SLPRC staff, with the help and supervision of a BP expert, whose job was to ensure that all specifications, as well as BP safety standards and practices, were strictly followed.

The local food industries required white spirit, so SLPRC produced an SD that had similar properties, except for a different flash point. This product proved acceptable to industry and is now produced regularly.

Objective: to increase production and production capacity

Steam is required in the crude column for stripping volatile substances from kerosene and gasoline, and the Marshall boiler was installed to produce steam. The automatic boiler required soft water, so a permanent softener was also installed. These changes were made to increase productivity and improve the quality of kerosene and gasoline.

SLPRC usually receives power from the National Power Authority. From 1971 to 1973, there were frequent power failures (51 in 1971 and 28 in 1973), and each meant the plant had to shut down. To overcome this problem, staff installed a standby generator. BP supervised the installation and made sure that BP standards and safety practices were adhered to, but the bulk of the installation was done by local staff.

Objective: to improve product quality

Pipe works leading to Shell, Mobil, and Texaco installations were modified so that ATK could be pumped through a dedicated line; PMS, DPK, and gas oil are pumped through another line. Black oil goes through a third line, ensuring minimum contamination of products, especially of ATK, which must conform to strict international specifications.

Objective: to reduce unit costs

In the 1971–1974 period, the price of crude oil increased considerably, and SLPRC could not increase its prices fast enough to keep pace. A lower throughput was required, but local demand also had to be satisfied.

During this period, the demand for fuel oil was falling because large ships were no longer refueling in Sierra Leone. It was necessary to reduce fuel oil production by cutting deeper into the fuel oil fractions for gas oil. A larger gas oil -fuel oil ratio could be obtained from lighter tees, but lighter tees are more expensive because they contain a higher percentage of the more expensive products, such as kerosene and gasoline. Therefore, changing to lighter tees not only meant the production of more gas oil at the expense of fuel oil but also the production of more gasoline and kerosene at lower throughput.

The SLPRC, thus, set its equipment to process lighter Nigerian tees. It started with a 60:40 mixture of Nigerian light-medium, then went up to 70: 30, 80:20, and 90:10; it now processes 100% Nigerian light crude. By going to lighter tees, SLPRC was able to satisfy the local market at lower throughput and, thereby, solve the dual problems of escalating crude-oil prices and changing domestic consumption patterns. The lower throughput apparently offset the higher cost of lighter tees.

This is, perhaps, SLPRC’s single most important technical change, indicating that it has a technological capability in oil refining and that the capability is not static. It shows that the company can produce a strategic response to ensure its financial stability in the face of severe external factors. The evidence available to the research team indicated that the SLPRC staff planned and executed this change with no significant foreign input.

The use of lighter tees caused some technical problems. Lighter tees are waxy, and because a deeper cut is taken from the fuel oil, its pour point rises and must be depressed. Initially, the pour point of fuel oil was depressed by adding some kerosene and gas oil, but this meant a reduction in the gains made by going to lighter tees. It was, thus, uneconomical to use diluents to depress the pour point of fuel oil, and a new technique had to be used. The company finally settled for a pour-point depressant (PPD) — a chemical additive that affects only the pour point. With a PPD, the advantages of lighter tees were regained.

The change to lighter tees necessitated the use of blending equipment and vessels with accompanying pumps, valves, and flow meters, and these were installed by SLPRC staff, a saving on installation cost.

Objective: to improve safety and preventive maintenance practices

A gasoline tank developed leaks and had to be rebuilt. A novel approach was taken: the foundation and frame were left intact, and sheets of metal were removed piece by piece and replaced with new ones. This meant a great reduction in cost and was so innovative, at the time, that two engineers from a Nigerian refinery were invited to observe. The technique was developed by BP, but the repairs were carried out by local staff, with BP supervision to ensure proper safety practices.

The story of the Hockadate boiler repair, narrated at an International Development Research Centre workshop on S&T in Monrovia in November 1982, is what led us to select SLPRC for a case study. The Hockadate boiler broke down, the steam-chamber cover developed a crack, and the boiler-feed water pump stopped. The maintenance engineer at the time was an expatriate, and he immediately suggested ordering the faulty parts from the United Kingdom. The Sierra Leonean mechanical engineer suggested that the repairs be done locally, at much lower cost and shorter boiler down time, and was told to carry out the repairs locally. The pump was completely stripped and rebuilt, and some pump parts and the steam chamber cover were fabricated at the national railway workshop. The repaired boiler has been trouble free for a long time, apparently, and works better than it did before the repairs.

After several years of use, cooling-water pipes corrode, narrowing the pipes and reducing water flow and cooling efficiency. The use of a corrosion-control chemical in cooling water makes the very costly replacement of pipes unnecessary and prolongs their life by preventing further corrosion. Ammonia and Kontol are now used regularly in heat exchangers, overhead condensers, and even the crude-oil column.

An impingement plate was inserted in the crude-oil column where the hot crude oil enters. This preventive maintenance was intended to prolong column life. Heater tubes are operated at high temperatures, and they carry crude oil, which can become acidic. The originals are gradually being replaced by tubes made from a more resistant alloy. This preventive maintenance will avoid costly accidents, such as tube breakage.

A major fire-fighting main was constructed around the processing area, tank farm, and administrative building. The system was later extended to the jetty, and unlimited water can now be brought from the sea via cement-lined pipes. Construction of the water main was suggested during a safety audit.

Cleaning leaded tanks requires expatriate specialists, which could be quite costly to SLPRC. Company procedures were devised that are quite safe and cost nothing beyond normal operating costs. Other technical changes to improve safety were

• Certification courses in first aid and safety were given to employees.

• A new safety manual was prepared by refinery staff, and an emergency procedure booklet is carried by each employee.

• A company car, which had been written off and was about to be sold, was converted into an ambulance.

• Vessels to be welded were filled with foam, which eliminated vapors completely.

Effect of technical change on product mix

Table 7 shows that there has been variation in the product mix. New products like LPG and SD were introduced in 1976 and 1977, respectively, in response to local demand. Production of RMS was terminated in 1982 because a severe foreign-exchange shortage prevented SLPRC from importing the platformate it needed to blend to produce PMS with an RON of 93. Production patterns were, therefore, to include tetraethyl lead in the blend; the yielded a product with an RON of 87. This is now marketed as a single product, PMS.

Production of MDO also started in 1976, and Sierra Leone stopped importing it the same year. Subsequently, only the occasional barrel was imported, as local demand was satisfied by SLPRC. The termination of IDO production coincided with

Table 7. Refinery products as percentages of annual total production (1971–1983).

 

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

PMS

9.28

9.16

11.32

13.70

17.08

17.38

16.28

18.37

18.09

16.72

16.03

17.06

17.90

RMS

3.85

2.98

4.07

5.48

3.71

3.20

2.20

2.30

1.72

2.47

0.23

DPK

5.98

5.87

6.92

8.73

9.84

12.39

12.43

11.44

12.06

12.71

11.94

12.40

13.13

AGO

20.66

16.72

19.48

22.28

26.08

26.29

26.69

25.84

28.68

31.30

30.86

29.06

29.83

IDO

4.87

4.71

4.91

5.54

5.07

0.51

FO

5.42

8.38

10.87

11.73

11.79

11.37

8.40

10.59

7.13

13.28

13.48

21.31

15.98

LFN

0.04

0.03

0.03

0.05

0.07

0.06

0.06

0.10

0.11

0.11

0.10

0.14

0.07

LPG

0.11

0.40

0.41

0.28

0.31

0.32

0.42

0.39

SD

0.01

0.02

0.01

0.01

0.01

0.01

0.01

ATK

5.74

5.55

5.53

8.01

6.43

7.28

8.58

6.61

7.38

7.62

7.11

6.65

7.98

BFO

39.07

42.98

36.50

23.83

17.96

19.67

21.55

17.46

15.48

10.54

11.42

6.76

5.38

BGO

0.42

1.47

0.21

0.92

4.20

3.63

2.92

6.36

5.11

8.31

MDO

1.53

2.29

2.73

1.24

2.91

1.05

2.62

1.03

LN

1.08

3.16

0.61

0.94

Source: Sierra Leone Petroleum Refining Company end-of-year accounts.

Notes: AGO, automotive gas oil; ATK, aviation turbine kerosene; BFO, bunker fuel oil; BGO, bunker gas oil; DPK, dualpurpose kerosene; FO, fuel oil; IDO, industrial diesel oil; LFN, lead-free naphtha; LN, leaded naphtha; LPG, liquid petroleum gas; MDO, marine diesel oil; PMS, premium motor spirit; RMS, regular motor spirit; SD, special distillate.

the beginning of MSO production. These two products are really the same. The introduction of MSO is, therefore, not a technical change but a scale-multiplying change. The production of IDO was 5% in 1975, and the total production of diesel oil (IDO and MDO) dropped in 1976 to 2% of the total (see Table 7).

Effect of technical change on production capacity

The SLPRC distillation plant, designed to produce 10 000 bpsd, only operated at that rate during trial runs. It is now known that local demand can be completely satisfied with the plant running at half its rated capacity. This, plus the fact that the principal agreement requires SLPRC to produce only for the local market, shows that there have been no technical changes with capacity expansion as the primary objective.

Effect of technical change on product quality

SLPRC product quality has always been high. This is partly because of the laboratory’s vigorous quality control. Sampling and analysis of products are done at regular intervals during processing, and reports are given to the operations superintendent, who makes adjustments and uses blending to correct any errors. With this continuous sampling, testing, and adjusting, product quality has remained high.

Because of its quality-control consciousness, SLPRC installed a dedicated line to pump ATK to the Shell, Mobil, and Texaco terminals. DPK, PMS, and gas oil go through another line, and fuel oil uses a third. Because ATK is used by jets at high altitudes, it must meet high standards, and SLPRC makes a special effort to keep the product is as free of contamination as possible. ATK is used to refuel aircraft at Freetown International Airport.

Effect of technical change on unit cost

SLPRC introduced significant technical changes to cut the production cost, which has two components: the cost of raw materials and the cost of refining. Table 8 shows that the cost of raw materials increased almost 30-fold and the cost of refining increased more than 10-fold from 1971 to 1983. The increase in the cost of raw materials was obviously caused by several jumps in world oil prices, but the reason for the increase in refining cost is mainly the decline in the value of the leone. At the start of the period, the exchange rate was 1 SLL = 1.24 USD, but at the end of the period it was 1 SLL = 0.17 USD.

Although the unit cost of product by raw materials rose from 87% to 94%, the refining cost declined from 13% to about 6%. A series of remarkable technical changes contributed to this. The first two were the selection of lighter tees and the adjustment of the plant to produce more of the products in high local demand. Those changes, more than any other, ensured survival of the company after the crude-oil price hikes.

There were also price increases that ensured profitability. The decline in real value of the leone contributed only to the yearly increases in the actual cost of production. It did not cause the reduction in the percentage contribution of the cost of refining relative to the cost of production. This could only have resulted from the technical changes.

The impact of changing the type of crude oil on unit input cost is seen most directly in imports of feedstock relative to 1971 values (Table 9). Imports started to decrease in 1973, continued to drop until 1977, when they were 30% below the 1973 level, and continued to drop until 1977. The biggest drop in a single year was in 1973

Table 8. Raw-material and refining costs of products (1971–1983).

 

Cost / long ton (SLL)

Proportion of total cost (%)

 

Materials

Refining

Total

Materials

Refining

1971

19.01

2.83

21.84

87.0

13.0

1972

21.30

3.04

24.34

87.5

12.5

1973

26.34

3.27

29.61

89.0

11.0

1974

87.58

5.54

93.12

94.1

5.9

1975

93.18

8.56

101.74

91.6

8.4

1976

124.99

10.39

135.38

92.3

7.7

1977

138.77

10.20

148.97

93.2

6.8

1978

131.74

11.73

143.47

91.8

8.2

1979

192.56

12.73

205.29

93.8

6.2

1980

325.78

17.83

343.61

93.8

5.2

1981

406.65

18.99

425.64

94.5

4.5

1982

413.30

28.21

441.51

93.6

6.7

1983

546.01

33.56

579.57

94.2

5.8

Source: Sierra Leone Petroleum Refining Company end-of-year accounts.

Notes; 1 long ton = 1.016 tonnes. In 1995, 595 Sierra Leone leones (SLL) = 1 United

States dollar (USD).

and seems to have been a strategic response to the 1973/74 crude-oil price hikes, when the cost of crude oil quadrupled.

Effect of technical change on safety and preventive maintenance

Several technical changes were aimed at plant and personnel safety. In the long run, these changes will also reduce the cost of production, but the most direct consequences were a safer work environment and longer equipment life span. Thus, new fire mains make the refinery safer. Chemicals into pipes to prevent corrosion increase safety and make equipment last longer, eventually reducing maintenance costs.

This type of change is important because it is internally motivated. Although its effect is difficult to detect in end-of-year accounts, the fact that the plant and its utilities have been operating for such a long time proves that they have been protected and well maintained.

Preventive maintenance is important because it involves consistent monitoring. This includes gathering information, inspecting facilities and equipment, drawing conclusions about problems, and executing a planned program of repairs and modifications. The key aim is to anticipate machine performance and deterioration. This is, in fact, a modest type of R&D.

At SLPRC, the planning and coordination of maintenance are carried out by the development engineer, whose functions include planning a schedule for testing and inspecting various parts of plant. Parts that have deteriorated to dangerous levels are repaired; otherwise, the date is set for the next inspection of the part. Parts and components needed for preventive and regular maintenance are ordered well in advance so that down time during planned maintenance is kept at a minimum.

Contributions of various divisions to technical change

The engineering division is responsible for major modifications of the plant and buildings, installation of additional equipment, and alterations of equipment and machinery. It also plans preventive maintenance and ensures that proper spare parts and supplies for engineering projects are available.

Table 9. Barriers to institute-industry interactions (mean responses).

Impediments to interactions

Universitya
(n = 12)

Industrya
(n = 16)

The orientation of the institute's research toward basic research is a mismatch with industry's needs for new and improved products

2.53 (3)

2.53 (2)

The need for the institute to publish research results is in conflict with industry's needs for protection of its trade secrets

3.35 (7)

3.44 (9)

Research performed by institutes is generally more expensive than in-house research

3.65 (9)

3.44 (9)

The institute often does not understand what industry needs in the way of product-oriented research or industry's need to maximize profits as return on investment

3.29 (5)

2.39 (1)

Legal matters regarding the institute's research inhibit the commercialization of these innovations

3.77 (10)

3.59 (10)

National industrial property policies hamper relationships

3.82 (11)

4.06 (12)

National research institutes are unable to efficiently undertake industry-sponsored applied research

3.47 (8)

3.03 (5)

Collaborations could affect the normal research environment and processes

4.35 (12)

3.97 (11)

Industry is reluctant to support national research institutes in basic research

2.24 (1)

3.03 (5)

Industry lacks its own in-house research capabilities

3.06 (4)

2.83 (4)

Attitudinal factors create a generalized culture gap and lack of understanding

2.41 (2)

2.83 (3)

Distance is a factor — some activities depend on close proximity between collaborators

3.29 (5)

3.36 (8)

Source: Field survey, 1991/92.

Notes: n, number of respondents; numbers in parentheses refer to the ranking of the determinants by order of importance.

a Significance conversion table:

≤1.49 Dominant

1.50–2.49Very significant

2.50–3.49 Significant

3.50–4.49Occasionally significant

≥4.50 Insignificant

The laboratory’s role, both before and after a technical change, is very important. Before the change, it collects data to determine potential results; afterwards, it collects data to show that expected results were achieved. However, for every big project, such as the LPG plant, the laboratory’s role has been limited to sampling and chemical analyses — computer simulations and process design are done elsewhere.

Usually, the laboratory is involved in controlling the chemical and physical parameters of products and in the quality control of crude oil. It participates in plant experiments designed to test new tees or newly installed machinery or merely to change the production pattern to meet changing demand. These duties mean the laboratory section will always be directly involved in technical change.

The operations department sets plant parameters to obtain optimum yield from new tees. It also determines the best operating conditions for new equipment.

The production section does market-type R&D, which determines the production pattern adopted by the operations group.

The safety department has modernized safety practices and emergency procedures. The emphasis is on preventing disasters, but adequate preparations have been made for dealing with emergencies.

In many instances, technological guidance is provided by BP, under the technical services agreement. When major pieces of equipment are added to the plant, the design, basic engineering, and detailed engineering are contracted out by BP; however, installation is done by SLPRC. BP’s supervision is invariably limited to ensuring SLPRC follows the design specifications and BP’s safety standards.

When asked about the contributions of expatriates during various installations, junior staff at SLPRC said BP experts contributed little. These junior workers do not understand the significance of strict adherence to specifications. However, SLPRC management are obviously aware of this need because they continue to approve a relatively large expenditure for foreign contracts every year (Table 10).

Table 10. Foreign exchange needed (1975–1982).

 

Foreign exchange needed (USD)

Year

Technical services agreements

Foreign contracts

1975

13 500

356 021

1976

58 627

568 540

1977

63 025

305 364

1978

138 545

356 095

1979

128 442

850 343

1980

136 265

323 948

1981

662 642

2 861 192a

1982

309 070

107 006

Source: Bank of Sierra Leone.

Notes: Does not include foreign exchange needed for feedstock.

USD, United States dollars.

a This figure includes some accumulated debts as well as forward payments for 1982.

The technical changes described earlier seem to have boosted staff confidence, for it is now easier for changes to be proposed, accepted, and implemented. This was indicated by the increased number of modifications and fabrications cited in the monthly engineering reports after 1979. Another indicator is that the engineering department is supervising construction of a new laboratory building on its own. Some experience was gained in 1982/83, when the department constructed the main fire building, under outside supervision.

Learning and technical change at SLPRC

In this section, I will attempt to link technical changes with the learning that developed the technological capabilities of SLPRC. Technical change can arise in response to sharply changed external circumstances. Examples include the technical changes made in response to accompanied oil price increases and shifts in demand for products, such as LPG and GO. Such changes will be classified as exogenously based.

Technical changes can also be endogenously stimulated, being made in response to anticipated changes in value: there is no danger to company profits. The continued use of chemicals to reduce the corrosion of pipes carrying cooling water is an example.

Another type of technical change is endogenously motivated, arising because plant personnel want to increase efficiency. This category includes all preventive maintenance practices and improvements in operating procedures resulting from greater familiarity with equipment.

All major technical change involves learning. The change to lighter crude oil is an example of crisis-induced learning. Crude-oil prices were escalating, but the political climate would not permit unlimited increases in product prices. The company needed a strategic response to ensure its survival, so it adjusted the production systems to use lighter tees that would reduce the throughput while producing roughly the same amount of high-demand products and reducing the production of low-demand ones.

The first change was that from Manjid crude oil from Gabon to Nigerian bonny medium-light 30:70. With the success of the original change, the company found it easier to implement subsequent changes, indicating that there was some learning by doing.

The installation of the standby generator and the LPG plant are two other examples of learning. In both cases the electrical installations, in particular, were done entirely by local SLPRC staff. SLPRC inherited from the Japanese the Sierra Leonean electrical-wiring technician who had wired the process plant during the construction phase. The company also employed a Sierra Leonean electrical engineer who had some power-generation experience with the National Power Authority. These two employees know more about the plant’s electrical layout than any expatriate contractor could possibly learn within the short duration of any installation. They are usually responsible for the electrical portion of major installations. By employing the electrician who had participated in the construction, SLPRC acquired knowledge about the wiring of the plant. Similarly, employment of the local, experienced electrical engineer was far more cost effective then employing a younger graduate and sending him to the power authority for the necessary experience.

Similar comments can be made about the mechanical engineering section: the senior welder had been an apprentice welder during the construction phase, and an experienced Sierra Leonean mechanical engineer was hired soon after start-up. The story of the Hockadate boiler indicates the high level of local mechanical engineering expertise during SLPRC’s early days. These examples indicate learning from the construction phase, as well as through employment of experienced personnel.

Another example of learning by doing involves the engineering department’s supervision of construction of the new laboratory building. SLPRC engineers had been involved in several building projects in the past, participating in the construction at some level, but not as project supervisors. Because of the experience gained from the previous projects, SLPRC can now supervise the construction of one of its own buildings.

The main evidence of learning at SLPRC, however, is in the many minor modifications and adaptations carried out by the maintenance department, changes that are endogenously generated. After many years of operating the plant, the engineers understand their equipment well enough to recognize modifications that will improve the overall performance of various parts of the plant. For these changes, no specific external technological inputs are required. The changes are planned and executed by company personnel, usually in response to their desire to improve plant performance. They have the ability to respond to meet urgent exogenous demands, the ability to anticipate the emergence of pressures or opportunities, and the concern to generate and improve the plant via minor modifications.

Conclusions

In this final part, the major conclusions of this study are summarized, and policy implications are discussed. Evidently, some indigenous and dynamic technological capability in oil refining exists within SLPRC. In particular, the company has demonstrated the capacity to react to exogenous demands, to anticipate pressures and opportunities, and effect improvements.

SLPRC has developed several capabilities:

• maintaining and repairing the plant and machinery;

• making minor changes to the plant and machinery to improve performance or durability;

• making minor changes to processes;

• running the company safely and profitably; and

• training another team to run a refinery that is similar in complexity to the one run by SLPRC and up to two times the size.

These capabilities were established without GOSL’s explicit intervention in matters of technology transfer. The employment strategy adopted by the refinery’s technical advisers has certainly hastened the development of technological capability. SLPRC recruits Sierra Leoneans who are already qualified and have some relevant experience. By doing this, the technical advisers hope to avoid elaborate training schemes and to lower personnel cost, as a Sierra Leonean may be employed at a fraction of the cost of an equally trained and experienced expatriate. Because oil-refining technology is transferred quickly to well-trained Sierra Leoneans and because their training is usually in science, engineering, or economics, they can easily adopt and master the technology.

Although expatriate technical advisers ensure that specifications and accepted safety standards are followed during major technical changes, local workers always play a major role in making these changes. There is evidence that some learning is taking place because of these changes. The most significant major technical change was the installation of the LPG unit in response to escalating world crude-oil prices.

Minor technical changes aimed at preventive maintenance and safety are carried out regularly by the indigenous staff. These changes are internally motivated and indicate a dynamic capacity to make modifications to the plant and its machinery.

The plant has always operated with a throughput well below its design level, so there is no incentive for the staff to try to stretch refining capacity. However, technical change by SLPRC has resulted in product diversification, maintenance of high product quality, reduction of unit cost, improved personnel and plant safety, and longer plant, equipment, and machinery life.

The principal agreement allows SLPRC to produce only for the local market. Over the years, production of gasoline, kerosene, and gas oil, which are in high local demand, has remained high or increased. Production of fuel oil, which is in low demand, has declined, and raw-material throughput has also declined, indicating greater productivity.

Profitability has always been the main concern of the oil companies participating in the joint venture. The pricing mechanism, whereby SLPRC reviews each year’s revenue budget and recommends price increases to offset any expected shortfalls, ensures profitability. The company has been profitable, and shareholders have been paid dividends for most of the company’s lifetime, except recently, when foreign-exchange shortages rendered the company insolvent.

Lack of foreign exchange, which causes shortages of crude oil and spare parts, is the main external factor affecting SLPRC’s performance. Because of adequate forward planning, shortages of spare parts have not yet led to work stoppages, but they have caused postponements of annual overhauls. Availability of crude oil determines the product supply.

The simplicity of process and the limited scope of operations at SLPRC are two factors that have helped technology transfer. Refining consists of straight atmospheric distillation, stabilization, and blending to yield products. There is no thermal cracking, reforming, catalytic reforming, or alkylation. The maximum throughput is 10 000 bpsd (some units elsewhere in the world have throughputs of 60 000 bpsd). SLPRC does not market or transport products or carry out basic or detailed engineering of plant equipment that is to be installed. As well, plant inspection is not done by SLPRC. The lack of complexity means technology can be transferred quickly.

The organization of employees is similar to that found in other refineries. All essential functions are performed by Sierra Leoneans, and there is an adequate body of skilled technicians to carry out day-to-day operations.

The two agreements that govern SLPRC were negotiated during the postinvestment phase, when there was no explicit S&T policy in Sierra Leone. Therefore, it is no surprise that both agreements contain very few clauses concerning effective technology transfer — transfer depends on the benevolence of the TNCs. Some technology transfer has taken place because of an employment policy TNCs adopted to reduce costs.

The principal agreement gave the TNCs the sole right to supply crude oil, from sources of their choice, but this arrangement quickly led to problems:

• The crude oil from the TNCs sources was more expensive than it would have been in the open market.

• SLPRC has to pay for crude oil in foreign currency, whereas the TNCs pay for products in local currency.

These problems have resulted in SLPRC accumulating a huge foreign-exchange debt and becoming insolvent in recent years.

GOSL did not carry out adequate feasibility studies before embarking on the refinery project. At the end of the investment phase, there was a need for a large sum of money to finance a refining company that would be solvent and to start up the plant. The TNCs cashed in on GOSL’s uncertainty about investing more money — they formed a joint venture with GOSL. Some of the company’s financial success may be attributable to the TNCs’ search for profits, but their 50% ownership of the company means GOSL does not have full control of an industry that is strategic for Sierra Leone’s development.

Recommendations

Some policy recommendations can be derived from careful consideration of the conclusions:

1. GOSL should negotiate to take over 80% of the refinery and be in control of an industry strategic for development; a long-term loan should be used to finance the takeover.

2. The refinery should be operated at full capacity, and the excess products should be sold to neighbouring countries to generate more foreign exchange for crude-oil purchases. The installation of a catalytic reformer should also be reconsidered.

3. All dividends should be paid in leones.

4. All contracts awarded by SLPRC should be awarded to Sierra Leoneans, who can then subcontract to foreign firms if this is necessary. In all foreign subcontracts, local participation and training should be mandatory.

5. Regular training visits of all SLPRC staff to refineries owned by the TNC participants should be arranged at the TNCs’ expense, as part of their contribution to the development of technological capability in Sierra Leone.

6. There should be mandatory reinvestment of some TNC profits in other sectors of Sierra Leone’s economy.

7. The TNCs should be asked to train a plant inspection team and to arrange for coding of the refinery’s better welders.

8. The laboratory, the mechanical workshops, and the fire and safety department should be upgraded, and their activities should be expanded to provide some services to other sectors of the national economy.

9. All proposed projects should be studied carefully, and contracts should include clauses covering the acquisition of technological capabilities. Sierra Leoneans must be involved in feasibility studies, process engineering, and detailed engineering, as counterparts, right from the start. They should be involved at the investment stage and start-up so that they can benefit from the learning that goes on in these phases. There should be firm timetables for training Sierra Leoneans to replace expatriates, as well as funding schemes for such training programs.

10. Only core technologies (rather than complete technologies) should be bought. Peripheral technologies should be acquired locally. Technical services agreements covering many areas should be replaced by technology-transfer agreements that are project oriented; each expatriate employed under such an agreement should be required to perform a specific function and to accept a Sierra Leonean counterpart as an understudy. Specific training programs should be organized under such agreements.

11. A planning unit should be established to evaluate the personnel requirements of all future projects and decide which workers should be trained and where so that, as the project starts, technology can be transferred concurrently.

References

Farrell, T.A. 1979. Tale of two issues. In Girvan, N., ed., Essays on science and technology policy in the Caribbean. Instituto Superior de Educacao Rural, Mona, Jamaica.

Koroma, A.B. 1982. The Sierra Leone Petroleum Refining Company Ltd. Report to BP London by the Deputy General Manager of SLPRC.

Lewis, A.W. 1985. Economic development with limited supplies of labour. In Agarwala, A.M.; Singh, S.P., ed., Economics of under development. London University Press, London, UK.

Smith, A.J. 1984. Technological capability in oil refining: Sierra Leone. Progress Report to International Development Research Centre, Ottawa, ON, Canada.

CHAPTER 13
Technological Assimilation in Small Enterprises Owned by
Women in Nigeria

O.I. Aina

Introduction

The central concern of this case study is to develop mechanisms for improving women’s employment in the informal sector in Nigeria, with particular emphasis on the development of women’s traditional skills.

Although many recent programs (sponsored by either the national government or international agencies) were designed to improve women’s economic status, most of them have failed to ameliorate the working and living conditions of rural women. They have not been able to raise women’s productivity to its full potential. Therefore, there is an urgent need to understand the forces that presently impede the acquisition of necessary skills and resources among women.

Many writers have pointed out the detrimental effects on women of technological and socioeconomic changes in the process of development (Dey 1975; Zeidenstein 1975; Palmer 1978; Whitehead 1985; Stevens 1985). Whitehead (1985) concluded that early approaches in the analysis of technological change appeared to be “sex blind,” and they also neglected the effects of institutionalized social relationships on women who worked. For example, most technologies were introduced to strengthen the dominant position of the male as the head of the household. Thus, many technological-development schemes failed because they were based on the assumption that the husband was responsible for the targeted activity (Dey 1975; Palmer 1978).

Other factors also contribute to the poor track record of many technological-development programs. One is the failure to take into consideration women’s accustomed tastes, beliefs, taboos, and modes of behaviour (Date Bah 1985). Bryceson (1985) stated that most of the appropriate technologies introduced to transform, for example, domestic labour have met with limited success because of limited dissemination, limited access, or poor design. Even when new technology is accessible, it is often unaffordable to women, as women lack access to critical resources. Or the new technology is impracticable; that is, women are unable to operate or maintain it. Rathgeber (1989) remarked that efforts to impose Western, technology-intensive knowledge systems on grassroots women generally have failed. She, therefore, recommended new strategies, grounded in traditional modes of interacting with the environment.

To properly fit the women’s issue into a model of technological change based on the employment, productivity, and income-distribution paradigm, Whitehead (1985) argued for incorporating sociological and economic aspects of intra- and extra-household relations in the analysis. Specific historical processes within which technological change is occurring become very important. For example, the capacity of women to be independent producers depends on a number of factors, including access to productive resources (e.g., land), which are often mediated by their dependent position in the household, and to publicly provided inputs (e.g., credit facilities, technical-skills training, and basic social infrastructures).

This paper presents an empirical study of technologies currently in use by rural women in Nigeria, constraints facing their use, and the general response of women to technical change, skills acquisition, and learning. In view of the current economic crisis, it has become imperative to upgrade women’s traditional skills. But the introduction of new technologies and processes cannot succeed without an understanding of local values and beliefs.

The research problem

The Structural Adjustment Programme (SAP) was introduced in July 1986 in Nigeria, against the background of unprecedented economic crises. The primary aim of SAP is to de-emphasize the primitive accumulation that characterized Nigeria after the civil war, thereby promoting capitalist accumulation in the development process. Among its specific objectives are restructuring and diversifying the productive base of the economy and reducing its dependence on the oil sector and imports.

The effects of SAP on the total economy are varied and multidimensional. However, focusing on the macroeconomic impact of SAP, we see that the productive base of the Nigeria economy moved, contrary to SAP policy expectations, in the opposite direction, increasing the dominance of the oil sector, reducing diversification, and increasing dependence on imports. Also, the balance-of-payments problem grew during this period. The growth of the economy was no longer sustainable: the economy became increasingly more import dependent, which not only created debt problems for the country but posed severe financial strains on the budgets of women, who, traditionally, are responsible for household consumer items. With the introduction of industrial capitalism, most of the productive activities (brewing beer, making cloth, and manufacturing cooking ware), which were traditionally women’s activities, were moved to modem, large-scale factories.

At the microeconomic level, Nigerian women continue to feel the impact of SAP. The concern about poverty and the adverse effects of SAP on the household standard of living and, particularly, on women, who are mainly found in the informal sector of the Nigerian economy, led to the introduction of the Better Life Programme (BLP), with the aim of mobilizing women to strive toward economic self-reliance by encouraging them to take advantage of the available opportunities.

The present economic crisis in Nigeria has brought about an ironic change — an increased demand for locally produced goods. For example, aso oke (a type of traditional dress woven in the cottage industry) is now popular at social gatherings and in the fashion houses. Because refrigerators have become unaffordable, rural dwellers are stuck with locally produced “water pots,” which are noted for their cooling effects on drinking water. Also, many Nigerians have now resorted to using locally produced soap (ose dudu, i.e., black soap). Yet, the women who produce these goods are constrained by their lack of access to critical resources (capital, labour, land, infrastructures, and improved technology).

Past experience, however, proves that to break the vicious cycle of poverty, women need more than access to critical resources. More than anything else, we need to attach more value to women’s work and to fully account for it in the development process. One way of making women’s work more visible is to focus more research on women’s productive activities.

Theoretical framework

This study is entrenched in the general framework of the theory of African political economy that gives primacy to material conditions, particularly economic factors, in the explanation of social life. The way a society produces its goods to meet its material needs, the mode of distribution, and the social relations emerging from the organization of production to a large extent determine the relative position of men and women in that society. By viewing social relations dialectically, the political-economy model emphasizes the dynamic character of reality. A focus on political economy highlights the ways that political and economic forces help to shape the contexts within which women operate. Both macrodimensions (e.g., capitalism) and micro-dimensions (e.g., household patriarchical structures) are taken into account. Thus, in Africa, both types of forces have interacted to marginalize the position of women. Women are, therefore, caught in a nexus of political and economic forces (Dauber and Cain 1981; Charlton 1984). The powerlessness of women to choose which technologies will be transferred has been aptly described by Cain (1981). He argued that the people responsible for technology choices are usually those least affected by them, whereas those most affected, who must adapt and live with the choices, often have the least to say about them.

Many writers have identified the negative impact of agricultural technology on women as food producers (Collier 1988; Jamal 1988; Afonja and Aina 1993). Stamp (1989) argued that many attempts to integrate women into development have failed because of inappropriate definitions of economic activity for women and because of stereotypes of women as “nonworkers” in any real economic sense. Agricultural intervention projects have, therefore, often resulted in gender conflict. This was succinctly described by Dey (1981), who discussed the deep rivalries between women and men in a Gambian wet-rice scheme. The Gambian women, who were traditionally responsible for wet-rice cultivation, were left out of the project design because the engineers who designed the project did not have a proper grasp of the traditional division of labour.

To make new technology appropriate for women’s use, we first need to study the technology they are currently using and identify the gender relations underlying this use. According to Stamp (1989), technology transfer is successful when women are the central decision-makers and when there are effective grass-roots women’s organizations.

The present study, therefore, examines macro- and microlevel factors influencing the rate of technology assimilation in cottage industries owned by women in Nigeria.

Research objectives

The broad objectives of this study are listed below, although only a few of them are discussed in this article:

1. to examine the structure of the selected cottage industries, focusing on the use of women’s labour and women’s access to critical resources (capital, improved technology, land, labour, raw materials, entrepreneurial skills, and marketing channels, etc.);

2. to document the technologies currently in use and their appropriateness to local conditions (i.e., to identify the problems associated with these technologies, using the users’ own terms and descriptions);

3. to examine the acceptance or nonacceptance of new technologies and, when there has been technical change in cottage factories owned by women, to examine skills acquisition and learning effects;

4. to investigate the social relations underlying production in selected factories (for example, gender-based division of labour, labour relations, husbands’ interference or noninterference in decision-making processes, women’s power to spend money or accumulate wealth independently of a spouse, and women’s ability or inability to manage the factory system independently);

5. to document information on income, expenditure, and assets of the selected village factories owned by women and the general management of finance, thereby helping to identify organizational structures that would help women gain control over increased incomes resulting from investments and improved technologies;

6. to document, in each of the four states studied, factors influencing success or failure (e.g., current government policies and programs and women’s accessibility to infrastructures, such as good roads, electricity supply, health services, and water supply); and

7. to make policy prescriptions to improve and expand the scope of village factories and thereby help incorporate women in national development.

Research methodology

Study scope

Four states in southwestern Nigeria were covered in the survey: Oyo, Ondo, Osun and Ogun. Women in the four states are well known for their prominent roles in the production of household wares.

The study focused on four traditional cottage industries: cloth weaving, mat making, soap making, and pottery making. Ten factory locations and two of the largest markets selling the traditional aso oke dress were selected from the four states (Table 1).

Table 1. Traditional industries and markets studied in Nigeria.

State

Centre

Industry or market

Oyo

Iseyin
Saki
Awe
Oyo

Cloth-weaving industry
Cloth-weaving industry
Soap-making industry
Oje market

Ondo

Owo
Ogotun-Ekiti
Erusu
Isua Akoko

Cloth-weaving industry
Mat-weaving industry
Pottery-making industry
Pottery-making industry

Osun

Ipetu-Ijesha
Inisa
Ede

Mat-making industry
Soap-making industry
Oje market

Ogun

Abeokuta

Pottery-makingindustry

Data collection

For the study, I gathered both qualitative and quantitative data. The tools of social investigation included

• a survey (this was done through structured questionnaires);

• in-depth interviews;

• participant observation (this helped me document the process of production and the conditions of the women’s work); and

• focus-group discussions (FGDs) (this method brought out group feelings or needs, particularly among factory owners).

On the whole, four categories of people were surveyed:

• owners of the cottage factories;

• employees and apprentices in the cottage factories;

• retailers and consumers of products from the selected village factories; and

• BLP managers, whose objective was to introduce technology to ease drudgery in the women’s work.

Sample Selection

The fieldwork, which took place between August 1992 and March 1993, was carried out in the 10 factory locations and 2 markets. Using a simple random-sampling technique, I chose 1178 factory owners from a list. These were interviewed, and 10 FGDs were held (each FGD included five to eight factory owners from each of the survey locations).

At the second level of the study, male and female employees and apprentices in the 10 factory locations were randomly selected for interviews (using the questionnaires). A total of 174 employees and apprentices, 366 retailers and consumers, and 29 BLP managers were interviewed.

Results and discussion

Demographic and socioeconomic characteristics of the samples
Factory owners

Data collected from the factory owners showed that only 5.4% of the total sample were men. The ages of the factory owners ranged from 18 to over 70; the mean age was 52. The average ages of owners across factories by industry were 37 for cloth weavers, 55 for potters, 56 for mat makers, and 57 for soap makers. The younger average age for the cloth-weaving industry shows that youths are now going into that industry. The other industries are still predominantly dominated by older women. The implications of this for the life of each industry are significant.

About 66% of the total sample were married; 18.9%, widowed; 2.3%, divorced; less than 1%, separated; and 11.9%, never married. Seventy-two percent of those in the never-married category were cloth weavers, corroborating the above-mentioned finding about the relatively young age of cloth weavers. About 23% of the total sample were female heads of households, meaning that acquisition of these traditional skills can help sustain women in households headed by women.

It is, however, important to note that about 74% of the factory owners never attended any formal school, and the others possessed only basic education (i.e., modern primary school). Thus, owning a factory may be very suitable for women unable to afford formal vocational training.

Notably, these cottage industries seem to be the only source of income for the owners; more than 76% of them had been in their business since childhood. In a way, skills acquisition seems to be generational (i.e., passed down from one generation to the next) and, sometimes, lineage specific. In the case of cloth weaving, it seems many people are breaking through traditional barriers, and the production process is becoming more modernized.

Remarkably, factory owners were from families with a low socioeconomic status. Predominantly, factory owners’ fathers were farmers, mostly with no formal education and with large families (an average of 11 children per household, with some households having as many as 25). Most (89.4%) of the mothers of factory owners were also without any formal education. Also, most of the spouses of the factory owners were illiterate farmers.

The majority of the factory owners had a monthly income of less than 500 NGN (in 1995, 78.5 Nigerian naira [NGN] = 1 United States dollar [USD]). Although a significant percentage (30.4%) could not estimate their monthly income, generally, income was limited — less than 16% of the whole group reported a monthly income of more than 500 NGN. Cloth weaving and soap making tended to be more economically rewarding. This is not unconnected with a growing technological capability in these two industries. However, more than 80% reported having no income from other sources, which further signifies that the selected industries are, in fact, the major sources of livelihood for these rural women and their households.

Factory workers

The 174 factory workers interviewed were apprentices (86%), paid employees (10%), and unpaid family members (4%). Of these, 173 were concentrated in the cloth-weaving industry and 1 was in the soap-making industry. Pottery and mat making recorded no workers (apart from casual labourers hired to dig clay or to carry mat stalks from the farm).

Only 2 of the 174 workers were men. This points to the predominance of women in the traditional crafts studied. The workers were up to 18 to 30 years old, but the majority (73%) were 20 or younger. More than 80% of these women had never been married.

In the past, these traditional crafts were learned only by those who were illiterate. Today, in contrast, literate and illiterate people are falling back on these informal structures for job and training opportunities: the data showed that 52.3% had basic education (modern primary school); 35.6%, secondary school education or its equivalent; 1.7%, university education; and only 9.8%, no formal education.

Data on workers’ social background showed that most of them were from families with a low socioeconomic status. They had illiterate parents, who were predominantly poor farmers or petty traders, and came from large families: the workers’ fathers had an average of nine children; their mothers, six. However, a new trend has emerged: children of educated and monogamous parents are now moving into the traditional crafts.

Factories

Most of the cottage factories (79.2%) were based in the home; a few were located in rented or purchased premises outside the home; some of the factory owners ran a cooperative system. The cloth, mat, and pottery factories were mostly based in the home. The soap makers, on the other hand, ran a partial cooperative system. Soap-making factories were clustered in an ebu, or district of town. A town could have two to six factory locations, with at least 20–30 soap makers at each location. In each ebu, some facilities like water and other material inputs were shared. Because the soap makers were already organized as groups, intervention programs for them would be easy to implement, control, and monitor.

Critical resources
Land

Most of the factories were based in the home. Cloth weavers either used the open space in front of their homes or converted a room into a weaving centre; sometimes they rented a stall. Mat makers used the corridors in their homes. Potters often used any available open space around their homestead. Because of the polluting effects of soap making, soap makers had their factories far from the home.

Although only 13.4% of the factory owners indicated that they had a pressing need for land on which to locate their factories, almost all of the factory owners complained about the unsuitability of their present locale for expansion. According to the factory owners, commercialization of land and the resulting high cost made it difficult for women to have access to land. Even in cases where land was leased out to women, as found among the soap makers in Awe and Inisa, permanent structures could not be built over leased land without incurring the wrath of the landowners, who were usually men. The FGDs conducted among the Awe soap makers revealed the extent of the land problem for these women. The women reported that they were hostile to UNICEF program implementers, who wanted to make permanent structures for the Awe soap factory. The Awe women rejected this offer, for they feared that the landowner might feel that it was a conspiracy to defraud him, although the women never communicated this fear to the program implementers. This finding supports Stamp’s (1989) findings on the issue of appropriate technology. She argued (p. 11) that scholars can only properly appreciate the problems with “the appropriate technology movement” when they “start from the reasonable assumption that women are refusing to accept or sustain appropriate technology on sound grounds, rather than out of ‘backwardness’ or ‘ignorance’.”

Capital

Most of the factory owners had started their businesses with initial capital of less than 500 NGN. Today this would be no longer possible: some weaving equipment, for example, now sells for more than 3000 NGN. The initial capital was obtained from the following sources: personal savings (65.4% of the owners); savings associations (14.6%); friends and relations (12.1%); spouse (11.1%); nongovernmental organizations (6.6%); and, in very few cases, the development banks and the BLP (numbers add up to more than 100% because some owners had more than one source of initial capital).

Capital needed for the day-to-day operation of the factory followed about the same pattern, but in addition the owners can use deposits paid by clients and the profits accruing from the factory operations. Notably, the women depend on traditional money lenders and the thrift and cooperative societies more than on the formal banking system. Less than 2% reported ever using the formal banking system for loans. Also, the traditional financial support, usually from husbands, seems to have shrunk. Less than 5% reported any financial assistance from husbands.

Among the four cottage industries surveyed, the capital outlay was highest in the cloth-weaving industry, and second highest in the soap-making industry. The cloth makers complained of lack of money to build large looms and buy imported thread and dye (prices were skyrocketing as a result of SAP). Soap makers reported that maintenance of soap factories had suddenly become expensive as a result of the high price of plywood and iron sheets. Also lacking were the necessary infrastructures: water (either through pipes or from wells), electricity supply, sewage disposal, motorable access roads, and health facilities.

Potters reported the high price of the variety of clays needed for their work; they also said that the labourers they needed to dig and pound clay had become unaffordable. Worse still, children, who used to be the main source of labour, had all gone to school.

Mat makers complained of a lack of capital to buy mat stalks: these owners were competing with buyers from the university drug-research units, who were ready to buy the roots of these mat stalks at any cost for pharmaceuticals. Labour to carry mat stalks from the farms to the factory sites had also become unaffordable. Sometimes the mat makers were producing at a loss because of high costs.

Technological evolution and assimilation

Technological knowledge in the selected cottage industries is usually acquired informally. The indigenous technical knowledge is passed from parents to children, aided by the traditional division of labour based on age, sex, and the kinship system. More than 74% of the factory owners did not have any formal training in the selected skills.

The apprenticeship system is, however, emerging as a new mode of skills acquisition, particularly in the traditional cloth industry. Programs like BLP for rural women and the recently established women’s education centres have trained some women in income-generating skills and provided vocational training in traditional cloth weaving and soap making, although the number of women who have benefitted from such programs is still very small. For example, only 70 women out of the total sample of 1178 factory owners had vocational training in either cloth weaving or soap making, and their training was obtained through one of the following: a Better Life Multipurpose centre, the diocesan training school, or a government vocational school.

The technology in use is, generally, very simple, manually operated, strenuous, and energy consuming. The following subsections discuss the trends in technological evolution and assimilation for each industry.

Cloth weaving

Weaving is a well-established household occupation in the towns of Iseyin, Saki, and Owo. Today, this craft has spread through the length and breadth of Yorubaland.

In Iseyin, weaving was traditionally a men’s vocation until about 10 years ago, when women started to show an interest. In Owo and Saki, on the other hand, weaving is primarily a women’s vocation.

The development of weaving technology is at three different stages. Stage 1 is represented by the traditional loom. This loom is stationary and has two forms. The four-pole form, used in Owo, has two vertical poles (stuck into the ground) and two horizontal poles. This loom can weave a piece of cloth that is 30 in. × 36 in. (1 in. = 2.54 cm). The three-pole form, used in Iseyin and Saki, has two bent poles (stuck into the ground) and one horizontal pole. This loom can weave a strip of cloth that is 5 in. × 36 in.

Stage 2 is represented by the portable loom. This loom is also used in Owo. The process and accessories used are the same as those for the three-pole traditional loom. The only difference is that the stage-2 loom is portable, instead of being stuck in the ground.

Stage 3 is represented by the big loom. Some of its accessories, like the shuttle, reel, and Headle’s wire, are imported. Using the big loom is more strenuous than using the smaller stage-1 and stage-2 looms: to effectively operate the big loom requires two people (one to do the weaving and one to mend the thread when cut). The big loom is much more efficient than the stage-1 and stage-2 technologies, however. As many as 10 complete “wears” can be “beamed” on this loom at once (there are two cylindrical rollers on a loom: one holds the warp threads, and the other holds the finished work; 39 stripes make a complete wear for an adult; a stripe is about 1 in. × 36 in.). Only one or two wears can be beamed on the smaller stage-1 and stage-2 looms at a time.

Increased productivity has been witnessed in the traditional cloth industry with the rise of the modern, imported Headle’s wire (replacing the traditional Headle’s twine) and the use of a longer reed, which accommodates the “denting” of more stripes, even up to the size of a bed sheet (a dent is the space between two wires on a loom; each warp thread is drawn through a dent). The new improved equipment can also weave towels, napkins, and trousers, etc.

Currently, the cloth industry is facing a major crisis, making the recent achievements in technology irrelevant. First, the imported spare parts, such as the reed and Headle’s wire, have become very scarce and expensive. Some of the parts, which cost in the range of 200–500 NGN about 3 years ago, now sell for more than 4000 NGN. Even wood (which is locally produced) has become suddenly expensive.

Second, the graduates from the various vocational centres, who have invested their time and money in learning to weave on big looms, cannot afford to set up their own weaving business because of the exorbitant price of equipment. Some trainees are now deserting vocational schools, and independent owners are now forced to learn to use the narrow loom, which is still relatively cheap (about 1000 NGN).

Third, the owners of the efficient big looms are facing a fall in output because of lack of apprentices, for such big looms need more than one operative, especially at the whopping, beaming, drafting, and denting stages.

Fourth, the prices of the thread and glass fibre used in weaving have escalated. Within the 6 weeks I was doing the fieldwork in Owo, there was a more than 50% increase in the price of thread. Despite the high price of equipment and raw materials, factory owners often resort to buying fake products. The quality of thread is no longer predictable; sometimes a particular colour already in use for a particular cloth on the loom might not be found. Factory owners can no longer tie their money into “free production” (producing at an optimal capacity without artificial restrictions), but they demand that customers “book” (show the intention of buying before the product is made) and pay up front. To reduce the high price of thread, factory owners suggested that the government establish a thread-manufacturing industry in the southern part of Nigeria, to alleviate the continued dependence on the northern thread factory.

Designers are using the traditional cloth-weaving factories as a base for the African designs now found all over the European market. Factory owners in Saki, which is a border town, send their products to neighbouring countries — Togo, Lome, and Cameroon. The factory owners seem to have limited market channels because there is no organized market in the area. They, therefore, depend more on the booking system of sale, which is open to trade fluctuations. The peak of sales in the Owo area is usually around July or December (i.e., dictated by the festive moods of the local ogun festival in July and the Christmas season), when a lot of burials and wedding ceremonies take place.

Despite its present problems, the traditional cloth industry is responding to change (combining both old and new modes of production and design). Now that women dominate the industry, men are leaving. Women are joining because they can easily combine it with running a home. Innovative designs are emerging, and the cloth texture is becoming finer, with a higher quality. Also, the average price a Nigerian consumer pays for the finished product is approximately one fifth of what similar imported material costs in the Nigerian market.

Mat making

The mat-making industry was studied in the towns of Ogatun-Ekiti and Ipetu-Ijeshu.

The equipment required for mat making includes a cutlass, a knife, pots for dyeing sliced mat stalks (alufa), a small plank of wood of about 5 cm thick and 20 cm long, and a small mat (ateere), upon which the weaver sits. All these are locally fabricated and, therefore, readily available.

No formal training is needed for mat making. A young girl can learn by sitting down by her mother and watching her work. Soon, the girl is allowed to try her hand at weaving, and she soon perfects her skill.

The procedure for making mats can be broken down into four steps: (1) on-farm activities, (2) smoothening and drying, (3) dyeing, and (4) weaving. The on-farm activities involve growing the mat stalk, weeding the farm, and harvesting the mat stalk. A mat stalk takes an average of 3–5 years to mature. Final harvesting of the matured mat stalk is done by hand. Harvesting and transporting a bundle of mat stalks to the homestead take a full day. The smoothening and drying stage commences the second day, with the slicing of mat stalks. A sickle-like knife is used to slice the content (pulp) out of the mat stalk. After sun-drying for 2 or 3 days, the sliced stalks are dyed or left plain.

Mat-making processes are reportedly very tedious. On the average, the fastest mat maker may be unable to make more than three big coloured mats in 2 weeks. Each mat sells for an average of 100 NGN. Apart from dyeing, no new technology has been introduced in this area. Its no wonder the mat makers are predominantly the aged (60–90 years): the old drudgeries still remain.

In both Ogotun-Ekiti and Ipetu-Ijesha, there are organized local markets where these mats are sold. Buyers come from big cities like Ilorin, Oshogbo, Benin, Ede, Akure, and Ilesha to buy the mats.

Today, 60% of mats produced at Ogotun-Ekiti are bought by the Better Life Shop, where the mats are made into fashion bags, calendars, dining-table mats, conference bags, purses, shoes, etc. Many of these products are exhibited at national and international trade fairs. Like the cloth industry, the traditional industry, if it is well developed, can earn the nation a substantial amount of foreign exchange.

Although the number of mat makers is dwindling because the old ones are not readily replaced by the younger ones, more youths are showing an interest in the byproducts of the traditional mat industry. Such products have also found their way into fashion houses.

Soap making

The soap-making industry was studied in Awe and Inisa.

The shelter for the soap factory is usually made of wooden columns, topped with thatch roofs and, in few cases, aluminium roofing sheets. These materials constitute a fire hazard because a lot of heat is generated during the soap-boiling process.

Traditional black-soap making is a major occupation for women in Awe, Oyo, and Inisa. The technology in use is simple but requires strenuous effort. The equipment and raw materials needed to make black soap are a drum or a clay pot, a mortar and pestle, palm-kernel oil, and ashes from cocoa pods. At the first stage, a mixture of oil and ashes is boiled in the drum or clay pot to form a thick paste (oka). After the paste has cooled down, it is transferred to the mortar and pounded with the pestle. The paste is later transferred to a clay pot for further boiling, until it starts to rise (a process that takes 1 or 2 h). When the mixture (now the soap) cools down, it is moulded into round shapes. Ashes are sprinkled on each soap ball to prevent sticking.

This traditional technique of production is still used today, although new structural facilities are emerging. For example, drums are taking the place of clay pots, and water is obtained from wells, instead of from streams and rivers. Intervention projects have been introduced by agencies such as UNICEF, the Cocoa Research Institute of Nigeria in Ibadan (as in the case of the Awe soap industry), and BLP (as in the case of Inisa soap factory). On the whole, however, efforts to totally modernize traditional soap production have failed.

The soap makers frowned on attempts by researchers to make their products more like bar soap, which, according to the women, lacked the unique qualities of the native soap. At Inisa, soap makers were disgruntled with the machines introduced by BLP. The soap-slicing machine was criticized on several grounds: using the slicing machine was not cost effective, as the soap sizes produced by such a machine do not fit the women’s slicing system; the manual operation of the slicers gave the women backaches and easily tired them out (the pushing system exerts too much pressure on the wrist, chest, and back). A grinding machine provided by the BLP to one of the six factories in Inisa was lying unused at the time of the survey. Although the grinding machine was appropriate, the factory “spokesman” (who happened to own a grinder that had been serving these women the past 10 years) selfishly prejudiced the soap makers against the government soap projects. This man felt he might be driven out of business if the BLP machine were accepted, and he also feared losing his traditional authority over the soap makers. At the time of the interview, he actually incited the Inisa soap makers against the field workers.

FGD reports, field observations, and the market survey showed that the traditional soap industry has a unique role to play in both the economic and the social life of the people, as shown by the list of its uses reported by both makers and consumers. Traditional soap is said to have numerous health and social values:

1. A little mixture of the soap in a glass of water reportedly cures stomach aches.

2. Traditional black soap is said to be very efficacious in the treatment of the vaginal wounds some women receive during childbirth.

3. A special water (eyin aro) collected during soap processing is traditionally used to cure eczema, boils, and wounds. Eyin aro reportedly has the effects of iodine on fresh wounds and is used to clean inflamed throats.

4. Reportedly, traditional soap clears up skin wrinkles, pimples, and other skin allergies. (At the time of the study, we found modern soap and body cream, made directly from the native soap, available in the market.)

5. Traditional soap is now widely used to wash clothes, to prevent fading and bleaching of colours.

Pottery making

Data on the pottery-making industry were collected from Erusu, Isua Akoko, and Abeokuta.

Pottery started in Abeokuta when the Ijaiyes came to this town as refugees. In Abeokuta, potters concentrate in an area of the city called Ijaiye. In Isua Akoko and Erusu, each quarter in the community is noted for a particular pottery design. Some specialize in agbagba (a bowl for frying cassava); others specialize in isasun obe (a pot for making soup), oru (a pot for herbal preparation or placenta burial), or agbagba isu (a pot for cooking tubers).

The technology used in the traditional pottery industry is simple: a mortar and pestle, a club, a cutlass, a hoe, a digger, shells, corn cobs, and calabash, among others. Local clay and water are the production materials. The production process involves mixing the clay with water, moulding, pressing, designing (for specific shapes and sizes), sun drying, and burning.

Major improvements have been seen in designing and drying (oven drying is replacing traditional open-fire burning). As well as making cooking and water pots, the potters produce coal pots, kettles, statues, flower vases, decorative pots, plates, and clay beads. Clay beads are in high demand today and are used by kings, chiefs, and socialites.

The main problem facing the potters is the scarcity of the clay appropriate for pot making. The clay for making pots is always a mixture of different types of clay. Exploring for clay can be hazardous. Because of the great depth of the pit that has to be made, there are always cases of diggers being buried under falling clay. The diggers are, therefore, scarce, and they demand a very high fee. Other problems include the following:

• The infrastructures are poor (scarcity of water, lack of electricity, bad roads, and lack of basic health facilities in case of accidents).

• The potters suffer during the rainy season (often the rains wash away the potters’ clay), and the harmattan (a dry, dusty wind from the Sahara) tends to crack pots.

• Many potters develop body aches, dizziness, and fatigue as a result of carrying heavy clays.

• Products often break when they are transported.

• The potters suffer from insufficient capital, lack of access to land and labourers, and the growing cost of inputs, especially the high cost of transportation (which has made it impossible for the pot makers to travel to other towns to sell their wares).

• The potters complained that lack of a public factory space makes them unable to organize themselves as a functional group.

• The potters are in dire need of grinding and mixing machines for the clay and ovens to bake the pots.

• The potters find it difficult to get local people to dig clays, so they often depend on Hausa, whose rates are hardly affordable.

The pottery technology appears to be inefficient, as the women reported that they were unable to meet the public demand for their products. They complained about the hazards of open-fire burning, which exposes them to heat and smoke. Firewood is also becoming scarce because of deforestation.

In Isua, BLP established some markets and provided an oven. However, the potters complained that the oven is too small to admit big pots and also produces insufficient heat, so drying is delayed, resulting in many of the pots cracking. The Country Women’s Association of Nigeria has arranged some soft loans for the potters, but this has not been too effective. The potters need functional potters’ associations to coordinate their activities.

In Abeokuta, potters have strong associations, through which they buy clay at great distances. Potters in Abeokuta believed that BLP was meant to cheat local women, and, therefore, they decided to refuse any help from BLP.

Potters, however, foresee a lot of prospects for the craft. Elite women are now buying pots in large quantities for home cooking, as well as flower pots for home decoration. Many of the potters have also participated in trade fairs.

A general assessment of technology in use

To assess the technology currently in use, I asked the factory owners to agree or disagree with the 11 statements shown in Table 2. Responses were given the following weights: totally disagree, 1; disagree, 2; agree, 3; totally agree, 4. The scores were then composited.

Table 2. Factory owners’ assessment of the technology they use.

Statement

Agree
(%)

Disagree
(%)

The technology is not time consuming

40.3

59.7

The technology is very safe

68.1

31.9

The technology is affordable (cheap)

66.7

33.3

The technology makes the work process easy

58.2

41.8

The technology is not energy sapping

38.2

61.8

The technology is easy to operate by women

75.2

24.8

The technology has a large production capacity

48.7

51.3

The technology does not need redesigning and remodification

78.8

21.2

The technology is in line with our social, cultural, and religious life

89.8

10.2

Spare parts are readily available

74.5

25.5

Repairing and servicing can be done easily and locally

79.5

20.5

Factory owners definitely wanted improved technology, to make production less cumbersome and reduce drudgeries (they gave a list of specific things they wanted the government to do to reduce the drudgeries). But generally, the potters would frown on any technology that would change the traditional flavour or texture of their products. For example, in many cases, a craft is linked to a deity. Potters in Ijaiye are all devotees of Iyamopo, a goddess who is believed to be supportive of pot production. It is believed that when this deity is annoyed, for whatever reason, there is bound to be a general cracking of pots during baking. Thus, Iyamopo is appeased at periodic festivals. Potters will never support any technology that will not allow them to obey the taboos surrounding Iyamopo.

The future of the pottery industry will depend on effective linkages between producers and city traders, who take pottery to the cities. The city traders are young and determined. The problem, however, is in getting the younger generation interested in a hazardous industry, which also needs upgraded technology to ease some of the drudgeries of production.

Policy implications of the findings

Effective technological change can only be achieved if there is a focus on the sociocultural and economic dimensions of technology. Women should be consulted when new or improved technologies are being selected, designed, and developed. The programs that trained weavers to use large looms, provided the soap-slicing machines to Inisa soap makers, and built the modern oven for Isua potters failed to make tangible, positive impacts because they failed to take account of local demand and the production needs of the factory owners. Large looms are no doubt effective for largescale production, but they are unaffordable to these poor women.

If program implementers want to introduce a new technology, they must first look at the issues of availability, practicality, and profitability, and there must be available and affordable infrastructural facilities for market linkages and other supportive facilities. Raw materials must be domestically sourced to reduce costs caused by frequent devaluation of the naira in the international market. The cottage industries could be made more profitable with intervention programs that use participatory approaches.

The government, at this point, can try to help small- and medium-scale industries (as part of an alternative industrialization strategy) by ensuring that market channels, both national and international, are opened up for local producers.

To expand the scope of cottage industries, I recommend that relevant vocational training be introduced at all adult literacy centres and women’s education centres. For cost-effective operations, factory owners should also be trained to use a simple accounting system and some simple organizational management.

The present intervention programs, such as BLP, tend to have good objectives, but they often fail because of some bad managers, who are corrupt and try to divide and rule the women’s groups. A higher level of social mobilization is achieved if there are functional women’s groups and women’s cooperative societies. Grass-roots women’s associations may be strengthened by better program interventions.

More intervention programs could be developed to inform local producers of the technological innovations already developed at the universities and other research institutes in the country. Because of the current low level of education among factory owners, they need to be instructed in the usefulness of new technologies and encouraged to change traditional values that are retrogressive. Encouraging these women to make time to go to adult literacy centres will also go a long way to improving the present mode of production, particularly in designing products.

The local producers should have factory houses, with the necessary infrastructures. Small-scale factories could be built by the government, with a token fee paid by local users.

References

Afonja, S.; Aina, O.I. 1993. The food crisis and new patterns of females’ labour utilization in agricultural production. In Afonja, S.; Aina, B., ed., Women and social change in Nigeria. Organization of African Universities Press, Nigeria.

Bryceson, D.F. 1985. Women and technology in developing countries: Technological change and women’s capabilities and bargaining positions. United Nations International Research and Training Institute for the Advancement of Women, Santo Domingo, Dominican Republic.

Cain, M. 1981. Overview: Women and technology — Resources for our future, In Dauber, R.; Cain, M.L., ed., Women and technological change in developing countries. American Association for the Advancement of Science, Washington, DC, USA. Selected Symposium 53.

Charlton, S.E. 1984. Women in Third World development. Westview Press, Boulder, CO, USA.

Collier, P. 1988. Oil shocks and food security in Nigeria. International Labour Review, 127, 761–782.

Dauber, R.; Cain M.L., ed. 1981. Women and technological change in developing countries. American Association for the Advancement of Science, Washington, DC, USA. Selected Symposium 53.

Dey, J. 1975. Role of women in Third World countries. Agricultural Extension and Rural Development Centre, University of Reading, Reading, UK. MA thesis.

Jamal, V. 1988. Getting the crisis right: Missing perspectives on Africa. International Labour Review, 127, 655–678.

Palmer, I. 1978. Women and green revolutions. Institute of Development Studies, University of Sussex, Sussex, UK.

Rathgeber, E.M. 1989. Introduction. In Women’s management in Africa. International Development Research Centre, Ottawa, ON, Canada. IDRC Manuscript Report 238e, i–iv.

Stamp, P. 1989. Women in development as a field of enquiry: Issues and conceptual problems. In Women’s management in Africa. International Development Research Centre, Ottawa, ON, Canada. IDRC Manuscript Report 238e, 6–25.

Stevens, Y. 1985. Improved technologies for rural women: Problems and prospects in Sierra Leone. In Ahmed, I., ed., Technology and rural women: Conceptual and empirical issues. International Labour Organization, Geneva, Switzerland; Allen & Unwin, London, UK. 284–324.

Whitehead, A. 1985. Effects of technological change on rural women: A review of analysis and concepts. In Ahmed, I., ed., Technology and rural women: Conceptual and empirical issues. International Labour Organization, Geneva, Switzerland; Allen & Unwin, London, UK. 27–62.

Zeidenstein, S. 1975. Socio-economic implications of HYV rice production of rural women in Bangladesh. Dacca, Bangladesh.

CHAPTER 14
Translating Technological Innovation into Entrepreneurship in
Nigeria: Social and Policy Implications

S. Adjebeng-Asem

Introduction

Theoretical and empirical investigations have emphasized the crucial role that technological innovation and entrepreneurship play in fostering the development of today’s industrialized nations. These types of investigation are now seen as crucial to the development of the Third World, and they are, accordingly, recognized as important components of technology policy and indigenous socioeconomic planning. The present emphasis on indigenous technical innovation and entrepreneurship stems from the failure of past attempts to stimulate Third World development by borrowing or transferring advanced technology from developed nations.

In most Third World countries, governments are criticized for paying no more than lip service to the need for accelerated growth and for not harnessing the abilities of their own citizens for technological innovation and entrepreneurship. Critics also lament that these countries depend too much on exogenous and often exploitative technology, and they point out the inappropriate choices of technology made by many developing countries.

This article is offered as a contribution to the search for ways to harvest indigenous capabilities. Specifically, it is an in-depth investigation of the social factors that influence the translation of new technologies into entrepreneurship and a summary of a major study of innovation and entrepreneurship in Nigeria.

The study included six cases — three cases of innovations accepted into general use and three of innovations that, though introduced into the market, were not accepted. Of particular interest were the nature of innovation, the need for it, its assessment by users, the socioeconomic characteristic of the inventors and users, and the factors that helped or frustrated the inventors in the commercialization of the product.

The investigation rested on a set of assumptions:

• There are in Nigeria (especially in the states of Lagos and Oyo) economically feasible inventions.

• The nation cannot fully exploit the inventiveness of Nigerians because of Nigeria’s political economy, the dominance of mercantile capitalism, and on overdependence on foreign technology.

• The difficulties in commercializing inventions are partly due to the attitudes and methods of some inventors and entrepreneurs.

• Despite all the constraints, some inventors and entrepreneurs will succeed in the large-scale commercialization of inventions.

The last assumption implies that the inventors who succeed in commercializing their innovations, either by themselves or through an entrepreneur, are the people to mobilize for an indigenous technological development in agriculture, which is important to Nigeria’s socioeconomic development.

The problem

The main concern of this chapter is to explain why technical innovations of potential value to agriculture in Nigeria are not widely diffused. This concern stems mainly from two observations from an exploratory study by Tiffin et al. (1987) of mechanical technology in postharvest operations: (1) there seems to be a tremendous amount of postharvest waste; and (2) there is a lot of mechanical inventiveness among those who work in these postharvest operations, but the inventiveness is not exploited.

All this is particularly puzzling at a time when the poor economic condition of the country is largely attributed to a failure to develop indigenous technology. The literature is full of accounts of Nigeria’s ample natural resources. Nigeria has a variety of export crops — cocoa, groundnuts, palm products, cotton, timber, and rubber — in addition to its abundant food crops. Nigeria is blessed with vast, rich lands, but 50–60% of it is untilled (Aribisala 1983). It has rich mineral resources, notably oil and iron. Afonja (1986) pointed out that Nigeria has a significant proportion of the world’s tin, columbite, and titanium; if these were exploited using indigenous inventiveness, the result would be a considerable acceleration of the country’s technological development.

Nigeria also invests relatively heavily in human resources, especially in technical training (Table 1). During the 1980s, great attention was paid to training intermediate- and high-level scientific, technological, and technical personnel through universities, technical colleges, polytechnical institutes, and trade centres. By 1989, there were at least 13 federal universities and three federal colleges of technology. In 1979/80, 40.7% of all students were in science and technology.

Nigeria’s crop of scientific and technical personnel has made modest advances in technological innovation, showing a fairly high level of inventiveness in not only the universities and research institutes but also the informal sector.

Of the 15 inventions shown in Table 2, only 2 were widely diffused, although all reached the testing stage. Two successes out of 15 inventions would not be regarded as a problem in many countries; indeed, the literature is full of examples of unsuccessful inventions, and the point is often made that few new technologies are successful. But these findings point to a serious problem in the agriculture of a country that cannot afford to invent for its own sake. In this instance, 12 of the 15 inventions were obviously simple and valuable but did not get to the market place, even though the inventions would have led to the use of indigenous products, rather than goods continuously imported.

Food-processing machines are imported, as are many finished products, although local products could well supply the need. For example, we could replace expensive imported vegetable oils with oils made from local crops. We cannot overemphasize the need for a country to commercialize and widely diffuse its own innovations. Tiffin et al. (1987) established that invention, the initial step of innovation, is much commoner in Nigeria than people realize; if these inventions were backed by appropriate public policies, some of them would undoubtedly become successful entrepreneurial ventures.

Table 1. Distribution of selected categories of personnel, Nigeria (1977–1981).

 

Year

Nigerian

Non-Nigerian

Total

Administration management personnel

1977

90019

5690

95709

 

 

1981

207116

4050

211 166

Scientific, technical, and technological personnel

1977

39649

2754

42403

 

1981

38055

2988

41 043

Other professionals

1977

 

1981

47367

867

48 234

Agricultural personnel

1977

7892

210

8102

 

1981

15 103

147

15 250

Health personnel

1977

20112

1281

21 393

 

1981

24881

1 155

26 036

Artisans and trades people

1977

219 888

332

220 220

 

1981

304877

4129

309 006

Source: Nigerian National Manpower Board.

Objectives for the study

The present study was designed to establish why indigenous technical innovations are often not translated into feasible business ventures despite the fact that Nigeria has both the technological capacity and the need. Several related issues were of interest: What factors are critical in the commercialization and diffusion of an innovation? What is it about Nigerian society that makes it produce creative but not entrepreneurial people? How can the positive factors be harnessed and the negative ones be neutralized?

These issues imply a link between technical innovation, nascent entrepreneurship, and a much broader level of technological development, although the study focused only on narrow aspects of the link. The study, therefore, had these primary objectives:

• to identify three postharvest innovations that were commercialized;

• to discuss the innovations in detail, tracing their history;

• to identify and analyze the social factors bearing on the success of these innovations;

• to study and analyze the common aspects of successful innovations; and

• to specify the conditions most likely to lead to successful, large-scale commercialization of technical innovations in agriculture and the conditions most likely to inhibit this.

An important secondary objective of this study was to recommend ways to harness the positive factors.

Definitions

In this work, innovation refers to the introduction of a technical or mechanical process involving

• a potential market (need pull) or a basic scientific idea (technology push);

• the ability to conceptualize the need or idea in practical terms;

Table 2. Innovations from selected Nigerian research organizations.

 

Invention stage

Market stage

 

Product

Idea

Prototype
manufacture

Testing and
development

Introduction
to market

Diffusion

Yam pounder

x

x

x

x

x

Maize sheller

x

x

x

 

 

Palm-oil digester

x

x

x

 

 

Cassava planter

x

x

x

 

 

Maize planter

x

x

x

 

 

Cowpea thresher

x

x

x

 

 

Melon sheller

x

x

x

 

 

Gari processor

x

x

x

x

x

Kiln to smoke fish

x

x

x

x

x

Rolling injection planter

x

x

x

 

 

Auto-feed jab planter

x

x

x

 

 

Fertilizer band applicator

x

x

x

 

 

Cassava lifter

x

x

x

 

 

Rice pedal thresher

x

x

x

 

 

Multipurpose bean dryer

x

x

x

 

 

Source: Tiffin et al. (1977).

• the concretization of the idea, that is, the production of an invention and the creation of a prototype or the adaptation of an old idea;

• a test of the new invention or idea to show that it is workable and acceptable; and

• the introduction, usually on a small scale, of the invention in the marketplace.

Technical innovation refers to innovation in mechanical hardware. An original technical innovation is one that originates from a basic idea or the recognition of a social need. It is concretized as a prototype and polished through research and development (R&D) before it is manufactured. An adaptive technical innovation starts with an existing product, process, or system that needs modification or improvement, and R&D is carried out on it until the desired result is obtained.

In the technologically advanced societies, uncommercialized inventions or laboratory-bound innovations do not generate serious concern. But in developing countries, where social and economic problems are in serious need of technical solutions, this state of affairs seems unacceptable. Hence, there is an interest in analyzing the factors that hinder or promote entrepreneurship of technical innovation. This is the subject of the next section.

The literature on entrepreneurship

Despite the growing awareness among economists and policy-makers that entrepreneurship is a critically scarce resource in many parts of the world, particularly in developing countries, and that it is not economic opportunity alone that calls it forth, little attention has been given to the social and cultural factors that influence it. The work of Akeredolu-Alu (1975) and Mansfield (1978) are notable exceptions.

The entrepreneur has been described as the one who starts an enterprise; the one who puts new forms of industry on their feet; the one who shoulders the risks and uncertainty of using economic resources in a new way; and the one with the right motivation, energy, and ability to build something by his or her own efforts. Managerial ability is an essential ingredient.

For this review, we shall regard the entrepreneur as a combiner of resources. This is a courageous, independent, and tenacious individual who can surmount difficulties created by the social milieu to combine or marshall such resources as initiative, risk taking, know-how, organizational ability, leadership, and marketing skills to establish a profit-oriented enterprise.

Weber (1930) and Schumpeter (1947) argued that entrepreneurship appears to be more appreciated during economic depression than when times are good. Studies of entrepreneurship lapsed after the Great Depression but had a resurgence in the 1970s and 1980s (e.g., De Bono 1971; Dobb 1976; Thring and Laithwaite 1977; Sounder 1981), when more attempts were made to find practical solutions to economic recession, high inflation, and mass poverty. Now there is a burgeoning literature of several theoretical perspectives; some of these are summarized here.

The economic perspective on entrepreneurship

The economic importance of the entrepreneur in world history has been recognized for several decades. Weber (1930) put forward the thesis that the protestant ethic is spirit of capitalism (Green 1959). Other writers have discussed, from different perspectives, the importance of entrepreneurship to different countries in the postindustrial era. Recently, some development economists have said that the expansion of high-grade personnel (such as entrepreneurs), rather than the increase of physical capital, is the major determinant of economic development. Schumpeter (1947), who was, perhaps, the first major economist to analyze the role of entrepreneurship in economic development, attributed innovation to the entrepreneur. He argued that “to study the entrepreneur is to study the central figure in modern economic history.”

In the theory of distribution put forward by Say (1824), a neoclassical economist, the entrepreneur plays a crucial role, though he or she is not a production factor. Unlike the capitalist, the entrepreneur directs the application of acquired knowledge to the production of goods for human consumption. Say postulated that, to be successful, the entrepreneur should be able to estimate future demand, determine the appropriate quantity and timing of inputs, calculate probable production costs and selling prices, and have the arts of superintending and administration. As this combination is not common, the number of successful entrepreneurs is limited, especially in industry.

Adam Smith, the 18th century philosopher and economist, made the distinction between the “undertaker” (a translation of the French entrepreneur), who manages his or her own capital and receives a profit, and the “inactive capitalist,” who receives interest. Although Smith did not articulate the entrepreneurial function, he strongly emphasized the importance of the business class.

It could be argued that these differences in the conceptualizations of the entrepreneur are the result not only of differences in intellectual viewpoints but also of differences in time and cultural perspective. Smith’s influence is, perhaps, the reason that the classical economists of the 19th century merged the entrepreneurial and capitalist functions and did not develop a theory of the entrepreneur. The belief of the classical school that economic relationships were determined by natural law may also have forestalled the idea of a conscious agent, such as the entrepreneur, at the centre of the economic process.

For Schumpeter (1947), as mentioned earlier, the entrepreneur is the centre of an integrated model of economic development, incorporating a theory of profit and interest, as well as a theory of the business cycle and the capitalist system. The entrepreneur is an innovator, one who carries a combination of the following: the introduction of a new product; the opening of a new market; the conquest of new sources of materials; and the organization of new industry.

Clark (1985) asserted that there is a certain artificiality to isolating entrepreneurship in the way Schumpeter (1947) did. Schumpeter admits that entrepreneurs can be other people, such as managers and capitalists, and are subject to complex behaviourial motives. It has been further argued that there is a tendency for innovating firms to move beyond commercializing just one invention and to continue striving for a competitive edge in the market place. Writers such as Cooper (1973) maintain that there are powerful reasons for thinking that firms attempt to institutionalize the capacity for innovation in a far more permanent sense than allowed by Schumpeter. Indeed, Schumpeter came to realize this and to recognize that corporate R&D is a major source of industrial innovation.

The neoclassical economists were not the only ones to fail to recognize the full functions of the entrepreneur. Most Marxist economists are equally guilty. To Marx, the capitalist is the central figure in the economic process. The capitalist’s major role emanates from ownership of the means of production and not from any personal activity. Generally, the entrepreneur is excluded from Marxian analysis, although Marx’s “active capitalist” has some of his features. The Marxist theory of distribution does not distinguish between profit and interest.

According to Baran and Sweezy (1973), the emphasis on the supply function of the entrepreneur is misplaced. The entrepreneur is not the major figure in capitalist development but is, along with the capitalist, someone who exploits and benefits from modern capitalism. The study of entrepreneurship applauds its genius, without trying to explain why this genius turned to the accumulation of capital. Thus, although the entrepreneur has tended to become a captive of bourgeois scholars, nothing in the concept, in its broadest sense, prevents its application to socialist economies.

The foregoing suggests that the whole discussion of the entrepreneur and his or her functions is invariably an examination of economic and business phenomena. In most cases, the first stage of an analysis is the survey of an economic institution, largely in economic terms. Indeed, the recognition of the importance of the entrepreneur has been couched in economic terms and, perhaps, has come to be understood as mainly an economic phenomenon. One of the indictments of this approach is that of the psychologist who seriously questions the rationale behind the general assumption in economic models. Many entrepreneurs, the psychologist points out, appear irrational and even romantic. Their behaviour is not handled well by the pecuniary maximization models of neoclassical economists, who see the entrepreneur as having a purely instrumental orientation.

However, the realities were recognized by some orthodox economists. Schumpeter, for instance, frequently argued that such motives as the desire to found a private dynasty, the will to conquer in competitive battle, or the sheer joy of creation could rule the judgment of the entrepreneur. Keynes also argued that the animal spirit might be far more important than any other factor in explaining stockmarket or real-estate investments. Despite the great influence of the classical and Marxist economists, entrepreneurship has not received much attention in economics; only in recent years have economists been calling for a systematic theory of the entrepreneur.

However, entrepreneurship cannot be understood mainly as an economic phenomenon or as a phenomenon of a developed economy. Indeed, the kinds of entrepreneurship that find a fruitful soil in a given society and the forms and mechanisms that most adequately provide savings and channel them into productive investments cannot satisfactorily be identified by economists because the factors that determine the form and rate of innovations and entrepreneurship lie largely in cultural and social conditions, not the economy alone. Entrepreneurship, therefore, should have a multidisciplinary focus, which should include sociological, psychological, and technological perspectives.

In the literature, it has been established that the development of technical innovation and the capacity to translate such innovation into entrepreneurial ventures is a positive step in the direction of socioeconomic development. There is underdevelopment when this step is missing. But history tells us that the ability to innovate and to translate innovations into entrepreneurial ventures is subject to constraints dictated by the political economy of a nation and to the attitude of people and their reactions to the structural constraints of the economy.

In Nigeria, technical innovation and entrepreneurship are conditioned by the political economy: the institutions, the sociocultural opportunities and constraints, and the orientations of individual actors in the social structure.

The survey

This study used certain a priori variables in a survey of 45 innovators, and the findings on the basis of these variables are summarised below.

Venture capital

Capital constitutes a major constraint for the entrepreneurs. Of the 45 innovators studied, only 5 have access to royalties from previously successful innovations. Almost 50% identified government support as crucial, while about 30% said they would need institutional support.

The commercialization stage is the most crucial. Developing the equipment and machinery costs money. Working capital is also hard to come by. Small businesses have problems securing bank loans. Innovators perceive government as being uninterested in their work.

Infrastructure

The infrastructure is lacking, and entrepreneurs sometimes have to provide generators, dig boreholes, etc. by themselves. Only 4 out of the 45 innovators were satisfied with the available infrastructure, 31 felt it was inadequate, and 10 indicated that it could be better.

Technical capability

Forty-one of the innovations were made by people with a reasonably good education; 23 were made by PhDs; and the rest were made by people with little education. All respondents felt that a “good education,” but not necessarily a higher education, would make them innovators.

Basic research

More than three quarters of the innovations resulted from some basic research, but the commercially successful ones did not. In most cases, research to improve the innovation was undertaken only after a prototype had been built.

Extended-family obligations

Extended-family obligations did not constitute a serious constraint on the translation of innovations into entrepreneurial ventures, although I had assumed that it would. Support from the family was generally nonfinancial. This finding contradicts that of Hopkins (1978), who found that the extended family in African societies ordinarily provided venture capital.

Use of patents

There is lack of faith in the Nigerian Patent Law, which respondents found to be fluid and to provide little protection for local innovations. Innovators consider this a major problem in the commercialization of their products and processes. Eighty-nine percent had not explored the use of the patent law. (The law has been enforced since 1970, and 6644 patents have been registered. However, only 177 are owned by Nigerians; the rest belong to foreigners.)

Size of organization

Size may refer to the volume of capital or to the size of the work force. Most of the entrepreneurs had a work force of fewer than 10 people and an initial capital of 50000 NGN (in 1995, 78.5 Nigerian naira [NGN] = 1 United States dollar [USD]). Small size obviates the need for large capital.

Early market identification

The size or spread of the market and its dynamics were considered crucial by all the innovators. Market competition is not limited to indigenous versus foreign; there is competition, for example, between local engineers and local blacksmiths. The blacksmiths often make a crude and cheap imitation of innovations. Foreign products seem to stifle local initiative.

Political factors

The survey identified two influences of Nigeria’s body politic on the innovation process:

1. There was less entrepreneurship in the colonial era than at the time of the survey, as economic growth was low. Colonialism brought economic growth to Nigeria; however, it thwarted indigenous entrepreneurship by encouraging consumer-oriented business, known locally as (karakata trade), rather than production-oriented initiatives. The roots of this lamentable process were traced by 22 of the surveyed innovators to the flooding of the indigenous market with foreign goods and the siphoning of local material to support Western industrialization.

2. The political instability that has plagued the country since the 1970s was said to have created an atmosphere of uncertainty for potential investors and of frustration for entrepreneurs. Rapid changes of government were seen to affect the policies governing import licences. The consensus was that uncertainties that attend efforts to get import licences discourage the high-risk investments crucial to technical entrepreneurship.

Effective coordination of production and marketing

The most challenging problem reported by engineers and innovators in the study is the need for technical skills and aggressive marketing, which all innovators identified as crucial but severely lacking. Only 14 expressed the wish to take business administration courses if they were available. Most would leave the commercialization of innovations to the orthodox entrepreneur.

Links between government and consumers

Respondents said that links between government and innovators and between government and consumers were virtually nonexistent in Nigeria. The innovators felt that government has no interest in local technical innovations. The link between innovation and entrepreneurship was also considered crucial but absent. Recent government policies are beginning to address the problem.

Support

Three kinds of support were identified: (1) tax relief and special loans for manufacturers; (2) research funding, especially for the development of prototypes; and (3) recognition of the quality and potential of local innovations. Recognition was surprisingly important. Forty-two out of 45 respondents wanted more of it. They reasoned that recognition would elicit support from government.

Other findings

There appeared to be a good deal of institutional support for innovations in Nigeria. There were no institutional constraints on the choice of project or the production and testing of prototypes. Most institutions provided seed money for projects. Nevertheless, it was the consensus of the respondents that teaching and research institutions did not offer enough of an avenue for the commercialization of innovations.

In contrast to the findings of Harris (1967), this study found that innovators consider financial support essential to their work. If we include tax relief and research funding in the general category of financial support, we may conclude that 57.8% of the respondents considered such support important. Unlike the printing and sawmill industries that Harris studied, manufacturing requires much more capital than personal savings can provide, in most cases.

It is generally agreed that an entrepreneur is a person with the drive and tendency to create a profitable enterprise. In response to a question about their self-identity, 34 of the respondents, mainly in the public sector, said they were not entrepreneurs, even though most were in the advanced stages of setting up their innovation-based enterprises. Perhaps they did not see themselves as engaged in profitable enterprises or did not see their efforts as entrepreneurial. In general, however, there appeared to be an increase in the number of institution-based researchers aspiring to set up their own businesses. This development appears to be the result of structural shift of the Nigerian economy toward self-sufficiency. More attention is being paid to the possible commercial exploitation of research results.

From our unscheduled interviews with entrepreneurs and a few users of the innovations, other significant findings emerged. First, the entrepreneurs confirmed that the innovators were interested in high returns from the commercialization of technical innovations, which tends to be capital intensive and have long gestation. The entrepreneurs argued that frequent changes in government regulations and the import-licence scheme, combined with a high degree of corruption, rendered manufacturing and technical innovation far too risky. Some, however, added that the country’s economic crisis is causing a positive change: as buying and selling become less lucrative more attention is being paid to manufacturing.

The major complaint of the users was about the cost of the products of innovation. The users argued these were beyond the means of average people. Women who used the yam pounder lamented that their husbands preferred the traditional way of pounding yam; most of the time, yam-pounding machines were seen as prestige gadgets for decorating kitchens.

The pepper grinders (which the women all agree were very useful) were too expensive to be purchased for household use. Most of them either bought them and put them to commercial use or had their vegetables ground by others. Yet others, notably those with small families, simply used imported blenders.

We concluded that market-driven innovations appeared to be better received than technology-driven ones.

The case studies

The three successful innovations selected for detailed case study were the maize sheller, the gari-processing machine, and the yam pounder. The three unsuccessful ones selected were the cassava peeler, the manioc machine, and the cowpea thresher.

The maize sheller

Maize is one of Nigeria’s staple foods. It is used in preparing morning, noon, and evening meals. Its supplies a sizable proportion of the population’s carbohydrates. It is widely cultivated — two crops a year is the norm — and its yield per hectare is high. With adequate storage and processing of maize, Nigeria could become self-sufficient in this crop. However, because of inadequate postharvest technology, farmers are compelled to dispose of their crops quickly. The result is an abundance of maize during the two harvest seasons and a shortage during the rest of the year.

Maize is better preserved for storage when it is shelled than when it is in the husk or on the cob; after shelling it is easier to treat the maize against weevils and other organisms. Traditionally, women and children shell the crop by hand, which is a long and tedious process; thus, the maize machine is an important postharvest innovation.

After the maize has been dehusked, the machine shells it in a rotary action that is 98% efficient. The shelled grain then drops into a storage chamber. The machine is about six times faster than manual shelling.

The innovator was an agricultural engineer. He developed the innovation at an institution, where he had access to the workshop and research facilities. The innovation was developed in response to a public need. Two farmers had asked at different times for such a machine, and the engineer, accordingly, developed it from scratch. These farmers bought the first machine, and 20 other machines were subsequently sold. The idea has been replicated by other researchers, and the sheller is now in general use.

I interviewed two entrepreneurs who bought the machine and were using it commercially. The first, one of the two original buyers, suggested that an adjunct function be added to the machine to sort bad grains from good ones. The second bought a sheller after observing the two original buyers using one. Both of the entrepreneurs had been using the machine for more than 2 years and commended its performance and efficiency.

Two women were also interviewed. They recognized the efficiency of the maize sheller and its contribution to high output. However, they did not perceive the machine as offering them more leisure; the time gained from not hand shelling maize was spent doing other things on the farm, such as dehusking, picking out bad grains, and other odd jobs. From the women’s point of view, the main advantage of the machine was that it performed the most laborious part of the postharvest work.

Thus, the maize sheller could be said to have scored a success as a demand-pull innovation.

The gari-processing machine

Gari is a local staple obtained from cassava, which is a root crop grown widely in Nigeria. Cassava normally rots quickly and is difficult to preserve whole or as a fresh tuber. It needs to be processed and adequately stored if products derived from it are to be available on the market all year. Most Nigerian varieties of cassava have a high cyanide content, another reason for processing the fresh crop.

There are several ways of processing cassava to prevent postharvest waste. Converting it into a flour is one method; another is to process it into gari (roasted pulp). The latter, however, is a long, tedious process. The harvested cassava has to be peeled, washed, grated, pressed, granulated, and dry roasted before it becomes edible gari, which can be bagged and stored. Despite the length of the process, gari is produced extensively and is the cheapest food on the Nigerian market, being consumed on a large scale by the lower and middle classes.

Nearly all the gari is produced by women, and a lot of rural women spend a great deal of their time producing it with the traditional, inefficient, manual methods. The labour-intensive nature of the process reduces productivity. It keeps rural women glued to their hearths, with little time for leisure, adult education, personal development, or participation in politics.

Several researchers and entrepreneurs have recognized the need to mechanize all or part of gari processing. Some successful attempts have been made, but only the Federal Institute of Industrial Research at Oshodi has developed a gari-processing plant that integrates all the processing stages (except peeling) and has been commercialized.

Another innovation is a set of machines that combines the grating and pressing parts of the process. This innovation has been widely commercialized. In the hammer-mill pulper, peeled cassava is fed into a hopper, whence it moves into the milling chamber, where it is milled into a pulp and ejected through an outlet into a perforated basin. A motor-operated pressing block forces the mash against the basin. The juice produced, which is toxic because of a high hydrocyanic acid content, escapes through the perforations and is collected in a drainage tray. There is no wastage in the two machines.

The innovator had only a primary education. He fabricated his machines, which he admitted adapting from others, with the help of four young apprentices. Production methods were largely the traditional ones of heating and beating scrap metal. Thirty machines were sold in 4 years. A set of the machines without electric motors originally cost 1050 NGN. With the increase in the price of scrap metal, paint, and other inputs, the price nearly doubled, to 1750 NGN. Venture capital was a problem at first.

The innovator had been inspired by a hammer mill he saw at Enugu. He took a year to produce the first prototype and another year to produce a better looking one, which he sold to a friend for minimum profit. After the machine’s efficiency was demonstrated, the innovator produced another type, which sold quickly. At the time of the survey, his business was self-supporting. His key to success were drive, hard work, perseverance, and an efficient team.

The yam-pounding machine

Yam is another staple that is cultivated and consumed across Nigeria. It is also seasonal, and, at present, it is very difficult to preserve, as it tends to rot. It is, generally, a middle- and upper-class staple, especially when out of season. But nearly all Nigerians consume it on a large scale during the harvest season. It is particularly favoured by the Yoruba, especially those of Ijesha lineage, and the middle-belt people.

The commonest way to prepare yam is to pound it into a sticky mash, after which it can be eaten in soup or a sauce. But pounding yam is a laborious process, and the pounding generates a large volume of sweat, not all of which escapes the food.

The yam-pounding machine is not precisely a postharvest innovation, but it is an important processing machine in Nigeria, and there are important lessons to be learned from studying it. Essentially, the machine is a mechanized mortar and pestle. The industrial-size version has a huge basin, whereas the portable one looks much like a bread mixer or a large blender. There are allegations that a Japanese manufacturer copied the prototype and produced a much more compact and aesthetically pleasing model solely for the Nigerian market.

The yam is first boiled and placed in the machine, the smaller version of which can pound enough yam in 60 s to feed five people. There is no loss of the product, and the machine is more hygienic and produces a lump-free mash.

The innovator of the domestic model was highly educated. His research was motivated by a desire to make yam pounding less laborious. The prototype was produced in 1976, after 2 years of work. After demonstrating its functionality and marketability, the innovator, who had access to a modern workshop and trained technicians, produced three of the machines to sell.

After the Japanese model began to dominate the market, the patent for the domestic model was sold to Addis Engineering, a local manufacturer that has since produced the machine on a large scale; the firm claims to have sold hundreds of them since 1977. The corporate entrepreneur for this innovation was Leventis Nigeria Ltd, the main distributor of Addis products. The distributor was able to provide Addis with user feedback. Addis then improved the innovation, adding an all-purpose grinder to the unit. This advance gave the Nigerian machine a competitive edge over the Japanese one, which by this time had captured the market with its better-finished machine.

The original domestic machine sold at 150 NGN, motor included. At the time of the survey, the machine with the grinder attached was selling at 1050 NGN. The Japanese model, which can prepare yam right from the uncooked, peeled stage, was selling for 250–300 NGN.

The success of the domestic model can be attributed to its original low cost and the need for status that it satisfied. The renovation added to its success.

The cassava peeler

The cassava peeler is one of the unsuccessful innovations. The cassava peeler is a simple, robust, but large piece of equipment. It consists of a big drumlike grater that rotates horizontally above an even bigger triangular basin. The unpeeled cassava tubers are fed, in succession, into the forum, where the skins are grated off and the tubers washed. A tonne can be processed in this way in a few minutes. Unfortunately, more than 50% of the cassava goes to waste.

Although the peeler has been commercialized to some extent, it has not stayed on the market. Indeed, processing mills, like Texagari, that installed the peelers have stopped using them and have gone back to manual labour, which is cheaper and much more efficient. The unacceptability of the machine has inspired its renovation, which is now at the R&D stage.

This innovation seems to have failed not only because it had technical problems but also because it was a technology-push innovation and not a demand-pull one; the impetus for its development was academic, and little account was taken of the availability of cheap labour in the Nigerian economy.

The manioc machine

The manioc machine was an unsuccessful attempt to diversify the use of cassava and preserve yields. The innovator, who was trained in the United States, wanted to replace the imported potato chips that were flooding the Nigerian snack market, so he designed a unit that would make similar chips from cassava.

The unit is a continuous-process plant, with only one manual stage (peeling the cassava). The cassava is fed into a hopper and then the machine ejects 2 mm thick chips into a polyethylene bag held by an operator. When the bag is full, the operator drops it into a sealer, which makes it ready for marketing. Only 2% of the cassava is lost in processing.

Although the innovator demonstrated the functionality of the machine, he has failed to sell more than one unit since 1976. Actually, he was using the firm’s unsold machines to produce cassava chips for distribution to big supermarkets like Leventis, UAC, and Kingsway Stores. Sales were slow, but he reasoned that if austerity continued and the sales of imported snacks declined, he would capture the snack market and also sell some of his machines.

A major impediment to the success of this innovation was that it was the result of a technology push and did not satisfy immediate local needs. The Nigerian economic problem makes it difficult for the majority of the population to afford three square meals a day; snacks have become luxury items. Other impediments identified by the innovator were the indiscriminate import of foreign goods, especially potato chips, and the problems he had getting adequate publicity.

The cowpea thresher

Protein is important in the human diet, but animal protein is expensive in tropical countries. Most people in Nigeria depend on legumes, like cowpea, for much of their protein. Cowpea is the most popular legume consumed by the Yorubas. However, despite its nutritional importance, not much research had been done on it. The International Institute for Tropical Agriculture recognized this deficiency and undertook research to enhance the resistance of cowpea to diseases. That research is in the realm of agrotechnology. However, the cowpea thresher represents a first attempt in Nigeria, perhaps in the whole world, to develop hardware to thresh cowpea and save women the drudgery. The machine can thresh 700 kg h-1, with a loss of only 0.1% of the cowpea.

In 1972, on a trip to the rural areas, the innovator, who was a highly educated man, found women struggling to thresh cowpea by putting it in cocoa bags and beating the bags with big sticks, sweating profusely in the process. He sympathized with these women and resolved to find an easier, more effective way of shelling cowpea. On his return home, he started working on a machine. He based his initial R&D on the traditional threshing method but, in fact, built four prototypes; each was modified, and the last ended up drastically different from the first. The first commercial product was launched in late 1976. He sold one to an entrepreneur in the area where he originally thought of his idea and another to an entrepreneur in lbadan. But there have been no sales since. Both purchasers were interviewed. They were using the machines on their farms to thresh their own cowpea for sale; they confirmed the 99.9% figure for the efficiency of the machines. Four women in two farming villages were also interviewed. They too confirmed that the machines were very efficient. However, they saw them as displacing hired labour, which depends on the shelling for income. These four women did not receive any direct benefit from the machines, as they were not normally involved in the threshing, but they saw it as helping the men and “unsuccessful husbands take better care of their families.”

I tried to understand why such an efficient a machine wasn’t commercialized on a large scale. The innovator, although claiming to be anxious to satisfy a social need, was uninterested in the commercialization process. His immediate interest was research for its own sake or, at least, for the sake of academic recognition. And the machine was too expensive for the farmers the innovator wanted to help. However, if this machine were commercialized by a few entrepreneurs, as happened with the milling machine, more units would be sold.

Conclusions

On the general level, it was discovered that the success of an innovation can be hindered by conditions that contribute in a major way to the economic strangulation of Nigeria — notably, the quest for the quick returns from retail trade rather than the delayed returns from production; and the domination of the local market by mercantile capitalism, which discourages receptivity for local innovations.

The six case studies established that successful innovations in Nigeria tend to be

• adaptive, better finished, and developed by innovators with easy access to capital;

• commercialized by entrepreneurs who had easy access to bank loans, undertook market research, were willing to take risks, knew how to capture distribution channels, and were efficient managers;

• perceived as satisfying immediate social needs and as better alternatives to existing machines or technologies;

• disseminated faster and well received and, thus, quickly adopted.

The reverse was true of unsuccessful innovations. Though the sample was small, making generalizations difficult, the pilot study of 45 innovators confirmed these conclusions.

The implication is that if Nigeria expects its technical innovativeness and entrepreneurship to play a crucial role in its socioeconomic development, it should endeavour to harness the positive factors and counteract the negative ones. To this end, the following recommendations are made.

Recommendations

President Babangida said the following in a speech, reported 22 January 1986, on the new Nigeria:

It has been gratifying to note the positive and enthusiastic reception by the nation of the policy package contained in the 1986 budget. It has also been instructive to observe the fear, and sometimes the cynicism, being expressed about the successful implementation of the various policies and programmes. … Government recognizes that in a period of economic emergency, policies, no matter how soundly formulated, become empty words unless they are vigorously implemented. We cannot, therefore, afford to allow the machinery of policy implementation to jog at its leisurely pace.

This quotation underpins my attitude toward policy recommendations. Academic papers of this genre usually conclude with a catalogue of beautiful policy recommendations. These recommendations almost always fail to go to the appropriate quarters; even when they do, they do not get implemented. Indeed, most of them end on library shelves, collecting dust, or find their way into the footnotes of yet another paper.

This could be the result of several factors. For instance, it could be that policy recommendations are so utopian that they just cannot be implemented. It could also be that there is a communications gap between government and individual researchers or corporate research institutions. Or there could be a general lack of commitment by government to policy research.

The last two are beyond the powers of individual researchers to correct, but the first is not. I believe that stating recommendations clearly, simply, and realistically enhances the likelihood that they will be implemented, and this, accordingly, is what I will try to do in my recommendations.

1. A national inventory should be taken of all technical innovations in Nigeria. This can be done effectively by a team of researchers, each assigned to different sectors. This inventory would become an important database for the government to consult as it formulates policies to promote national technological takeoff.

2. The government should create social and political conditions that are favourable to indigenous innovation and entrepreneurship. The government needs to make special efforts to support new technologies that are in the interest of the nation. The government should also support innovative and entrepreneurial efforts that would develop productive local industry, rather than encouraging a merchant economy that distributes luxury goods. The government could provide support and incentives to the private sector. The new industrial policy is a step in the right direction.

3. The government should drastically limit the participation of foreign capitalists in certain crucial areas of the economy where there is local capability, such as in banking, and encourage private Nigerian capitalists to do the job instead. Where local capital is absent or weak, government should define the terms of multinational involvement at each level of the economy, monitoring each stage of the process closely and evaluating the output continually. The pervasive and negative influence of multinational corporations on the Nigerian economy persists only because the state sanctions it.

4. To support innovations, international agencies and multinational corporations should invest in small-scale industries. These organizations should provide simple technology for which local entrepreneurs can supply peripherals or spare parts, rather than imposing, through grants and investment, technology that is either too costly or too cumbersome to operate.

5. A receptive climate for innovation and entrepreneurship should be created. A rural-development program should educate villagers on the need for, and the advantages of, innovation in their economically productive activities.

6. The government should raise the quality of life of rural people by providing a better infrastructure and ensuring that people are sufficiently rewarded for their work. For some time, it has been the case that innovations are not adopted because of insufficient rural income; the government could improve this situation by buying agricultural surpluses at good prices for processing and storage. This is being pursued by the present government and should be supported.

7. The quality of locally produced goods should be raised to the standards of the imports. With sufficient financial support, local producers could make better and more appealing goods.

8. Research should be undertaken to develop better processing equipment. Research costs money. Research funds and venture capital are needed to exploit the results of research. Funds could be attracted by publishing findings and soliciting federal and state governments and their agencies, industry, philanthropic organizations, wealthy people, and financial institutions. A proposal by the Continental Merchant Bank to set up a venture capital company is a step in the right direction. The federal government should encourage such moves.

9. An institution, like a National Innovation and Entrepreneurship Board, should be created to take patents, find entrepreneurs, and provide them with venture capital. Innovators should try to set up workshops and farms where they can commercially test their own innovations.

10. The government should encourage universities and research institutions to commercialize their findings and put about 20% of their proceeds back into more research. The government should use appropriate national agencies to develop in entrepreneurs the aggressive marketing skills they need to commercialize innovations.

11. The government and the research institutions should try to bridge the communication gap between the producers of technologies and potential users and thus move the innovation from the workshop to the doors of the people. This could be done in two ways. The government could organize small trade fairs in rural areas to demonstrate technologies. Research institutions could periodically hold open house for users to inspect finished or ongoing projects and make suggestions for improvements or new research.

12. A comprehensive system of links should be established between all the actors in technical entrepreneurship: government, funding agencies, universities, research institutions, innovators, manufacturers, entrepreneurs, and users. Coordination of existing public organizations would be of value. The government should modify the organizations’ mandates to eliminate overlap and make the support of innovation an explicit goal.

13. The government should formulate truly protective patent laws. The assurance of protection against copying can stimulate an inventor. However, patent laws in Nigeria are said to be so fluid that they provide hardly any protection. The ineffective patent system is a disincentive to innovation.

14. Nigerian consumers should demand better quality. Consumers have a crucial role to play in indigenous innovation — as Rothwell and Gardiner (1985) pointed out, tough customers make for better design.

15. Nigerian innovators should be more tenacious in the face of peer jealousy and unfair criticism. They should encourage public receptivity by advertising their inventions in journals and the mass media.

16. Nigerian entrepreneurs should have tax relief and easy access to venture capital to encourage them to invest in manufacturing, rather than in buying and selling.

17. Parts of the engineering curriculum at Nigerian universities should be critically examined and reorganized. The current curriculum — a mix of those from Britain, North America, and eastern Europe — creates problems. It is time Nigeria evolved an engineering curriculum that is more appropriate for its own needs. There is a need for engineers who can think and work with their hands, so the curriculum needs to be more practical. There is also a need for trained technicians to support the efforts of the graduate engineers.

18. Technical entrepreneurs should receive training in basic engineering, business management, finance and accounting and should have an understanding of the social, legal, and political realities of the country. Education for technical entrepreneurship is rapidly developing in North America, and Nigeria can benefit from its experience. There should be centres where all interested innovators can from time to time take a course or a workshop in business administration. Retired engineers could be used in such programs, benefiting both the retired person and the trainee.

References

Afonja, A.A. 1986. Materials, energy and environment. Faculty of Technology, University of Ife, Ife, Nigeria. Inaugural lecture.

Akeredolu-Ale, E.O. 1975. The underdevelopment of indigenous entrepreneurs in Nigeria. Ibadan University Press, Ibadan, Nigeria.

Aribisala, T.S.B. 1983. Nigeria’s green revolution achievements, problems and prospects. University of Ife, Ife, Nigeria. Distinguished Lecture Series.

Clark, N. 1985. The political economy of science and technology. Basil Blackwell, Oxford, UK.

Cooper, C., ed. 1973. Science, technology and development: The political economy of technical advance in underdeveloped countries. International Social Science Journals, 25(3).

De Bono, E. 1971. The use of lateral thinking. Penguin Books, London, UK.

Dobb, M. 1976. Studies in the development of capitalism. Macmillan, London, UK.

Green, R.W. 1959. Protestantism and capitalism: The Weber thesis and its critics. Health and Company, Boston, MA, USA.

Harris, J.R. 1967. Industrial entrepreneurship in Nigeria. Northwestern University, Chicago, IL, USA. PhD dissertation.

Rothwell, R.; Gardiner, P. 1985. Innovation, re-innovation and the role of user: A case study of Britain hovercraft development. Technovation, 3, 176–186.

Say, J.-B. 1824. A treatise on political economy [translation]. Prinsap, C.K., trans. 4th ed. Wells and Illy, Boston, MA, USA.

Schumpeter, J.A. 1947. Capitalism, socialism and democracy. Harper and Row, New York, NY, USA.

Sounder, W.E. 1981. Encouraging entrepreneurship in large corporations. Research Management, 23(4), 10–15.

Thring, M.W.; Laithwaite, R.R. 1977. How to invent. Macmillan, London, UK.

Weber, M. 1930. The Protestant ethic and the spirit of capitalism. Allen & Unwin, London, UK.

CHAPTER 15
Technology Adoption by Small-Scale Farmers in Ghana

S. Owusu-Baah

Introduction

The low agricultural production of the Third World has been a long-term concern of agricultural experts. In Ghana, the government spends a significant amount of foreign exchange to import food items, especially cereals, to supplement local production. Since 1970 the Northern Region has developed into Ghana’s largest rice and cotton producer, but the yields could still be higher (Government of Ghana 1978). However, several factors are preventing the region from reaching its full potential (Northern Region Rural Integrated Project [NORRIP] 1982):

• inefficient agronomic practices that tend to promote soil degeneration;

• lack of improved crop varieties;

• poor farm- and water-management practices;

• lack of a favourable pricing policy for crops and agricultural inputs; and

• poor transportation and credit facilities.

In 1981, in an attempt to increase the yield of northern farms to meet Ghana’s food requirements, the Canadian government established NORRIP to plan and design projects for the region. NORRIP cooperates with several other organizations in the north to assist small-scale farmers to increase their productivity through the use of improved farming techniques and appropriate technology, a package comprising agricultural inputs and farming practices.

This study focused on technology adoption by small-scale farmers in the Mamprusi area of the Northern Region. Mamprusi was chosen because of its potential for agricultural development and because (according to NORRIP) there are positive attitudes toward change in this area. Farming in the Mamprusi area is done on small holdings by farmers using traditional and inefficient agricultural practices and technology.

The central hypothesis was that the strategies used for diffusion of improved technology to small-scale farmers in the north have been inadequate or inappropriate and that this is why the aims of the development agencies have not been realized in this region.

Objectives

The objectives of the study were

• to review the available literature on the adoption of technological innovations by peasant communities in and outside Ghana;

• to review the aims and strategies pursued by rural-development projects, such as NORRIP, in their attempt to diffuse improved technology among the peasants of the Mamprusi area;

• to conduct a preliminary survey of the area’s farming community to outline the factors relevant to the adoption of technologies in this district;

• to conduct formal and quantitative surveys to test hypotheses suggested by the preliminary survey;

• to suggest to decision-makers ways to facilitate the adoption of technology by rural farmers.

Methodology

A reconnaissance survey was made of the study area to obtain a general overview and to collect secondary information relevant to the study. Interviews were held with personnel from the Ministry of Agriculture (MOA) regional headquarters, Tamale; the District Agricultural Office, Walewale; NORRIP; the Ghana-German Agricultural Development Programme (GGADP); the Crops Research Institute, Nyankpala; the Ghana Seed Company Ltd, Tamale; the Langbensi Agricultural Station (LAS), Langbensi; the Catholic Agricultural Project (CAP), Walewale; and the Global 2000, Walewale.

Interviews were also held with farmers: checklists were used to find out why farmers behave the way they do and to help me develop appropriate questionnaires. In Walewale, Gbimsi, Langbensi, Wungu, Guabiliga, and Mimima, village leaders and others respected in the community were asked for their opinion.

An in-depth (informal) survey of 20 selected farmers was conducted to obtain information on farm households and farming practices and to identify some of the constraints to increased food production. Information was gathered by means of checklists, as well as by visits to the farmers’ plots.

Questionnaires designed on the basis of information obtained in the two previous surveys were administered to 69 randomly selected farmers in the Mamprusi area.

Historical background

The northern region was until 1970 largely neglected. It has, however, been developed into the nation’s largest rice and cotton producer. This was as a result of the German-financed GGADP (Government of Ghana 1978). It was felt there was a need to introduce modem and appropriate technology because the traditional mode of farming, using simple hoe and cutlass on small plots of land, hadn’t the potential to increase agricultural output. Production of maize and rice, which stood at 418 000 and 68 000 t, respectively, in the 1974/75 cropping year, was too low. At the same time, it was estimated that national demand for maize and rice would be 751 000 and 171 000 t, respectively, by 1985 (Government of Ghana 1978, table 11).

The policy of the 1970s was to encourage large-scale commercial farming, with mechanized systems. The Agricultural Development Bank was encouraged to advance loans to farmers to go into large-scale rice cultivation, using mainly tractors and high-yielding rice seeds. Earlier, in the 1930s, Bullock Traction Technology (BTT) had been introduced. In 1975, the Government of Ghana thought BTT was not the right kind of technology for modern agriculture. This led to the government scrapping its support for the project. Tractors were considered appropriate for modernizing Ghana’s agriculture. The policy of this time was no different from that of the 1930s: both failed to take account of the interests of the small-scale farmers.

Several types of tractors were imported to support increased agricultural production. At some point, as many as 17 different makes were imported, and spare parts obviously became a problem. The rising cost of tractors, parts, fuel, and lubricants discouraged the use of tractors, and many were abandoned. This affected agricultural production, making the policy antiproductive.

Aid agencies in the region continued to support the BTT program, with little success. After several years of problems with the tractors, coupled with the problems in Ghana’s economy, the government changed the policy, once again favouring the BTT. Ever since this policy change, the emphasis has been on developing appropriate technology for use by farmers in the northern region. Several aid agencies have been in the forefront in the development and transfer of appropriate technology, a package comprising the use of bullocks or donkeys, fertilizers, irrigation, and improved, high-yielding seeds.

Previous research

The debate about the use of tractors to increase agricultural output has been continuous. Basically, there are two views in this debate: the substitution and the net-contribution views.

The substitution view portrays tractors and animal and human labour as substitutes. The main considerations are the factor prices of these inputs. If the costs of animal and human labour rise high enough, it may be economical to adopt the use of tractors; otherwise, vice versa.

The net-contribution view argues that inadequate power is the main constraint in agricultural production. The greater power of tractors allows them to do greater work in a shorter period of time. This releases labour for other jobs in the household and on the farm.

In response to this argument, the substitution view suggests that in the labour-surplus countries of the Third World, labour-intensive practices are more appropriate. In these countries, labour is cheaper than in the advanced countries and the newly developed countries of Asia. In Duff and Kaiser’s (1982) study of the mechanization of small rice farms in Asia, the authors showed that the rising rural wage, induced by industrialization and urbanization in Japan, South Korea, and Taiwan, was the principal motivation for substituting machines for animal and human labour.

In the same study, Duff and Kaiser (1982) argued that in countries like the Philippines, West Java, and South Sulawesi, the introduction of mechanized land preparation displaces family and animal labour. It is only when mechanized threshing is introduced that hired labour is displaced. This is because, in most developing countries, threshing is traditionally done by hired labour. Without alternative jobs, therefore, displaced laborers suffer low income.

The aim of any improved technology is increased production. Several studies have been conducted to determine the impact of improved agricultural technology on incomes, production, and employment, but they failed to account for the effects of other agricultural inputs. Generally, results from such studies have been mixed. Tan and Wicks (in Duff and Kaiser 1982) found a significant difference in yields from mechanically and traditionally tilled fields in Asia. This finding contradicts that of Duff and Kaiser (1982), who found no significant difference; however, their study made adjustments for fertilizer use. In yet another study (Sukharomana 1982), it was found that mechanization did actually increase rice yields in Thailand. However, the regression analysis used in the study failed to account for the role played by other inputs, such as fertilizer and pesticides. An increase in agricultural production may also result from (1) extending the area under cultivation or (2) more intensively farming an existing area. Obviously, the first can occur only in areas where there is an abundance of land.

The study area

The study area is in the Mamprusi area, the northernmost portion of Ghana. The area is sparsely populated, with an estimated population density of 19–22 people km-2. Agriculture is the most important economic activity in the area, employing more than 90% of the labour force. Most of the farmers are subsistence oriented.

The main towns in the study area are Walewale, Wulugu, and Langbensi. Other towns that influence farming in the study area include Gamboga, Nalerigu, and Nkpanduri. Walewale is located some 110 km north of Tamale. (Northern Region capital) and lies on the main road between Tamale and Bolgatanga (Upper East Region capital).

The study area receives an annual rainfall of 900–1000 mm, the lowest in the region. Rainfall distribution is unimodal, with much of the rain falling between May and September. The rainy season is followed by a long and severe dry season. During this period, the area comes under the strong influence of the harmattans (winds that originate in the Sahara and blow across the Sahel region). The harmattans are very dry, and, as a result, humidity may be as low as 10–20% during the dry season. Dryland farming is virtually impossible during this period, so the farmers produce only one crop a year.

The mean temperature is around 29°C. March, April, and May are the hottest months, when temperatures exceeding 35°C are not uncommon, and the coldest months are August and September.

The study area is served by a number of small rivers, many of which dry up during the long dry season. A few have been dammed to provide water for people and livestock. The small rivers drain two major rivers, the White Volta and Nasia, which are outside the study area.

The topography is generally flat, becoming undulating and hilly toward the northeast. Altitudes range from 150 to 330 m in the northeast, with its rocky hills.

The soils are fairly good, belonging to capability classes II and III, and are somewhat uniform across the study area. Two distinct soil classes can be identified: the Savanna glysols, or Enfisols (United States Department of Agriculture [USDA] classification); and the Savanna ochrosols, or Alfisols (USDA classification). The Savanna glysols occur in river valleys and are alluvial or colluvial, whereas the Savanna achrosols, which are common in upland areas, are moderately well drained soils developed over voltaian sandstones.

The natural vegetation is Guinea Savanna woodland, with tree cover in most areas. Many of the trees are felled for fuelwood. Trees of economic value, such as the shea (“butter tree”) and the baobab (“monkey bread tree”), are common and grow in the wild.

Infrastructure

A network of dirt roads and tracks connects the villages studied. Many of the roads were found to be in bad condition, even during the dry season, and to be virtually impassable during the rainy season, a period of intense farming activity.

The main government clinics are found in Walewale and Kpasinkpe and in Upper East Region.

The District Agricultural Office is located in Walewale, and there are technical assistants in charge of villages in the area. Many of these technical assistants are not well trained, and they have to rely on public transport to visit the farms. Input supply depots are generally lacking in the area, and there are virtually no government silos. Marketing facilities are poor and are mainly operated by the farmers. All the markets are periodic: most convene every third day.

There are no banks or credit agencies in the study area; thus, credit is largely unavailable to the farmers.

Socioeconomic factors

The major ethnic group in the study area is the Mamprusi, who are predominantly crop farmers. Other important ethnic groups, who originated in other parts of Ghana and the neighbouring countries, include the Kusasi, Frafra, Mossi, and Fulani. The Fulani people are mainly cattle herders. Islam is the main religion in the area, although Christian denominations, such as Roman Catholic, Presbyterian, and Adventist Mission, are active there.

The farms

Farm households

Sixty-nine farm households were interviewed during the formal survey. The average household size was 5.3 persons. The number of wives per household ranged from zero to four (one farmer was found to have five wives).

The farmers in the sample were young: the average age of the heads of households was 43.4 years (CV = 0.27). Table 1 indicates that two thirds of the farmers were younger than 50 years. The age distribution shows only a slightly positively skewed distribution, with a Pearson correlation of r = 0.61.

Table 1. Age distribution of heads of households.

Age

n

Proportion of farmers
(%)

Cumulative distribution
(%)

20–29

5

7.3

7.3

30–39

24

34.8

42.1

40–49

17

24.6

66.7

50–59

14

20.3

87.0

60–69

9

13.0

100.0

Total

69

100.0

 

Source: Calculated by researchers.

The average household owns two plots; the compound garden and the main plot (or farm), which is usually 2–6 km from home. The average farm size is estimated at 3.9 ha, with more than half of the households owning <3 ha (Table 2). Land for farming is acquired from the village chiefs or elders.

Land is easily obtainable because the population density is low in the area. No rents are paid, except for occasional gifts of cola, fowls, rams, etc. The head of the household is usually responsible for decisions concerning farming operations, often in consultation with the spouse(s). Family labour is the main source of farm labour and, in view of the availability of land, usually determines the size of the family farm. The correlation between family size and farm size was highly significant (P = 0.002, r = 0.4288).

Table 2. Size distribution of farms.

Area
(ha)

n

Proportion of farms
(%)

Cumulative distribution
(%)

1.0

3

4.4

4.4

1.0–1.9

11

15.9

20.3

2.0–2.9

22

31.9

52.2

3.0–3.9

7

10.1

62.3

4.0–4.9

14

20.3

82.6

5.0

12

17.4

100.0

Total

69

100.0

 

Source: Calculated by researchers.

The roles of family members in farming operations are distinct, although each member can take part in any activity. The men and the boys are often responsible for land preparation, particularly preparation of ridges, mounds, and ploughing, whereas the women’s main role is seeding or planting. All family members take part in the first and major weeding of the farm, but women and children are mainly responsible for subsequent weedings. (Women and children also gather fuelwood for the home.) Harvesting of produce is often done by all family members, but threshing and winnowing operations are performed by the women and girls. Where rice is grown, young boys are often employed to scare away birds just before harvesting. Young boys are also often seen herding livestock or conveying farm produce in a cart pulled by a bullock or donkey.

Farmers’ objectives

The objectives and resource endowment of the small-scale farmer strongly influence the farmer’s choice of enterprise and activities within the farming system. The surveys revealed that the main objectives of the small holders were

• to satisfy the household’s subsistence requirements (the main staples — millet, sorghum, and maize — are grown on all farms);

• to satisfy household cash needs through the sale of surplus crops (economic necessity forces many farmers to sell crops, although they may not have produced enough); the growing of cash crops, such as groundnuts (i.e., peanuts) and cotton; the sale of livestock; or off-farm work; and

• to keep livestock as insurance against crop failure or as a customary and religious practice.

It is worth mentioning that, apart from being an important staple crop, sorghum (or guinea corn) is also grown for brewing local beer (pito), which is a major off-farm income earner for women. The mash from pito brewing is used as livestock feed supplement.

Farming practices

Crop husbandry

The main reason for growing crops is to meet the family food requirements. The major crops grown in 1987 are shown in Table 3. The 1987 season was disappointing because although the study area (like the rest of the country) received adequate rainfall, the distribution was poor, and the rains came when they were not expected. Therefore, the proportion of farmers growing the various crops is likely to have been lower than usual, particularly for beans. The important beans grown are cowpeas, pigeon peas, and the roundbean (or bambara). In addition, rain-fed rice is also grown, especially in valley bottoms.

Table 3. Crops grown in the 1987 crop season.

Crop

Number of farmers

Proportion of farmersa
(%)

Maize

65

94.2

Millet

62

89.9

Groundnuts

51

73.4

Sorghum

48

69.6

Cotton

6

8.7

Beans

5

7.2

Source: Compiled by researchers.

aN = 69.

Land preparation and planting

The farming season begins with land preparation in February or March; the slash-and-burn method is used. Seed-bed preparation begins with the onset of rains in April or May and mainly involves ploughing of fields and making ridges. Sometimes mounds are made. Ridging is very important because it permits farmers to take advantage of early rains to do their sowing. Labour shortages are acute, as there are virtually no landless people in the study area and everyone is working on the family farm. Ridging is done with a hoe or with bullock or donkey traction. Hoe ridging is laborious and time consuming, sometimes taking days to complete 1 ha of land. Hoe farmers tend to have smaller farms, and seeding is often delayed. A few hoe farmers are able to hire bullocks or donkeys for ridging, but the demand for these animals is very high during this period because they are labour saving.

About 38% of the farmers own bullocks, and 19% own donkeys (see Table 7). Bullock ploughs are owned by about 23% of the farmers, whereas ridgers are owned by only 16%. For farming operations, two bullocks are needed at a time. This has been found to impede the adoption of bullock-traction technology, as bullocks are expensive, costing, on average, 32 000 GHC each (in 1995, 1175 Ghana cedis [GHC] = 1 United States dollar [USD]), and require more attention. CAP is focusing more attention on the introduction of donkey-traction technology because only one donkey is required for farming operations and donkeys are less expensive (about 11 000 GHC each), require less attention, and are not often stolen.

Seeding is done soon after the ridges have been made. On farms where bullocks are used, women commonly do the sowing while the men and the boys make the ridges. The crops are grown on the ridges, and groundnuts and beans are often planted on the side of the ridges. According to advice from the extension service, spacing of crops should be 90 cm on the ridges, with 40 cm between the ridges. Although many farmers are aware of this advice, they do not take it: those with smaller holdings aim at attaining higher planting densities, and others believe that taking accurate measurements is time consuming.

Input use

Farm inputs are basic and essential to any farm enterprise; without them, no output is possible. Consequently, major efforts aimed at developing efficient and effective technologies to improve farm productivity have focused on high-quality inputs. These efforts have, however, achieved limited success in the case of small-scale farmers, who are often regarded as resistant to change (Sands 1986). Some researchers have attributed small-scale farmers’ failure to adopt improved technologies partly to the inadequacy of support systems, such as extension services, credit, and input supplies.

Sands (1986) contended that technology must be evaluated not only in terms of its technical performance under environmental conditions typical of small farms but also in terms of its conformity to the goals and socioeconomic organization of the small-farm system. The second criterion is crucial to the small-scale farmer’s adoption of improved technologies, although this criterion is often ignored, or its importance is taken for granted. The proportions of farmers using various types of farm inputs are shown in Table 4. The reasons the nonusers gave for not using them are presented in Table 5.

Table 4. Use of various farm inputs.

Farm input

Number of farmers

Proportion of farmersa
(%)

Improved seed

12

17.4

Farmyard manure

25

36.2

Compost

5

7.2

Inorganic fertilizer

63

91.3

Pesticide

10

14.5

Source: Calculated by researchers.

aN = 69.

Table 5. Reasons for nonuse of farm inputs.

 

Proportion of nonusers (%)

Reason

Improved seed
(n = 57)

Manure
(n = 44)

Compost
(n = 64)

Fertilizer
(n = 6)

Pesticide
(n = 59)

Lack of knowledge, skill

5.3

18.2

28.1

11.9

Cost

45.6

13.6

66.7

30.5

Nonavailability

28.1

40.9

16.7

6.8

Lack of credit

38.6

50.0

23.7

Labour requirement

11.4

35.9

Lack of material

20.3

Waste of time

31.3

Source: Compiled by researchers.

The farmers mainly use seeds from the previous harvest for planting, or they purchase seeds from local markets. Some of these seeds are improved; however, only 17% of the farmers regularly purchase improved seeds. The main sources of these seeds are MOA, CAP, and LAS. A number of farmers have to travel some distance to purchase seeds and other farm inputs. The popular varieties of improved maize seed are dobidi, Safita 2, and Laposts. Next, sorghum seeds and groundnut varieties, such as Florispan and Manipints, are commonly purchased. The majority of farmers who do not purchase improved seeds indicated that they were discouraged by the cost of the seeds and lack of credit to purchase them.

Farm-yard manure and compost are relatively inexpensive ways to add nutrients to the soil and to improve the soil structure. Inorganic fertilizers, on the other hand, are expensive and do not improve soil structure. About 36% of the farmers indicated that they used farm manure regularly, whereas only 7% of the farmers used compost. Farmers who did not use manure regularly indicated that manure is not available nearby and also mentioned the difficulty conveying the manure from the krads to their plots. However, about 36% of the farmers who did not use compost said that the labour requirement impeded their use of it, and 31 % thought that composting was a waste of time.

We found that more than 90% of the farmers use inorganic fertilizers on their plots. The reason for using fertilizers varied, but the farmers were unanimous in their belief that the use of fertilizers results in higher yields. About 41% used fertilizer because they took the advice of the extension service, and one third said they used sulfate of ammonia to combat the parasitic weed Striga gesnerodies. Striga tends to have devastating affects on cereals and legumes and is very difficult to eradicate. The attempts to eliminate the weed with strong herbicides, like 2,4-D and oxyfluorifen, have not been successful. However, it is known that striga does not perform very well on fertile soils, and, according to the farmers, the ammonia fertilizer causes their crops to outgrow the weed, thereby uprooting it. The extension officers, however, do not recommend the use of ammonia on cereals because it stimulates vegetative growth at the expense of grain yield. Until an effective way of combating striga is found, it will be difficult to make the farmers change their methods.

Compound fertilizers, such as 15–15–15 and 20–20–0, are the main fertilizers supplied to farmers in the area. Fertilizer recommendations are not based on any detailed soil survey; instead, they appear to be uniform across the region. The Northern Region receives its fertilizer allocation from Accra, and the quantity of it is almost invariably less than the region requires. In addition, fertilizers usually arrive late, mainly as a result of transportation problems. It is, therefore, rationed, and, as a result, the farmers can purchase only suboptimal quantities. With fertilizer recommendations not attuned to the soil nutrient requirements, it is obvious some nutrients are wasted and others are not supplied in adequate quantities.

Pesticides are used by less than 15% of the farmers. The cost of pesticides and lack of credit were the main reasons the other farmers gave for not using them. The farmers buy pesticides from a number of sources: MOA, the various agricultural projects, other farmers, and the market.

The farmers were asked to indicate the year when they adopted certain farm inputs, and the results are shown in Table 6. It is evident that their use of fertilizers began earlier than their use of pesticides. The majority of the farmers began using inputs in 1980–1984, but agricultural production suffered greatly, mainly from drought. In 1984, when weather conditions improved, all resources were used in an attempt to reverse the decreasing trend in agricultural output. As a result of government measures and foreign aid, large quantities of farm inputs were made available in 1984, and farmers were encouraged to use them.

Harvesting and use of crop residues

All members of the farm household harvest the crops and transport the produce. In some cases, carts pulled by donkeys or bullocks are used. The crop residues have various uses. Cereal residues are often burned in the field, and the ash is sprinkled on

Table 6. Adoption of farm inputs.

 

Seeds

Fertilizer

Pesticide

Period

n

%

n

%

n

%

1970–1974

3

4.8

1975–1979

1

8.3

13

20.6

1980–1984

7

58.3

27

42.9

7

70.0

1985–1988

4

33.3

20

31.7

3

30.0

Total

12

99.9

63

100.0

10

100.0

Source: Compiled by researchers.

the soil. In some cases, cereal residues are used for making compost or are buried in the soil to improve the soil structure. Groundnut and bean residues are commonly fed to animals.

Crop storage and sales

All the farmers stored at least some of their crops at home, although a few stored crops on the farm as well. The crops are stored for varying lengths of time in different types of containers. Crops are stored for 4–6 months, on average, and the storage period rarely goes beyond 10 months. The storage time is influenced by the space available, the quantity of crop output (many farmers do not produce enough to last them throughout the year), sales, and losses to fungus, insects, and pests. Some farmers are forced by short-term cash shortages to sell produce soon after harvest, when prices are low, and purchase food during the dry season, they are very high.

The crop-storage techniques used by the farmers are basically traditional and have not changed much over the years (this is a facet that has been neglected in research). Cereals are commonly stored in homemade straw bins, which last from 3 to 5 months. These bins are usually placed on wooden platforms and are often covered. When the bins are full, they are sealed and cow dung is smeared on the outside to make them waterproof. Groundnuts and beans are often stored in jute bags, but because they are cash crops, they are not often stored for long.

Crop losses during storage are estimated at between 20 and 25%. Much of the damage is caused by insects, especially weevils, rodents, and fungus. All farmers take measures to prevent or reduce storage losses. They dry cereals before storing them, and they use smoke and ash to prevent insect damage. Farmers also use insecticides, such as Actellic™ dust, Adtrex™, Gammalin™ dust, and even dangerous ones like DDT and Carbaryl™. It was disappointing to observe that many farmers bought insecticides from neighbours, as well as from the local market.

Crops are sold in local markets or the markets of neighbouring villages, depending on when the markets convene. The modes of transport to the markets are most inefficient, and, as a result, trading picks up only in the afternoon. On market days, farmers are commonly seen travelling, dangerously, on trucks that have not been designed to convey passengers. Others are seen trekking over long distances. This limits the amount of produce they can send to the market, and the time spent is often at the expense of farming and other activities. At the market, the farmers sell their produce and use the money to purchase things they need for their households and farms, and they return home with scarcely any cash.

Livestock husbandry

Livestock occupies an important position in the farming system and is owned by 62% of the farmers interviewed (Table 7). The livestock numbers are likely understated because farmers are generally apprehensive about revealing the size of their herds.

Table 7. Livestock holdings.

Type

Owners
(n)

Livestock numbers
(n)

Mean holdings
(n)

Cattle (including bullocks)

28

240

8.6

Bullocks

26

57

2.2

Donkeys

13

18

1.4

Sheep

29

140

4.8

Goats

31

152

5.0

Poultry

31

561

18.1

Pigs

9

62

6.9

Source: Formal survey (1988).

Cattle are mainly kept with the Fulani, who are responsible for their upkeep and grazing, and they release the animals to the owners on demand. The cattle are kept in kraals overnight and sent for grazing in the morning. During the dry season, the cattle often trek over long distances in search of good pasture and water. Dry-season feeding of livestock is a problem. The Fulani commonly set fire to large tracts of land to force grass to regrow for the cattle. Agricultural scientists and environmentalists advise against this, but the practice has not abated. A Fulani cattle herder usually keeps livestock for several owners, and the quantity may not encourage good husbandry.

Livestock production in the study area receives inadequate technical support from MOA’s Department of Animal Health and Production, which becomes noticeable during outbreaks of livestock disease. But for the past 2 or 3 years, diseases like rinderpest and, more recently, anthrax, have been contained. The farmers often buy drugs and antibiotics from the local market.

Analysis

Technological inadequacies

Any agricultural-technology system has three main parts: (1) production, (2) storage, and (3) sales and marketing. Unfortunately, however, several agricultural-technology systems developed for the Third World concentrate mainly on increased production and neglect storage and sales and marketing. This was characteristic of the agricultural technology developed for northern Ghana. No adequate preparation was made for the storage of surplus output, and marketing facilities were nonexistent.

One can argue that most farmers in the Mamprusi area are aware of the importance of fertilizers and are also ready to use them; however, the quantities of fertilizers sent up north by the central government are inadequate. The high-yielding seeds respond better to fertilizer, and if adequate fertilizer is not applied, less than optimum yields will be achieved. The small quantities of the fertilizer usually arrive late, normally after farmers have tilled their lands and planted their crops. The central government imports fertilizers without consulting with the experts on the types of fertilizer to use. When considering what fertilizer to buy and where to buy it, the central government is more concerned about prices and conserving foreign exchange.

Storage poses a considerable challenge for farmers in the Mamprusi area. Almost all the farmers use some traditional method for storage, which limits the length of time that the crops can be stored. There is always the pressure to sell off whatever is stored before it goes bad. Under such circumstances, farmers accept low prices for their produce. The Ghana Food Distribution Corporation (GFDC), a stateowned enterprise, is the only government agency set up to buy and store the farmers’ produce. The GFDC has the capacity to store 17 500 t, but this capacity is said to be idle because of a contractor’s faulty design. In any case, the storage capacity is far from adequate in view of the levels of cereal demand and supply. The GFDC hopes to increase its storage capacity to more than 120 000 t in the second and third phases of its program. Private participation in the purchase and storage of farm produce is virtually nonexistent. A few firms do buy vegetables and fruit for processing, but these firms do not have the production capacities to allow them to buy large quantities.

The farmers can only store produce by drying and bagging it. The bags are then kept in the farmers’ bedrooms or in mud silos. Several of these farmers do not apply any insecticides. Those who do apply them buy them indiscriminately, without any advice from the extension service. This is dangerous to the farmer and to the farmer’s family, as well as to the consuming public. There are examples of farmers using Gammalin 20 or DDT to both kill rodents and preserve food.

There is a big problem with food marketing in the Mamprusi area. The method for transporting produce to market limits the amount that can be sent. The roads are especially difficult during the rainy season. Even in the dry season, these roads are so bad that not many trucks can use them. For that matter, many farmers walk to market with their produce on their heads. Several of the markets open every third day. They open late but close early to allow the farmers time to walk back to their homes.

Often, farmers’ produce is priced very low because of the pressure on the farmers to meet expenses and pay their debts (or the interest on their loans). The pressure to sell may also be due to inadequate storage.

Areas of intervention

The government should intervene in certain areas to ensure the farmers adopt technology. Farmers will not be induced to adopt technology if it just means higher yields, with no ready markets for their produce.

The unimodal rainy season in the region results in inadequate irrigation. During the rainy season, farms are flooded and crops are destroyed. Canals should be constructed to conserve this extra water for future use. Such water-control measures have been ignored by both the government and the development agencies.

Another important issue is that of credit. There is no financial institution in the whole area. The nearest bank is at Bolgatanga, more than 50 km from Walewale; the Agricultural Development Bank at Tamale has an agency at Malerigu, several kilometres away. However, the farmers who took an interest in going to the bank for help were frustrated. In several instances, these farmers made many trips to the agency at Malerigu only to be given loans that were just adequate to pay for their transportation there and back. New technology is expensive if one also takes into account the prices of fertilizers, high-yielding seeds, implements, and so on. Farmers need to raise loans to buy all these inputs. Development agencies in the district should find a way to grant loans to farmers.

The calibre of extension staff leaves much to be desired. Many of the extension staff are unable to explain technological innovations to the farmers. Moreover, the extension officers, usually referred to as technical officers, have to depend on public transport to do their work. Development agencies should consider buying bicycles and motorbikes for the technical officers. Some in-service training should be provided; some technical officers could also be sent to agricultural schools.

Storage and sales and marketing must be addressed seriously. When these are improved, they will provide incentives for farmers to produce more. As rational entrepreneurs, farmers will respond to market trends. A ready market for their produce will encourage them to produce more. To do so, they will need to adopt appropriate technologies.

Conclusions

On the whole, several agencies are actively involved in the dissemination of technological information to small-scale farmers in the Mamprusi area. The objectives of almost all these agencies overlap. Unfortunately, however, there are examples of the agencies competing, instead of cooperating, to achieve their common goals. This has normally led to duplication of work and, sometimes, confusion for the farmers. LAS and the Adventist Development Relief Agency (ADRA) both operate at Langbensi. LAS was the first to operate in the village, and then ADRA moved in. ADRA used food aid to win some support from the local farming community. It is a mistake for an agency to provide farmers with food when it is trying to help them increase their output — food relief is a disincentive, LAS and ADRA were also doing the same things, and this confused the farmers. (NORRIP is not an executing agency. It only makes plans and invites external organizations to come in to implement those plans. NORRIP is still in the process of trying to execute its own plans.)

The essential ingredients are missing in the technological package introduced to the small-scale farmers. Farmers know of the technologies being developed for them and are ready to adopt them. However, they have many frustrations. They do not get their fertilizers supplied at the right time or in the right quantities, and the prices are too high. With the exception of Global 2000, all the other projects rely on Walewale for their supply of fertilizer. This completely frustrates the projects’ operations.

Technology policies for Ghana are not in the hands of the central government. Evidently, therefore, the government has very little to do with the innovation and dissemination of agricultural technology. The control of this is in the hands of several nongovernmental organizations.

Recommendations

The following recommendations are made for implementing and diffusing technology in Ghana:

1. The Government of Ghana should take control of agricultural-technology policies and play a leading role in achieving their objectives.

2. NORRIP should be restructured to coordinate the activities of the development agencies and eliminate duplication in their work.

3. The development agencies should come up with strategies to advance loans to farmers. (These loans could be in the form of cash or agricultural inputs.)

4. Canals should be built to conserve excess water from the heavy rains. (Ultimately, rivers will have to be dammed for irrigation. Agricultural technology of the kind being introduced to farmers in the north cannot rely on the rains.)

5. The development agencies operating in the Mamprusi area should take advantage of the government’s new policy on fertilizer imports to import their own fertilizers and other agricultural inputs for farmers in their catchment areas.

6. MOA should team up with the development agencies to solve the marketing and storage problems. (For example, some of these agencies have silos that could be used by the GFDC to store what they have to buy from farmers in the area.)

References

Duff, B.; Kaiser, M. 1982. The mechanization of small rice farms in Asia. In Farm power and employment in Asia: Performance and prospects. Proceedings of a regional seminar held at the Agrarian Research and Training Institute, Colombo, Sri Lanka, 25–29 Oct. 1982.

Government of Ghana. 1978. Ghana agricultural sector review, 1.

NORRIP (Northern Region Rural Integrated Project). 1982. NORRIP development strategy for Northern region. Ghana.

Sukharomana, S. 1982. The impact of farm power strategy in Thailand. In Farm power and employment in Asia: Performance and prospects. Proceedings of a regional seminar held at the Agrarian Research and Training Institute, Colombo, Sri Lanka, 25–29 Oct. 1982. 130.

CHAPTER 16
The Impact of University Research on Industrial Innovations:
Empirical Evidence from Kenya

Mohammed Mwamadzingo

Introduction

Almost all schools of thought in economics agree that industrial innovations provide the main driving force for economic growth and that they contribute to the creation of competition among firms and countries. However, there are many theories to explain the source, rate, and direction of innovation and its effects on economic growth. Two principle theories are the demand-pull theory and the science-push theory. The demand-pull theory emphasizes market forces as the prime determinants of technical progress. The science-push theory defines science and technology (S&T) as a relatively autonomous process leading to industrial innovation.

Many observers have come to the conclusion that there is no real boundary between the two schools. It is argued that both demand pull and science push are required for the success of industrial innovations. A successful innovation needs to take account of the interaction between market needs and the changing S&T environment. The study of the role of innovations in economic growth becomes a study of the interaction between research institutes or universities (the suppliers of scientific information) and the industry (the users of research results).

In Kenya, the mechanism linking universities and research institutions with the productive sector appears to be ineffective, despite numerous efforts. There is widespread concern that the research at universities and scientific institutes in Kenya is not focused on the needs of industry. The research results, therefore, remain largely unused, and this has limited the effectiveness of the S&T infrastructure in Kenya.

Objectives

The aim of this study was threefold:

• to examine the importance of academic research to industrial innovation and industrial growth, with the objective of understanding how research findings are brought into the productive sector;

• to identify the strengths and weaknesses in the links between universities and the productive sector in developing countries, particularly Kenya, with the objective of understanding why research findings are often ignored by industry; and

• to make recommendations for promoting cooperation between academia and industry.

A review of the literature

Academic research and innovations in industrialized countries

The importance of universities in promoting technical change and innovation is widely recognized. This has prompted increasing concern about university–industry linkages, as shown by the ever increasing literature in this area.

Various arguments have been used to justify the growing interest in university–industry interactions (see Stankiewicz 1986). First, industry–university relations have been influenced by short-term economic considerations and today’s cutthroat competition. Because of the global economic recession, many countries have found it imperative to marshal their S&T capacities to improve their competitive position. Because academic research and development (R&D) receives a very large portion of the national research funding in most countries, academic institutions must in turn contribute to development. In addition, the general feeling is that institutions of higher learning are underused resources and that explicit policies are required to effectively incorporate them in the development process.

Second, it is argued that the current interest in university–industry relations has been caused by “conjectural considerations” and this relationship is merely a stage in the innovation process. Stankiewicz (1985) argued that this stage may have started a long time ago, but its impact only began to be felt recently. This stage of the innovation process is characterized by the interaction and interdependence of many new technologies, such as information technology, new materials, and biotechnology. These new technologies require high degrees of academic interaction in basic research and call for cooperation among people in diverse fields, with highly specialized S&T backgrounds.

The role of universities and other institutions of higher learning in the innovation process is natural because of their multidisciplinary nature, their competence in undertaking basic research, their reservoirs of knowledge and information, and their ability to recruit young talent. Therefore, the university should be incorporated in the national-development planning process.

For the universities to be effective in stimulating innovation and industrial growth, they must cooperate with industry. But, unfortunately, this is not always the case in developing countries. The universities in the Third World are normally concerned with their own internal, urgent problems of staffing, finance, and expansion. On the other hand, industry is preoccupied with its own problems, such as lack of adequate markets, institutional rigidities, and inefficient and inadequate infrastructures, and is usually unaware that the professors might have plausible solutions to its problems. To bridge this gap in communication, effective linkage between industry and university should be established.

Project HINDSIGHT (Sherwin and Isenson 1967) was one of the pioneering studies to quantitatively assess the effects of R&D inputs to technical innovation. The study identified 710 “research events” (important discoveries or breakthroughs) that made possible successful development of weapons systems. These research events were identified as “science events” or “technology events,” depending on the original intention of the research. Science events include mathematical and theoretical studies dealing with natural phenomena, “experimental validation of theory and accumulation of data concerning natural phenomena,” or a combination of these two. Technology events include the development of new materials, “conception and/or demonstration of the capability to perform a scientific elementary function, using new or untried concepts, principles, techniques, materials, etc.” Sherwin and Isenson concluded that only 9% of the 710 research events deemed essential to the development of the weapons systems took place at universities.

Project TRACES (IITRI 1968) was also one of the first systematic studies of the role of research in the innovation process. Table 1 presents the distribution of performers of key events documented by IITRI. The table shows that only 7% of the applied research (development and application) emanated from academic institutions.

Table 1. Distribution of research performers in project TRACES.

Research
component

Universities and
colleges
(%)

Research institutes and
government laboratories
(%)

Industry
(%)

Nonmission
research

76

14

10

Mission-oriented
research

31

15

54

Development and
application

7

10

83

Source: IITRI (1968).

Langrish et al. (1972) showed that out of 158 key technical ideas used in innovations, 56 (35%) originated at firms, and of the remaining 102 (65%), 7 came from a British university and 17 came from a British government laboratory. To determine the relative contribution of university research in organic chemistry and the use of this research by industrial researchers, Langrish (1974) examined seven review articles in the Journal of the Society of Chemical Industry, London. The review articles contained 567 references to other articles or patents. The institutional origins of 396 of these were then identified, and only 23 (6%) were traced to the work of British universities (Table 2). Of those articles, seven stated that some industrial finance supported the research. British government institutions seemed to be of more interest to the industrial reviewers, as 45 (11%) of the references cited were articles written in such institutions.

Table 2. Institutional origins of literature cited in British industrial research.

 

Industry (%)

University (%)

Government (%)

 

British

Foreign

British

Foreign

British

Foreign

102 ideas

22

40

7

3

19

9

396 references

10

40

6

21

11

19

452 abstracts

19

68

1

5

1

6

Source: Langrish (1974, table 1).

The Langrish (1974) study also showed that there had been a marked change in the main institutional sources of abstracts, from universities in Europe (particularly German universities) at the end of the 19th century to American industry during the latter half of 20th century. This also confirmed that British university research has little impact on British industry.

Langrish (1974) proposed two explanations for the decline in importance of university research: (1) Industry has increased its research activities. (2) A new branch of science is useful to industry only in the early stages — the relationship between university research and industry may be a function of the maturity of the discipline. Once a new discipline has been established, the aim of science is to understand it, and the aim of technology is to make it work, but industry has been very successful at making things work without too much reliance on understanding.

The decline in the impact of British university research was also explained by Rothwell (1985, p. 7):

In certain areas of science the role of universities is to make the initial fundamental breakthrough, followed by many years of basic research to understand the nature of the process; the role of industry is commercially to utilize the breakthrough, concentrating on understanding and harnessing its effects while being largely unaware of their causes. Given the very rapid growth in industrial R&D capability, industry would largely be unable either to utilise the potential of the breakthrough or progressively to enhance this potential. Industry has thus needed increasingly to take over the relevant fields of research itself. At the same time the universities have gone on to open up new fields of research, paving the way for the next generation of industrial applications.

The British Universities and Industry Joint Committee (see CBI 1970) looked at the ways companies use university R&D by size of company. On all the measures of contact between industry and universities, there was a marked pattern: the small firms had by far the fewest contacts. Moreover, out of 403 firms employing fewer than 200 people (out of a total of 1097 firms), 75% had little or no contact with universities, whereas out of 96 firms with more than 5000 employees, only 9% had little or no contact with universities. A correlation analysis of the data revealed that having a higher proportion of scientists in its senior management increased the likelihood of a smaller firm’s having contacts with universities. Further analysis showed that nearly one quarter of the firms approached universities for technical advice, and just under one third of them approached research associations. Companies used universities mainly for the specialists’ advice or experimental facilities. The general impression given by the analysis was that most companies did not regard universities as a major source of technical advice, except when the universities could offer specialized knowledge or expertise.

The Science Policy Research Unit (SPRU) databank of important British innovations introduced since 1945 has shown that universities and research associations have provided major initiating knowledge in a (combined) average of 4.7% of 2293 innovations in 1945–1980, as shown in Table 3. Both universities and research associations have decreased in importance as sources of innovation, whereas the contributions of governments and individuals have fluctuated. The databank also yielded information on the level of university input to firms of different sizes: on average, small firms used the universities less than their larger counterparts did.

In contrast, Gibbons and Johnston (1974) suggested that British university research has made a significant and direct contribution to industrial R&D. They investigated the role of scientific information in the resolution of technical problems arising during the course of an industrial innovation and revealed that of 887 inputs of information, 34% were from outside the firms. The study showed that, of the information inputs obtained from outside the firm, the major science sources (accounting for 36% of the inputs) were scientific journals and scientists at universities, whereas the major technology sources were trade literature and companies supplying material or equipment. Contact with scientists from outside the firms (usually in universities or government research establishments) furnished the firms with very useful information on the theories and properties of materials. Moreover, the scientists also provided direct contributions to industrial R&D, such as suggesting alternative designs or providing the location of specific information or specialized facilities and services of direct relevance to the problem at hand (Gibbons and Johnston 1974).

Table 3. Sources of major knowledge inputs to innovations.

Source

1945–1959

1960–1969

1970–1980

Average

In-house (%)

63.7

69.3

77.0

70.0

University (%)

2.8

1.6

1.6

2.0

Government (%)

5.0

6.7

7.5

6.4

Research association (%)

3.6

2.8

1.7

2.7

Related industry (%)

14.3

11.9

13.2

13.1

Unrelated industry (%)

8.6

10.4

5.5

8.2

Individual (%)

1.5

0.6

2.6

1.6

Parent company (%)

14.0

12.2

9.1

11.8

Interactions (n)

559

872

862

2293

Source: Townsend et al. (1981, table 6.1).

Note: Columns add up to more than 100% because some innovations were attributed to more than one source.

Other contacts with universities included occasional direct employment of academics as consultants and the provision of funding for research relevant to a company interest. In some cases, a university scientist acted as a sort of “gatekeeper,” “translating” information from scientific journals to make it meaningful to the problem solver. University-educated personnel in a firm were also able to contribute substantially to problem solving as a result of their greater access to scientific information sources, such as journals and their acquaintances at universities.

Gibbons and Johnston (1974) concluded from their analysis of information flows that the interactions of basic applied in-house and external research are so complex that it is not easy to establish normative criteria for the optimal allocation of government funding to research. These researchers also concluded that the basic research infrastructure at universities and government installations contributes to commercial innovation in more ways than simply providing the private firm with exploitable scientific discoveries.

Mansfield (1991) estimated the extent to which technological innovations in various industries were based on “recent” academic research (i.e., <15 years old) and estimated the lag between the investment in those research projects and the industrial use of their findings. The study considered a random sample of 76 major American firms in seven manufacturing industries: information processing, electrical equipment, chemicals, instruments, drugs, metals, and oil. Mansfield came up with interesting results. He found that about 11% of the firms’ new products and about 9% of their new processes could not have been developed without substantial delay without recent academic research. He also identified interindustry differences: the percentages of new products and processes stemming from recent academic research was highest in the drug industry, “which has an obvious interest in the large amount of medical, biological, and pharmaceutical research carried out at universities,” and it was lowest in the oil industry (p. 3). These interindustry differences were accounted for by differences in R&D intensity among firms. He found, on average, a 7 year lag between the conclusion of the academic research and the commercial introduction of the research-based innovation, but the lag tended to be longer for large firms than for small firms. Finally, Mansfield estimated that the social rate of return from academic research in 1975–1978 was 28% by comparing (p. 6)

the stream of social benefits if investment in academic research takes place with what it would have been without this investment, holding constant the amount invested in nonacademic research. In other words, what would happen if the resources devoted to academic research were withdrawn—and not allowed to do the same or similar work elsewhere.

Rosenberg (1992, p. 382) argued that American universities play an important role in the development of scientific instruments:

A central part of the “output” of university research enterprise has been much more than just new theories explaining some aspect of the structure of the universe or additional data confirming or modifying existing theories. An additional output (or by-product) has been more powerful and more versatile techniques of instrumentation including, in many cases, an ability to observe or measure phenomena that were previously not observable or measurable at all.

In most of the studies reviewed here, industrial sources accounted for the largest single, external source of S&T innovation, although the actual proportions varied somewhat, from 26% in the Gibbons and Johnston (1974) study, to 82% in the Townsend et al. SPRU study. Universities reportedly provide around 20% of the externally sources of inputs, according to the SAPPHO study (SPRU 1972); 10%, according to the Langrish (1974) and Gibbons and Johnston studies; and only 5%, according to the Bolton Committee of Inquiry on Small Firms (Freeman 1971).

Together, these studies tell us a great deal about the contribution of academic research to industrial innovation and about the direct and indirect channels through which information from this research enters the innovating organizations. Unfortunately, the same cannot be said of developing countries, as the following section will explain.

Academic research and innovations in developing countries

Universities and public research establishments are among the most important scientific institutions in most countries, including Third World countries. Universities usually account for a significant proportion of national research expenditures, a large share of the scientists engaged in R&D, and the bulk of a nation’s production of S&T research. Unfortunately, despite all this, the contribution of public R&D institutions in developing countries is negligible, and studies on the role of universities and research institutes in industrial technological change in developing countries are scarce.

Industrialized countries and developing countries are faced with completely different environments: both skilled labour and capital are in short supply in the Third World. Studies of the innovation process (reviewed above) show that demand-pull and science-push factors tend to influence technical change. But in developing countries, according to Utterback (1975, p. 667), “most users do not have the expertise to define and clearly communicate their needs or problems in such a way that technical expertise can be brought immediately to bear upon them.” The problem has persisted for quite some time. As Nayudama (1967, p. 323) commented, the results of research from universities and other institutes in developing countries “flow rather slowly, irregularly, and inefficiently … [and] even this scant flow seldom reaches as far as industrial use, and very often there is no flow at all.”

Various factors that created and have sustained the problem have been suggested. For instance, Crane (1977) and Zilinskas (1993) attributed the gap to the absence of indigenous technological innovation, which, in turn, is caused by the lack of demand for such innovations and by obsolete but tenacious legal and social barriers. Subsidiaries of multinational companies (MNCs) in the developing countries have not contributed to domestic research because the MNCs perform almost all their research in their own countries. Crane (1977) also mentioned that few local firms are motivated to undertake research to develop innovative technology because (1) they operate under monopolistic conditions; (2) their managers lack scientific knowledge and therefore are incapable of using it effectively in their operations; (3) they are too small to use technology effectively; or (4) they operate with many assembly plants and turnkey projects that literally do not need any locally produced technology.

The studies in the previous section showed that most of the ideas successfully developed and implemented by firms in developed countries originate outside the firms. One would expect that obtaining up-to-date information would be difficult for research institutions in the Third World because of their overreliance on existing technology and information, their scarcity of resources and professional personnel, and their isolation from the international scientific community (Utterback 1975).

The lack of an effective link between S&T research institutions and the productive sectors in developing countries has been noticed by the larger international community and has resulted in various programs of action. An awareness of the importance and complexity of the problem led the United Nations Industrial Development Organization (UNIDO) to organize an expert group meeting on industry–university linkage. The emphasis of the meeting, held in Vienna in 1973 (UNIDO 1974), was action to be taken by bilateral and multilateral agencies.

Further attempts by the United Nations (UN) include the 1979 Vienna Programme of Action on Science and Technology for Development, which showed that the development of strong linkages between producers and users of R&D is one of the challenges facing developing countries in the reinforcement of their S&T capabilities (Nichols 1984).

In 1983, the Lima Panel, under the UN’s auspices, called for the formation of a network of institutions (including R&D and educational institutions, consulting and engineering firms, private companies, and public enterprises) to apply the classical demand-pull and supply-push theories in the developing countries like they are applied in the developed countries.

Other meetings organized under the auspices of UNIDO included the Regional UNIDO–ESCAP Workshop and National Consultations on the Commercialization of Research Results, held in Bangkok, Thailand, in 1984; and the Ad-hoc Expert Group Meeting on Co-operation among Universities, Industrial Research Organizations and the Role of UNIDO in this Co-operation, held in Vienna, Austria, in 1976.

However, despite these and many other efforts, the developing countries have largely remained, as Clark and Parthasarathi (1982) wrote, on the “techno-economic periphery.” This feeling of the futility of these efforts was also realized much earlier on in the 1970s, when it was decided that what needs to be done to understand why underdevelopment has persisted in developing countries is to carry out policy-oriented empirical studies. On this note, Cooper (1974, p. 59) specifically commented that

it seems to me that we have reached a point in the analysis of science and underdevelopment where there is little to be gained by making endless logical refinements to the kind of very general hypothetical framework …. The only way to further our understanding of the problems is to push ahead with empirical studies.

Various empirical studies have been commissioned by the UN Conference on Trade and Development (UNCTAD) to assess the contribution of R&D institutes to technological innovation in Senegal (UNCTAD 1988a) and Sri Lanka (UNCTAD 1988b). The general conclusion drawn by the Senegal and Sri Lanka studies was similar to that drawn by a later study on R&D institutes in other developing countries (UNCTAD 1990a, p. iii):

The overall output efficiency is unsatisfactory compared to the allocated financial and human resources. On the other hand, even in the cases where the R&D institutes have succeeded in building up specialised technological capabilities or where they have produced improved or new products and processes, they have little impact on the productive sectors because many of the R&D results have not been used industrially.

The Senegal study (UNCTAD 1988a), which focused on the food industry, found that the research institutions achieved significant results, but their results had very limited application in the productive sector. The main bottlenecks were identified: “the structure of the research institutes, the attitude of those in control of the agri-food system [the enterprises] and the role of the authorities.” The argument was that the research institutes were not structurally equipped to efficiently disseminate information about their research results. There did not appear to be an adequate infrastructure to provide the industrial entrepreneurs with the technical and financial information needed to apply the research results on a commercial scale.

The same conclusions were drawn in the study of R&D institutes in Sri Lanka (UNCTAD 1988b). The lack of linkage between the R&D institutes and the productive sector was attributed to the lack of communication between the institutes and the potential users, the inappropriateness of institutes’ output for domestic technological needs, and the inadequate arrangements for the implementation of research results. Other independent surveys that have reached similar conclusions include those of Collinson (1991), Ehikhamenor (1988), and Eisemon and Davis (1992).

The role of academic research in industrial innovation: empirical
evidence from Kenya

Kenya like most other developing countries, has assigned industrial programs a central role in its efforts to create economic growth and increase the pace of industrialization with S&T (Odhiambo and Isuon 1989). Many S&T institutions have been established, often at a great cost. Unfortunately, most of these institutions work in isolation, without effective linkages with the productive sector. There is, thus, a need for a greater understanding of the factors that could lead to improved interactions between scientific research institutions and industry and to the enhancement of Kenya’s industrialization process.

Government policy statements on industrial research relationships

Probably the earliest attempts by the government to coordinate industry–research interactions can be traced back to the late 1960s. According to the National Development Plan, 1970–1974, the government was proposing to establish a national council for scientific research. This council was to have (para. 10.62) an “industrial research committee which will meet regularly to discuss, assess, and co-ordinate industrial research projects. It will also identify and select new projects and recommend them for implementation.”

However, since the proposed council did not take off until later in the 1970s, no overall body oversaw the implementation of research results. The government’s participation in the R&D in the manufacturing sector was restricted to the activities of the Industrial Survey and Promotion Centre of the Ministry of Commerce and Industry, the East African Industrial Research Organization, the Department of Design and Development of the Faculty of Engineering of the University of Nairobi, the Kenya Polytechnic, and the Kenya Industrial Estates Technical Service Centre.

All the subsequent development plans simply set aside a single paragraph to state the government’s intentions to coordinate industrial research activities. For instance, the National Development Plan, 1979–1983, commented (para. 7.55) that

the Kenyan institutional base for industrial research will be strengthened, particularly in regard to development of appropriate technologies for processing indigenous materials. Programmes at KIRDI (Kenya Industrial Research and Development Institute), Industrial Survey and Promotion Centre and the IRCU (Industrial Research and Consultancy Unit of the University of Nairobi) will be expanded, carefully interrelated and, where appropriate, coordinated with development activities in agriculture, forestry and other sectors.

However, the next two national development plans (1984–1988 and 1989–1993) seemed to make specific policy statements regarding industrial research. The 1984–1988 plan put it more clearly, saying (para. 6.60) that

Efforts will be directed to the development of appropriate technologies by assisting institutions including schools which indicate an ability for innovation, improvisation and inventiveness. Some of the funds of NCST will be used for this purpose.

It is clear from the National Development Plan, 1984–1988, that National Council for Science and Technology (NCST) was to coordinate industrial research institutions (including universities) and the transfer of the S&T research findings to the productive sector. The mode of coordinating was further fine tuned in the 6th National Development Plan, 1989–1993 (Government of Kenya 1989), which specifically associated (para. 5.62) the establishment of the Kenya National Scientific and Documentation Centre (KENSIDOC) at NCST with the need to implement Kenya’s S&T research findings for social and economic development. The plan lists the medium-range objectives of KENSIDOC as follows:

• to put appropriate tools for the identification of sources at the disposal of planners, research workers and technologists (information referral services);

• to provide information on research institutions, on-going programs and projects, and research scientists in various disciplines;

• to disseminate results of research obtained in Kenya or those about Kenya obtained by local or foreign researchers; and

• to strengthen information sources in priority scientific areas (such as agricultural, industrial, health, and development planning) identified in national development plans and strategies.

NCST and KENSIDOC have not had noticeable impacts on the linkage of scientific research and local industry. Expenditures of NCST are very low, and those of KENSIDOC are even lower. For instance, in 1990/91, KENSIDOC spent only 700 000 KES (in 1995, 59–62 Kenyan shillings [KES] = 1 United States dollar [USD]). Between 1987 and 1990, NCST spent 5–11% of the total development expenditure on KENSIDOC, basically refurbishing the library and purchasing personal computers. Because of severe financial constraints, there were no development expenditures in 1991/92. But between 1992 and 1995, the council should have spent an annual average of 129 000 KES on KENSIDOC. Moreover, the situation seems even worse when you visit NCST offices in Nairobi. Its national documentation centre is virtually nonexistent. The creation of the centre was actually just a mere change of the inscription on the door leading to the existing library.

The Kenyan government’s latest statements regarding the development of industry–research relationships are given in the Ndegwa report (Republic of Kenya 1991). The report points out that (para. 8.47) even at “present Kenya does not possess a comprehensive technology policy but improving dissemination and use of appropriate technology are of great importance for the long-term future of the informal and small scale industries.” Some of the specific recommendations contained in the report are the following:

1. KIRDI should be restructured so that it assumes additional responsibilities for modifying existing technologies and adapting those being imported.

2. Research institutions should have greater autonomy so that they can manage their own affairs independently, free from dependence on government administrative and budgetary routines.

3. The Ministry of Research, Science and Technology should develop guidelines for technology development, transfer, and use, stressing the importance of interaction between researchers and those who apply the results in their own businesses.

4. Universities should be encouraged to do even more to attract funds from the private sector, either as donations or as payments for research or other services.

Since the submission of the report to the government nothing has been said about how the objectives will be achieved. The report may end up as a mere reference document, which is what happened to the reports of many earlier commissions.

Another way of looking for official strategies for industry–research relationships is to review speeches and recommendations given by high-ranking government officials at conferences, workshops, and seminars. One of the earliest discussions of linkages of research institutions and industry in Kenya may have been the 1972 conference on “the Coordination of Production, Dissemination and Utilisation of Social Science Research Findings,” organized under the auspices of the Institute for Development Studies, University of Nairobi (Barnes 1972). The conference explored the supposition that the application of research in Kenya is characterized by severe lack of communication among of various sectors of the economy.

This conference gave rise to another one in 1973, “In Search of a System for the Dissemination of Research Findings and Technology in Kenya” (Burke 1973). As at the earlier conference, the general feeling of the participants was that the problem was not so much the absence of dissemination machinery as a lack of coordination of organizations. There are many independent bodies in the country, but most of them work in isolation, often unaware of each other’s existence. This sentiment can be summed up by a quotation from a speech given in the opening address (Burke 1973) by the Minister of Finance and Planning, Mwai Kibaki:

We who deal with planning are all too aware that we do not make full use of the available information and knowledge in this country. We are aware of the gaps existing in the plans we publish … and we are aware that there are people in the country who know what should be done, but because of the system existing in Kenya they have no short cut to inform those who are taking the decision. … The channels of communication are not as efficient as they should be.

The next step toward the recognition of the importance of linking national industrial research activities with the productive sector was the organization of a symposium in 1981 by the Industrial Sciences Advisory Research Committee. Like the earlier 1972 and 1973 conferences, the 1981 symposium came to the conclusion that there was a lack of adequate procedures for disseminating and exchanging information about R&D activities in the country. It was suggested that the existing institutions be examined to improve the research interface with the local private sector. The government volunteered that it was ready to “risk” some money for the implementation of R&D results. It was also recommended that an investment promotion centre be established and that its activities include these functions.

Yet another seminar, “The Role of R&D Institutes in the Development of Kenyan Industry,” was held in Nairobi in 1987. The main objectives were (1) to review R&D institutes’ functions in developing the public and private sectors; (2) to provide an opportunity for local industrialists to interact and to discuss research programs; (3) to examine the government’s policy on the development of industry and the use of local resources; and (4) to provide an open forum for industrialists and researchers to deliberate on the mechanisms of cooperation among themselves.

One outcome of this seminar may have been the formation of the National Research and Development Committee (NIREDCO), whose secretariat is at KIRDI. The committee enjoyed the top-level representation of institutions and drew up programs to bring about interaction and cooperation among research, industry, government, implementing agencies, and financiers of industrial projects. NIREDCO has not actually lived up to its expectations and has not been effective in linking research and its industrial application. Another outcome of the 1987 seminar was the establishment at KIRDI and NCST of industrial databanks to be used for determining high-priority national industrial programs. So far, none of these databanks has had any profound effect on industry–research interactions in Kenya.

The latest attempt to bridge the gap in industry–research collaboration in Kenya was the 1989 conference on “Cooperation between the Private Sector, Public Research Institutes and Universities in Research, Innovation and Diffusion of Technologies,” which examined ways the private sector can be promoted using local R&D potential (Makau and Oduwo 1989).

Probably the strongest statement on research collaboration was contained in an NCST (1990) report, which commented (para. 4.2.3) that

Academic and Research Institutions are never ends in themselves. They have reason to exist only as they meet the demands of existing firms or serve as toll for technology policy development and propagation. Hence their creation, objectives, structure and programmes must be measured against their ability to make these ends…. Institutions have been created without sufficient consideration of what their role should be in carrying out adopted policy. These institutions, as well as their programmes and activities, have been established without sufficient thought as to whether they are in accord with overall national industrial policy.

The university administration’s view on collaborative research

Just like the government, the University of Nairobi does not seem to have any explicit policy regarding its association with local industries. Many of its consultancy units were established at the university as a result of influence from outside the university, mostly from the UN bodies, with the university acting merely as an implementing organ on behalf of the government.

I was unable to obtain formal documentation or consult with liaison offices about the university’s efforts to establish industry–research interactions and so decided that the only way to obtain the views of the university administration was to search for statements given in speeches delivered at official functions, such as seminars and workshops at the departments and in the faculties of the university. Such statements could not constitute the official policy of the university, but they are an indication of the thinking of those in charge of policy at the university. One of the earliest views on the concept of university–industry interaction was expressed in a 1984 report of a subcommittee set up to evaluate the performance of the Industrial Research and Consultancy Unit of the Faculty of Engineering and the Faculty Projects Office of the Faculty of Architecture, Design and Development (de Sousa et al. 1984). According to its report, the team interviewed Vice-Chancellor Philip Mbithi, who expressed the feeling that, though the university was willing and able to participate in industrial interactions with the local productive sector, such efforts would be more encouraged if the specific projects came from the public sector. However, no recommendations were given on how such interactions could be promoted.

Mbithi also spoke at the Department of Chemistry’s seminar, “University–Industry Co-operation in Chemistry,” in 1986. His devotion to the topic was evident (UNESCO and University of Nairobi 1986, pp. 33, 36):

I have been invited to open many functions before, but there is none that gives me greater pleasure than the duty I have been requested to perform this morning. The joint workshops and seminars on university–industry interaction you are attending today are the first of their kind in the African region. … We in the University of Nairobi are willing to explore such joint ventures in the interests of overall national development, as part of our contribution to the national technical effort.

The only other forum for the university administration to air its perception of industry–research interactions has been during seminars and short courses organized by the UN Educational, Scientific and Cultural Organization (UNESCO) Pilot Project on Engineering Education-Industry Co-operation. There was no further official documentation to show the place of industry–research interactions at the central-administrative level. Several interviews with the vice-chancellor and deputy vice-chancellor (in charge of administration and finance) revealed that the administration was well aware of the lack of policies to govern such activities. They knew that the existing mechanisms were not operational, but they had not investigated the issue thoroughly enough to understand the pitfalls and how to rectify them. The administration was more concerned about the more urgent problems facing the university, such as the ever-increasing student population, declining levels of education, and severe financial constraints affecting the staff morale and depleting the already limited and outdated university infrastructure.

R&D at the University of Nairobi

From my search of official statements and the interviews with high-ranking officials, it was clear that there was no specific or definite policy mechanism to guide the university in its interaction with local industries. My next step was to inquire about the activities of the individual faculties, departments, and consultancy units at the university, with the aim of describing what was going on independently of support from the university administration.

This study examined the industrial research activities of 13 departments in four S&T faculties at the University of Nairobi and 1 department at Kenyatta University. Table 4 lists these departments and the corresponding number of staff engaged in industrial collaboration. The table shows that only 5 (35.7%) of the 14 departments studied had established formal mechanisms for industrial cooperation: the Industrial Research Consultancy Unit (IRCU), the Faculty Projects Office, and the departments

Table 4. Selected industrial R&D activities at University of Nairobi and Kenyatta
University.

Faculty or department

Formal
mechanisms
for industrial
collaboration

Total
staff
(n)

Staff involved
in industrial
collaboration
(n)

Staff
interviewed
(n)

University of Nairobi

 

 

 

 

Central administration

 

 

 

 

University–Industry Links

No

8

8

6

Committee

 

 

 

 

Faculty of Engineering

 

 

 

 

Industrial Research and Consultancy
Unit

Yes

2

2

2

Mechanical Engineering

Yes

25

9

6

Civil Engineering

No

30

4

1

Electrical and Electronics

No

28

5

2

Engineering

 

 

 

 

Faculty of Science

 

 

 

 

Chemistry

Yes

24

4

1

Microbiological Resources

No

16

0

2

Centre

 

 

 

 

Biochemistry

Yes

28

2

1

Institute of Computer Science

No

15

3

1

Glass Blowing Unit, Science

No

2

1

1

Workshops

Faculty of Architecture, Design
and Development

 

 

 

 

Housing and Building

No

11

2

2

Research Institute

Faculty Projects Office

Yes

1

1

1

Faculty of Agriculture

 

 

 

 

Food Technology and
Nutrition

No

16

3

2

Kenyatta University

 

 

 

 

Appropriate Technology Centre

No

9

1

1

Total (Yes = 5; No = 9)

 

215

45

29

Source: Field survey, 1991/92.

of Mechanical Engineering, Chemistry, and Biochemistry. The formal industrial interactions undertaken by three of these (IRCU, Chemistry, and Mechanical Engineering) were actually initiated by UN agencies, particularly UNIDO and UNESCO.

Table 4 also shows that 20% of the staff in the selected departments were involved in industry–research interactions, but this proportion is actually an overestimation – the departments were surveyed because they had the highest concentration of such interactions. Some departments not surveyed that may have links with local industries include the Centre for Nuclear Science Technology and the departments of Physics, Agricultural Engineering, Geology, Soil Science, and Crop Science. Some of the staff who were supposed to be involved in the interactions were merely listed by the chairs of departments interviewed, not necessarily fully committed to the idea. This could be deduced from the fact that only 29 of the 45 members of staff who were supposed to be involved in industrial collaboration were willing to be interviewed. In addition, only 11 of the ones interviewed were carrying out industrial projects on behalf of their departments, whereas the others were undertaking such projects in their individual capacities.

At the level of the central administration there was the University–Industry Links Committee, which was set up in 1986 after much pestering by the Kenya Association of Manufacturers. This committee could not be sustained beyond the level of specifying its own objectives because of what some members referred to as “problems of self-ego.” Most of the members at the committee were high-ranking staff at the university, who could not find the time to attend even a few meetings. The committee was somehow “hijacked” by some members to advance their own opportunities to obtain consultancy contracts. The committee was also reluctant to seek the views of the very beneficiaries and initiators of the mechanism — the industry.

A review of the research going on in the faculties and departments showed that the university does have the expertise and technological know-how to offer a wide range of services and to generate improved products and processes. This is confirmed by several technologically successful consultancy projects and the generally high inventive activity of the individual members of staff. Some of the notable R&D undertaken at the university includes laboratory services in water, soil, and structural engineering; professional services in the treatment of fresh and waste water; work on foundations for roads; and the designs for engineering services, mechanical plants, and a prototype industrial oven. Other areas worth noting include foundry technology, chemical engineering (specifically health care and food production), architectural and design work, environmental science, low-cost building technologies, and legume inoculants.

Despite the potential, very few interactions have occurred because of the lack of incentives to participate in industrial projects, rigidities in the managerial and institutional structures of the individual research units, and inadequate and obsolete research facilities. In the productive sector, there is the problem of a lack of awareness of what the university has to offer local entrepreneurs.

Characteristics of industry–research interactions

To measure the extent of collaborations resulting from an industry–research interface, it is important to identify successful and unsuccessful linkages and the benefits and impediments connected with such collaborations. I found it difficult to compare the levels of success or failure of linkages and the resulting impacts on the collaborating partner because the collaborative projects were dissimilar, reflecting differences in organizations, personalities, disciplines, institutional and economic contexts, and stages of development and operation. The measurement of success was also affected by the method of interaction (formal or informal) and by the modes of interaction, that is, the modes of industrial financial support for research (donations, transfers, and exchanges and sharing of staff, equipment, and information).

For the sake of simplicity, we assumed that successful interactions were those that both parties were pleased with. However, this does not imply that there was a net financial gain in the exercise. Unsuccessful programs were those that failed to bring about or sustain institutional interaction, despite various efforts to do so.

Description of successful linkages

From an in-depth investigation of 22 organizations, I found a total of 48 interactions (Table 5), giving an average of just more than 2 interactions per organization. It should again be stressed that the current study was not aimed at comprehensively identifying the interactions at the university, and this was due to the limited time and financial resources, as well as the obvious difficulties in identifying less formal interactions, which were prevalent.

Table 5. Success and failure of interactive mechanisms.

 

University of Nairobi

 

Type of interaction

Successful

Unsuccessful

Total

Knowledge transfer (n)a

19

6

25

Technology transfer (n)b

8

3

11

Research support (n) c

3

3

6

General cooperation (n) d

1

5

6

Total (n)

31

17

48

Total (%)

65

35

100

Source: Field survey, 1991/92.

a Attendance at (and, in the case of one of the parties, the organization of) seminars and workshops for the purpose of exchanging information and ideas.

b Interactions structured with a view to integrating technological results from the university or research institutes into private-sector programs or commercial products.

c Industrial contributions to the interactive process (gifts, money, equipment, etc.) in support of research excellence at institutes, not necessarily with the aim of strengthening researchties.

d Linkages that require some degree of cooperative planning with the aim of establishing formal research consortia for the benefit of the entire industrial and scientific community.

For the study, interactions could include financial support of research (donations, transfers, and exchanges and sharing of personnel, equipment, and information). I did not take any account of the duration of an interaction; that is, an interaction between a research institute and industry could have occurred for a couple of minutes or for several years. An interaction could be as simple as a discussion imparting information or could be as elaborate as a formal venture, with a contract.

Table 5 shows that the rate of success (simply taken as the proportion of successful interactions) was impressive (31 of 48, or 64.6 %). The high rate of success for the interactions was mainly attributable to the large number of knowledge-transfer mechanisms at the University of Nairobi. Table 5 also clearly shows only half of the interactions involving research-support mechanisms were successful. However, the university has a good rate of success with interacting involving its technology-transfer mechanisms. The most problematic mechanism was general cooperation: only one interaction out of six was successful.

Table 6 gives more specific information on successful interactions at the

Table 6. Description of successful interactions at the University of Nairobi.

Description of project

Department or unit

Company (category)a

Research-support mechanisms

Kenya car project

Central administration

Kenya Railways Corp. (PP)

Joint supervision of PhD
student and provision of
laboratory facilities, etc.

Food Technology and
Nutrition

Unga Ltd (MSE)

Student project on standardization
of sand for
use in cement manufacture

Civil Engineering

Bamburi Portland Cement Co. Ltd
(MNC)

Knowledge-transfer mechanisms

Engineering education
seminars and short
courses

Mechanical Engineering

Kenya Railways Corp. (PP)
Kenya Bureau of Standards (PP)
Firestone East Africa (1969) Ltd
(MNC)
General Motors (K) Ltd (MNC)
Kenya Assn of Manufacturers (NGO)

Materials testing and
consultancy

Mechanical Engineering

Kenya Railways Corp. (PP)
Kenya Bureau of Standards (PP)
General Motors (K) Ltd (MNC)

Background studies of the
water sector

Industrial Research and
Consultancy Unit

National Water Construction and
Water Corp. (PP)

University–Industry
Co-operative Workshop in
Chemistry

Chemistry

Dawa Pharmaceuticals Ltd (MNC)
Firestone East Africa Ltd (MNC)
CPC Industrial Products (FF)
East Africa Industries Ltd (MNC)
Bamburi Portland Cement Co. Ltd
(MNC)
Kenya Breweries Ltd (LSE)
Magadi Soda Plc (MNC)

Promotion and dissemination
of low-cost
building technologies

Housing and Building
Research Institute

Makiga Engineering Works (ISE)

Student attachment

Chemistry

Kenya Breweries Ltd (LSE)

Staff exchange

Mechanical Engineering

Kenya Bureau of Standards (PP)

 

Technology-transfer mechanisms

Small-scale processing of
cultured-milk products

Food Technology and
Nutrition

Technoserve (NGO)

Engineering design, fabrication,
and installation of
drug-packaging equipment

Mechanical Engineeringb

Sterling Products (MNC)

Chemical formulation for
the manufacture of liquid
foliar fertilizer

Chemistryb

Nova Chemicals Ltd (SSE)

Engineering, design, fabrication,
and installation of
machinery for the
manufacture of liquid
foliar fertilizer

Mechanical Engineeringb

Nova Chemicals Ltd (SSE)

Fabrication and testing of
low-cost building technologies

Housing and Building
Research Institute

Makiga Engineering Works (ISE)

Engineering consultancy
on material testing and
localization of motor
vehicle parts

Mechanical Engineeringb

General Motors (K) Ltd (MNC)

Engineering design, fabrication,
and installation of
bar-soap-making machinery

Mechanical Engineeringb

Nyumbani Soap (ISE)

Engineering consultancy
on fatigue corrosion of
heavy machinery and
equipment

Mechanical Engineeringb

Magadi Soda Plc (MNC)

General-cooperation mechanisms

General contacts on
fibre-concrete roofing tiles
and other low-cost building
technologies

Housing and Building
Research Institute

Makiga Engineering Works (ISE) Research Institute

Source: Field survey, 1991/92.

a FF, foreign firm; ISE, informal-sector entrepreneur; LSE, large-scale enterprise; MNC, (subsidiary of) multinational company; MSE, medium-scale enterprise; NGO, nongovernmental organization; PP, public parastatal; SSE, small-scale enterprise.

b Interaction undertaken at the individual level.

University of Nairobi, showing that six of the eight successful technology-transfer mechanisms at the university involved individual lecturers, without any assistance from their respective departments or the central administration. The highest concentration of successful links were with subsidiaries of MNCs, which accounted for 12 of the 31 interactions (i.e., 38.7% of the total). Small- and medium-scale firms (including the very small, informal-sector entrepreneurs) and the government bodies each reported seven successful interactions (22.6%). A firm could have more than one interaction: for example, the company may obtain specialized information from an institute, have student attachments, help develop the university’s curriculum, etc. The most active department at the university was Mechanical Engineering, with 14 of the 31 interactions (45.2%), followed by Chemistry, with 9 such interactions (29%).

Most of the successful mechanisms at the university involved the transfer of knowledge through seminars and courses for people from the industries. However, most of the seminars attracted only personnel from the public bodies, MNCs, and large-scale firms. If we remove the effect of the knowledge-transfer mechanisms, then half of the core interactive links (research, technology transfer, and general cooperation) would be between the university and small- and medium-scale firms, with MNCs accounting for 33.4%. Again, unlike previous studies, this one demonstrated that the small firms have into the most successful interactions.

Mechanical Engineering still tops the list, having 5 of the 12 core links, with the Housing and Building Research Institute and the Department of Food Technology and Nutrition each contributing to 2 core links. Although there was no single section or division of KIRDI with a discernible lead in contributing successful core interactions, it is a pity to note that the most comprehensive and expensive infrastructure of the institute (the Leather Development Centre and the Engineering Development and Service Centre) had not established interactive mechanisms.

FACTORS INFLUENCING SUCCESSFUL INTERACTIONS — For the field study, scientists and industry were asked to rate the significance of nine factors in successful industry–research interactions. Respondents rated the factors on a scale of 1 to 5 (1 = dominant; 5 = insignificant). A similar method was used by Fowler (1984) to determine the impediments to university–industry relationships in the United States.

The results of our survey are shown in Table 7. From the scientists’ point of view, the factor that most influenced the success of an interaction was “financial implications.” Two thirds of the respondents from the University of Nairobi indicated that the success of a project depended solely on this factor. No scientist rated this factor as insignificant. The second most important factor was the position of personnel in the industry involved in the project. Tied for third place were previous collaboration with the partner and geographical proximity.

Table 7. Factors influencing the success of technology dissemination (mean responses).

Determinant of success

Universitya
(n = 12)

Industrya
(n = 16)

Position of personnel in collaborating organization

2.50 (2)

2.25 (2)

Extent of previous collaboration

3.17 (3)

3.44 (7)

Proximity of collaborating partners

3.17 (3)

3.00 (3)

Financial implications involved in the partnership

2.08 (1)

3.38 (4)

In-house research capabilities in industry

3.67 (7)

3.19 (4)

Informal methods of collaboration

3.33 (5)

3.44 (7)

Organization of R&D framework in industry

4.42 (9)

3.20 (5)

Type of partnership, agreement, or contract

3.67 (7)

3.75 (9)

Technical sophistication of product or process

3.33 (5)

1.94 (1)

Source: Field survey, 1991/92.

Notes: n, number of respondents; numbers in parentheses refer to the ranking of the determinants by order of importance.

a Significance conversion table:

≤1.49 Dominant
  1.50–2.49 Very significant
  2.50–3.49 Significant
  3.50–4.49 Occasionally significant
  ≥4.50 Insignificant

Industry’s satisfaction with the interactions was derived from the impressive technical ability of the research institutes. The industrialists considered the interactive processes a success when the institutes undertook projects with a higher degree of technical sophistication than was available in the industry. In fact, half of the respondents rated this factor as dominant in the success of the interactions, and a further 31.3% rated the factor as very significant. Industry ranked the position of personnel in the institute and their geographic proximity as other important factors. One quarter of the industrialists rated the position of personnel in the institute as dominant, another 37.5% rated it as very significant.

Description of unsuccessful linkages

Table 8 lists the types of unsuccessful links that involved the university, revealing that 8 (47.1%) of the 17 unsuccessful interactions at the university were with subsidiaries of MNCs and 6 (35.3%) were with large-scale firms. There was only one unsuccessful link involving an informal-sector entrepreneur. Three of the projects were carried out by individual members of staff in their capacities as individuals.

Significance of impediments to industry–research interactions

Scientists and industry used the same scoring scheme to rate impediments to industry–research interaction. According to industry, the chief obstacles to negotiating projects with national research institutes include (1) their lack of understanding of what industry needs; (2) conflict of interest — institutions are interested in basic research and industry is interested in new and improved products and processes; (3) attitudinal factors; and (4) industry’s lack of in-house research capabilities. The results are shown in Table 9.

The main hindrances identified by research institutes were more or less the same as those identified by industry, although they rated the significance of these hindrances differently and for different reasons: (1) industry’s reluctance to support basic research — many researchers felt they restricted themselves by agreeing to follow industry’s direction on what research to conduct and when to conduct it; (2) attitudinal factors and lack of mutual understanding — researchers believed that industry was uninterested in their work, just as industry tended to see nothing offered by research institutes; (3) conflict of interest; and (4) industry’s lack of in-house research capabilities.

Summary

The broad aim of this study was to examine the relationship between academic research and the productive sector, with the purpose of identifying the factors affecting the strength or weakness of the links between the research at Kenyan universities and scientific institutions and the industrial sector. The experience of industrialized countries has shown that there is a link between universities and industry. But this does not seem to be the case in most developing countries. Universities and research institutes in developing countries, particularly in Africa, seem to be predominantly concerned about their internal problems of staffing, finance, and expansion. On the other hand, industry is preoccupied with its unique problems — a lack of adequate product markets, some institutional rigidities, and inefficient and inadequate infrastructures — and is usually not aware that local scientific institutions might have plausible solutions to their problems.

Table 8. Description of unsuccessful interactions at the University of Nairobi.

Description of project

Department or unit

Company (category)a

 

Research-support mechanisms

Research collaboration on
Matricaria chamomilla L.
project

Chemistry

Dawa Pharmaceuticals Ltd (MNC)

Proposed research project on
salt and soda quality

Industrial Research
and Consultancy Unit

Magadi Soda Plc. (MNC)

Extension of research project
on sand analysis for cement
production

Civil Engineeringb

Bamburi Portland Cement Co. Ltd
(MNC)

Knowledge-transfer mechanisms

Kenya car project

Central administration

Naciti Engineers Ltd (LSE)

Student attachment, participation
in 2nd Conference
on University—Industry
Co-operation Workshop
in Chemistry

Chemistry

Dawa Pharmaceuticals Ltd (MNC)
CPC Industrial Products Ltd (MNC)
East Africa Industries Ltd (MNC)
Kenya Breweries Ltd (LSE)
Magadi Soda Plc. (MNC)

 

Technology-transfer mechanisms

Energy auditing in a large
dairy

Food Technology and Nutritionb

Kenya Co-operative Creameries (LSE)

Foundry technology for local
enterprises project

Mechanical
Engineering

African Marine and General
Engineering Works (LSE)

Engineering consultancy on
refurbishment of existing
foundry

Mechanical
Engineeringb

African Marine and General
Engineering Works (LSE)

General-cooperation mechanisms

Attempts to form a national
forum for university—industry
interactions

Central administration

Kenya Assn of Manufacturers (NGO)

Co-opted membership of the
University–Industry Links
Committee

Central administration

Naciti Engineers Ltd (LSE)

General cooperation on
UNESCO-sponsored projects

Chemistry

Dawa Pharmaceuticals Ltd (MNC)

General cooperation on the
development and dissemination
of low-cost building
materials

Housing and Building
Research Institute

Undugu Society, Metal Workshops
(NGO)
Shelter Works (ISE)

Source: Field survey, 1991/92.

a ISE, informal-sector entrepreneur; LSE, large-scale enterprise; MNC, (subsidiary of) multinational company; NGO, nongovernmental organization.

b Interaction undertaken at the individual level.

Table 9. Barriers to institute-industry interactions (mean responses).

Impediments to interactions

Universitya
(n = 12)

Industrya
(n = 16)

The orientation of the institute’s research toward basic research
is a mismatch with industry’s needs for new and improved
products

2.53 (3)

2.53 (2)

The need for the institute to publish research results is in
conflict with industry’s needs for protection of its trade secrets

3.35 (7)

3.44 (9)

Research performed by institutes is generally more expensive
than in-house research

3.65 (9)

3.44 (9)

The institute often does not understand what industry needs in
the way of product-oriented research or industry’s need to
maximize profits as return on investment

3.29 (5)

2.39 (1)

Legal matters regarding the institute’s research inhibit the
commercialization of these innovations

3.77 (10)

3.59 (10)

National industrial property policies hamper relationships

3.82 (11)

4.06 (12)

National research institutes are unable to efficiently undertake
industry-sponsored applied research

3.47 (8)

3.03 (5)

Collaborations could affect the normal research environment
and processes

4.35 (12)

3.97 (11)

Industry is reluctant to support national research institutes in
basic research

2.24 (1)

3.03 (5)

Industry lacks its own in-house research capabilities

3.06 (4)

2.83 (4)

Attitudinal factors create a generalized culture gap and lack of
understanding

2.41 (2)

2.83 (3)

Distance is a factor — some activities depend on close proximity
between collaborators

3.29 (5)

3.36 (8)

Source: Field survey, 1991/92.

Notes: n, number of respondents; numbers in parentheses refer to the ranking of the determinants by order of importance.

a Significance conversion table:

≤1.49

Dominant

1.50–2.49

Very significant

2.50–3.49

Significant

3.50–4.49

Occasionally significant

≥4.50

Insignificant

Policy recommendations

Right from the outset, one aim of this study was to provide recommendations on the interaction of universities and industry, with special reference to Kenya. The study identified issues relevant to the transformation of policy, not only in Kenya but also in many other developing countries. If attention is paid to these issues, relationships between scientific research establishments and industry could be made more effective.

Changes in the structure of funding: The customer-contractor principle

The importance of S&T to economic development and the nature of scientific research make it imperative for countries to take deliberate steps to manage institutions open handedly. Governments have supported R&D because the central authority has a responsibility to train and educate its own scientific people. Government should support the types of research that are important to national needs and aspirations but are unlikely to be undertaken by the private sector.

Although there are marked differences among countries, the best way to use public research establishments is probably to adopt the contract mechanism (Gummett 1980). Examples from advanced countries show how the mechanism works.

After World War II, the United States developed a deliberate policy of having more research done by nongovernmental bodies, under contract with the federal government. The strategy was supposed to be advantageous because the government would not only have access to the wide spectrum of existing expertise but would also promote the cross-fertilization of competing institutions. This approach was successful and made the scientific infrastructure very flexible, able to respond to changing programs and project requirements.

More or less the same outcome was observed in the United Kingdom. The concept of linking the work of the research establishments to the manufacturing sector gained momentum in 1964, when the British government established the Ministry of Technology. However, despite a relatively high level of R&D, the economy, in general, and the manufacturing industry, in particular, left much to be desired, so in 1967 the ministry adopted the contract mechanism.

In 1970, the ministry issued a discussion document, outlining the proposal that a British R&D corporation be set up outside the civil service to run the civil laboratories. The proposed corporation was to be financed partly by a general grant from the government, partly by specific government contracts, and partly by sale of services, royalty income, joint ventures, and other contract work from industry. The aim was to ensure that the organization and management of R&D were logical, flexible, and decentralized.

The Rothschild (1971) report, which was accepted and implemented by the British government during the 1970s, advocated the customer-contractor principle for government-sponsored applied R&D, together with the appointment within each department of a chief scientist (to provide scientific advice and to formulate research policy) and a controller of R&D (to be responsible for the execution of the departmental research programs). The Rothschild report (para. 6) was based on “the principle that applied R&D, that is R&D with a practical application as its objective, must be done on a customer-contractor basis. The customer says what he wants; the contractor does it (if he can) and the customer pays.” The report also recommended that a “general research surcharge” of about 10% be added as a contribution to research not directly concerned with the programs commissioned by the customers. The intention was to support basic research, which no customer would be willing to contribute to. The implication was that the government research laboratories would have to apply to the ministry for funds for programs only in areas the minister had defined.

Perhaps the most important of these measures was the requirement that projects be partly supported by an industrial customer. This condition not only guaranteed a genuine industrial demand for the project, but also fostered a new kind of relationship between government and private industry.

Examples of programs designed to accord with the government’s priority objectives include the Alvey Programme. Similar programs have also come into place in other countries, such as the various programs of the Agency of Industrial Science and Technology of Japan’s Ministry of Trade and Industry and the programs of the German Federal Ministry of Research and Technology (OECD 1989). The common characteristics of these programs are that they have their own management structures, they are visible in the budgets of the governments, and they clearly promote industrial objectives and the stated intention of mobilizing all of the sectors within the research network: the institutions of higher education, the industrial sector, and the public research establishments. There are now several hundred contract research organizations, with total sales in the European Economic Community (EEC) amounting to 1 billion USD, representing 1.5% of the total R&D in the EEC (Haour 1992). The United Kingdom contract research market was estimated to be worth 670 million USD in 1988/89, excluding contract R&D performed by industrial companies for the Ministry of Defence and other government departments and for other industrial companies (Ringe 1991). It was also estimated that in 1986/87, contracts accounted for 15% of university revenue (Bossard Consultants 1989). About 80% of the developing countries listed in the 1987 UNESCO Statistical Digest have science expenditures, including those on research, of less than 0.5% of their gross national product (Mwamadzingo 1993). Moreover, it has also been observed that the concern to gain contract research funds, coupled with the availability of such funds, has led to a high level of submissions from the United Kingdom research associations, which were mostly successful. This had the effect of actually increasing the level of revenue (in real terms) from government sources (Kennedy et al. 1985).

The present study recommends that links between the government research infrastructure (including higher education institutions) and industry (the users of the research) be systematically and deliberately encouraged. The aim should be to ensure that the research establishments emphasize the users needs. The contract mechanism and competition will have the advantage of boosting the dynamics of research institutions, as well as the quality of their services.

One of the ways advanced countries encourage the adoption of the customer-contractor principle has been a reduction in government funding. For instance, the cutback of nuclear R&D programs forced many government nuclear-research establishments to diversify their operations and to fund these operations with contracts with industry. However, this would not be appealing in developing countries, which already spend too little on R&D in proportion to their national incomes. What is required is to institute closer government monitoring of the missions and aims of its research infrastructure but, at the same time, allowing the research institutes greater autonomy. The problem with government research establishments has been the incompatibility of, on the one hand, the public sector’s administrative and financial roles and its rules governing the conditions of employment and, on the other, the very nature of research activities. This incompatibility becomes even more detrimental when it is no longer merely a matter of conducting research, but also, and above all, of promoting its use within the economy and society. This objective of S&T policies will not be achieved unless the management of government establishments is allowed a greater degree of autonomy, which implies a correspondingly far greater degree of responsibility.

The adoption of the contract mechanism will also have a number of advantages in addition to its providing a further channel for funding. First, the use of contracts can be seen as a guide for making S&T findings serve the needs of economic development by forging a link with the industrial sector. The existing system, under which research institutions just receive finance from above, does not ensure that the projects and programs undertaken are actually of any interest to the end users. Second, the contract mechanism will break the existing barriers between the different research institutions in the country, making it easier to serve the needs of production. The argument here is that if there is money to be made, it may well lead to various research institutions pooling their resources (knowledge and facilities) for specific projects and programs. Third, the increased funding derived from the contracts will make the institutes better able to reward their staff, improving the terms and conditions of employment, thus raising the enthusiasm of the scientists and engineers.

Commercialization of research results: Industrial liaison units

The university is already sensitive to the opportunity to obtain income from commercialization of research results. The university has been successfully developing its potential in specific areas of S&T, but the significant problem is that its work in these areas is ignored by industry. The lack of interest is due to poor marketing strategies, as the industrialists are not aware of what is available. Thus, the institutes should establish industrial liaison offices (ILOs) to act as marketing agents. If the ILOs are adequately staffed and properly organized, they could bridge the gap, and enhance the interaction, between the research institutions and industry.

An ILO is affiliated with a research institution and has the objective of providing contact between the research institution and industry. ILOs act, partly, as a switchboard or single window, guiding industrialists to the most appropriate expertise. They also take the initiative of going out to look for consultancies with the industry. There has been massive growth of ILOs throughout the Organization of Economic Co-operation and Development (OECD) countries since the 1970s (OECD 1984), although the ILOs differ considerably in their resource endowments, functions, and locations. For example, whereas the Swedish ILOs are linked administratively to the universities, those in France are linked to various industrial research associations (Rothwell 1982a, b).

One of the most developed forms of the ILO is to be found in the Ruhr area of Germany (OECD 1984). UNIKONTAKT (Kontaktstelle für Informationstransfer Universit ät—Industrie Ruhr Universit ä t Bochum) provides a useful example, as it shows, first, how the simple concept of an ILO officer may be developed and, second, the constraints that the university structure may place on the effective working out of this idea. UNIKONTAKT also performs other functions, such as obtaining financial support for joint university–industry projects; providing advisory services and conferences and seminars to bring about a flow of information between the university and industry; obtaining and licencing patents derived from university research; and making university faculties more familiar with the basics of industrial and business practices.

Experience suggests that ILOs are to some extent handicapped by the rigidities of the university structure; the administrative difficulties in handling research contacts at the universities; and the rather limited interest of university scientists in the short-term practical questions of the industrialists. The liaison officer alone is also unlikely to have a really significant influence on a university’s overall level of interaction with industry. Some academic scientists with well-developed contacts with industry see ILOs as superfluous and even objectionable (Menon 1987).

Conditions under which ILOs are effective include (Stankiewicz 1985) the following:

• the local officers are intimately familiar with the departments and their activities;

• the officers are perceived as competent, particularly by the scientific community;

• the liaison function has high visibility and status within the university structure;

• the ILO adopts an active marketing approach, rather than taking a passive service-when-demanded approach; and

• the liaison function is linked to other interface mechanisms (such as research institutes, technology-transfer units, and research parks), rather than operating entirely on its own.

Just as it is impossible to characterize ideal technology transfer — it can take many forms, from academic consultancies faculties, contract research organizations, university spin-offs, and innovation brokers to research and science parks (Stankiewicz 1985; Rothwell 1985; Moe 1983; Menon 1987; Kenney 1986; OECD 1984) — it is impossible to identify the characteristics of an ideal ILO. What is important, however, is to view the mechanism as a process in which learning is the key factor. Even the best-conceived structure will not produce quick results. UNIDO has published a guide on how to establish such units in developing countries (UNIDO 1985).

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