Technovation 22 (2002) 51–60

www.elsevier.com/locate/technovation

Developing a manufacturing-based economy in Nigeria through

science and technology
M.O. Ilori a, A.A. Adeniyi a,*
, A.A. Oyewale b, S.A. Sanni b, I.A. Irefin a

a
Technology Planning and Development Unit, Faculty of Technology, Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria
b
National Centre for Technology Management (NACETEM), Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria

Abstract

The bedrock of manufacturing, and in fact globalisation of production and marketing, is science and technology (S&T). Some
industrialised countries that are poorly endowed with natural resources have become affluent societies through the execution of
sound manufacturing productions developed through the application of S&T.
Despite the various National Development Plans put in place in Nigeria to enhance industrialisation, the country still remains a
mono-resource (crude oil) based economy. Growth in manufacturing is also in a downwards trend, and industrial capacity utilisation
is below 37%. The poor performance of the manufacturing sector has been attributed to a number of factors which include, amongst
others: high cost of production due to high exchange rate; weak demand for manufactures due to declining purchasing power of
the populace; high expenditure on spare parts, repairs/maintenance; legal and illegal influx of cheap imported goods (globalisation
of trade); and political instability, especially during the military regimes.
For the country to improve its manufacturing sector, evolve a manufacturing-based economy and be relevant in the globalisation
of production and trade, it should pursue a combination of these S&T approaches and moves: generation and application of S&T
knowledge relevant to manufacturing through in-country R&D, S&T and innovation efforts; technological licensing and transfer;
encouragement of foreign direct investments; adoption of continuous improvements and innovation programmes; and technological
knowledge initiation. This is only possible in a national innovation system with the following enabling environments: a well-funded
education system; good and well-maintained physical infrastructures; favourable environment for R&D and innovations; and stable
and favourable economic, legal and political conditions.  2001 Elsevier Science Ltd. All rights reserved.

Keywords: Science and technology innovation manufacturing; Economy; Globalisation; Strategies; Production development environment

1. Science and technology concepts
Science and Technology (S&T) are two different
words frequently used together as a phrase because of
their close interrelationship and the interdependent role
they play in the development process of any society.
Science is widely accepted as organised or systematic
knowledge of empirical phenomena in nature, art and
society. It is a way of life and a never-ending search for
knowledge and truth. The goal of science is to under-
stand empirical phenomena in order to explain and pre-
dict or forecast them. It has also been described as a
* Corresponding author. Tel.: +234-36-233833; fax: +234-36-
231245.
E-mail addresses: aadeniyi@nacetem.rinaf.net.ng; aadeniyi@na-
cetem.oauife.edu.ng (A.A. Adeniyi).
way of gathering knowledge which may or may not be
applicable to the production of goods and services. A
modern school of thought extends the definition of
science further to embrace all intellectual and imaginat-
ive efforts aimed at establishing a consensus of rational
opinion over the widest possible fields (Anon., 1982;
Ahmed and Russell, 1988).
Technology, on the other hand, is the corpus of
knowledge and a set of techniques by which a given
society manipulates and controls the physical need to
satisfy its wants. Thus it is a special body of knowledge
owned and used by every society at a given moment to
convert its natural resources into goods and services
needed by individuals in the society (OECD, 1981). In
other words, it is the totality of knowledge, techniques,
procedures, processes and skills that culminate in the
production of goods and in the provision of services.

0166-4972/01/$ - see front matter  2001 Elsevier Science Ltd. All rights reserved.
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52 M.O. Ilori et al. / Technovation 22 (2002) 51–60
More explicitly, technology denotes the whole or an
organic part of scientific and empirical knowledge relat-
ing to industrial activities, material and energy resources,
modes of transportation and communication, and other
similar fields that are directly applicable to the pro-
duction and improvement of goods and services. Tech-
nology is made operative by technologists and engineers,
who are concerned with the design and effective appli-
cation of new products, processes, equipment, machines
or installations in the productive sectors of the economy.
Science and technology (S&T) have nowadays
become symbiotic and interrelated. They cannot be sep-
arated in terms of research and development (R&D),
public service, transfer of operational knowledge and
innovation. While technology may have its roots in
science, the development of science also depends on
technology. Much contemporary scientific research, both
fundamental and applied, depends on modern tech-
nology, and would have been impossible without highly
sophisticated equipment for observation, measurement
and data processing. The output of scientific research is
split into two components: one which feeds into edu-
cation and cultural channels, while the other feeds into
technological research. Similarly, the output of techno-
logical research is split into two streams: one flows into
industry and services while the second flows into scien-
tific research in the form of new and improved instru-
mentation and techniques, amongst others (Anon., 1982).
Technology can also be grouped into three types
according to its functionality; that is, production tech-
nology, consumption technology and organisational
technology. Production technology is further disaggre-
gated into process technology, materials, tools and
implement technology and design technology. Consump-
tion technology, however, deals with choice, supply and
deliverance of goods and services to where they are
needed. Organisation of production and its relationship
to society comprise organisational technology. These
various definitions and classifications recognise the fact
that technological innovation is not only dependent upon
efficiency of production, but also on the organisation and
management of men and materials that go into pro-
duction. In summary, technology involves the practical
implementation of scientific knowledge, which is written
down and accessible to any person or institution, and
non-scientific knowledge, which forms part of the cul-
ture of society in general, or of a company, working
group, workers or inventors in particular.
The concept of “Science and Technology” means,
nowadays, the totality of activities in a nation that lead
to innovation. These include (Anon., 1982):
1. scientific and technological research — the study,
experimentation, conceptualisation and theory testing
involved in making discoveries or developing new
applications;
2. experimental development — the process of adap-
tation, testing and refinement which leads to practi-
cal applicability;
3. scientific and technological services — a mixed group
of activities crucial to the progress of research and to
the practical application of science and technology.
The services collect, process and disseminate the
scientific and technological information needed for
such purposes;
4. innovation — that is, the use of a new product, pro-
cess or invention (resulting from new knowledge, or
a new combinations of existing knowledge) in the
national economy. Innovation can also include the
transfer of technology and is the introduction of pro-
ducts or processes into countries in which they were
previously unknown; and
5. diffusion — the propagation of innovations through
out the productive sectors of the economy.
2. Manufacturing and manufacturing-based
economy
Manufacturing comprises the techniques and methods
by which inputs are physically transformed into outputs.
The outputs differ in form and content from the starting
materials. While many manufactured goods are end-pro-
ducts or consumer goods, others are used by producers
of consumer goods as either raw materials, parts, tools
or equipment.
There exists a wide variety of manufactured goods
that can be found in society, ranging from simple food
products, pharmaceuticals and domestic goods to highly
complex industrial machines, automobiles and aircraft.
These wide-ranging goods are produced through one or
more of the five basic categories of manufacturing pro-
cess. These basic categories are extraction, chemical
change, preparation, fabrication and assembly. The order
of listing is generally in line with the processing
sequence flow from natural raw materials to finished
goods. It can be seen from the sequence that manufactur-
ing involves a high level of value addition, whereby out-
puts are at a much higher premium than raw material
inputs. Technology is a special body of knowledge used
by every society for the manufacture of goods and for
the provision of services for its citizenry. In other words,
manufacturing and the provision of services are highly
dependent on technology.
Some benefits that make a manufacturing-based econ-
omy superior to other resource-based economies include
the provision of:
1. major consumers for raw materials and the energy
industry;
2. the basis for the transport and distribution industries;
 M.O. Ilori et al. / Technovation 22 (2002) 51–60
3. products for the wholesale and retail trade;
4. machinery for the various sectors of the economy; and
5. a major market for the finance and service industries.
On the global scene, manufacturing sectors play a key
role in international trade, which is a major source of
hard currency. Furthermore, manufactured exports pro-
vide a means of purchasing the luxury products and tech-
nologies of other nations. These two factors play an
ever-increasing role in motivating less-developed coun-
tries to expand their own manufacturing capabilities (De-
Lamare, 1991).
3. International trade, globalisation and
manufacturing
A fundamental change is evolving in the economy of
the world through the removal of restrictions to free
international trade, enabling countries to have easy and
ready access to one another’s domestic markets. This
phenomenon, usually referred to as globalisation when
considered from the market perspective, continuously
bridges the gap between the so-called “domestic” and
“export” markets, thereby making the distinction
between them blurred and progressively obsolete.
From the production perspective, globalisation is
increasingly compelling the individual company to dis-
perse some of its production capacity to different
locations around the world in order to capitalise on the
classical factors of production (land, labour, energy and
capital). The manufacturing sector of each nation there-
fore needs to compete with their international rivals for
market share, growth, cost and profit. The degree of suc-
cess depends largely on the ability of firms to develop
products with life-cycle cost characteristics that are
acceptable and competitive. The manufacturing firms
must also be able to generate sufficient rewards from
sales in order to justify their risks and investment.
One of the resultant effects of global competition is
the increase in the proportion and varieties of manufac-
tured products both exported and imported by each
industrial nation. It is important to note that nations can
only achieve and maintain a high standard of living for
their citizenry by developing sound manufacturing and
marketing strategies. The implications of such sound
strategies are that:
1. the largest economic sizes of plant incorporating the
best technologies can be employed to operate at full
capacity, thereby providing technical benefits of scale
and cost advantage;
2. productivity gains are realised by replacing or sup-
plementing human efforts with machine power and
artificial intelligence developed through investment in
S&T; and
53
3. the profitability derived enhances the nation’s ability
to finance the next generation of new product ideas
through R&D, which is the bedrock of S&T develop-
ment.
Consequently, a significant level of prosperity is sus-
tained by maintaining a profitable, vigorous and buoyant
manufacturing sector (De-Lamare, 1991; Hill and
Jones, 1995).
4. Industrialisation and National Development
Plans in Nigeria
Industrial development became evident during the col-
onial era, when there was fervent clamour for import
substitution as a result of gross inflow of industrial pro-
ducts from the British. Among the first industrial activi-
ties established in Nigeria were the extractive industries
(e.g., oil from palm). Activities later moved into pro-
cessing of raw materials (e.g., groundnut, palm kernel,
palm oil, timber, rubber and cotton lint) into semi-fin-
ished goods for export to the colonial markets in Europe.
Other activities include repackaging and assembly of
machineries. The strategy was adopted to encourage
domestic production of consumer goods, intermediate
and capital goods (by importing components and engag-
ing in final assembly), thereby to “industrialise from the
top downwards”. Notable among the sectoral groups
involved were wheat flour milling, confectionery manu-
facturing, brewing, sugar, beverage and tobacco compa-
nies. The products from these companies were not only
new, and initially dependent on import for their major
inputs, but they also successfully crowded out their dom-
estic substitutes from the food baskets of many house-
holds. The National Development Plans came into exist-
ence in order to co-ordinate this industrial
development process.
The first National Development Plan (1962–1968)
gave high priority to the industrial sector, which received
about 13% of the total capital expenditure of the budget
plan. The following were the primary objectives of
industrialisation as contained therein.
1. To stimulate the establishment and growth of indus-
tries that contribute both directly and materially to
economic growth.
2. To enable Nigeria to participate to an increasing
extent in the ownership, direction and management of
Nigerian industry and trade.
3. To broaden the base of the economy and minimise
the risk of overdependence on foreign trade.
4. To secure full employment for the people and make
the fullest use of available resources.
The industries established before then, especially with
54 M.O. Ilori et al. / Technovation 22 (2002) 51–60
foreign equity participation, were simply to make “final”
imported finished formulations. Others dressed imported
goods for labelling and sale, or simply cut imported bulk
items into smaller sizes and packaged them for the mar-
ket. It was during this first National Development Plan
period that import substitution became established as a
policy.
The second National Development Plan (1969–1974)
attempted to create new policies to correct the undesir-
able effects identified in the first National Development
Plan by taking the bold step of direct capital-intensive
investment in major industries. It was designed to raise
the level of intermediate and capital goods production
and earn foreign exchange. Many projects, both on food
and agriculture and non-agricultural sectors, were under-
taken to implement the new policies.
The above projects failed to achieve the objective of
correcting the flaws in the first plan because consider-
ation was not given to existing technological and mana-
gerial capabilities as well as infrastructural inadequacies.
This led to the development of the third National Devel-
opment Plan (1975–1980) to correct these inadequacies.
Foreign firms exploited the liberal import substitution
policies and incentives to establish more and more of
the “finishing” type industries, such as the assembly of
radios and televisions, knocking together of shoes from
imported uppers and soles, bottling of soft drinks from
imported concentrates and packaging of tablets/pills into
imported bottles. The exploitative tendencies were the
resultant effects of failure in machine design, tool-mak-
ing, foundries, etc. in the Nigerian industrial set-up. The
third National Development Plan failed to make the
nation any stronger in its industrial growth and parti-
cularly reinforced the nation’s technological dependence
on the developed countries.
The fourth National Development Plan (1981–1985)
did not achieve its objectives because it was politicised
by the government then in power. The plan could not
be released for implementation until about two-and-a-
half years after it had been drawn up. Similarly, the fifth
National Development Plan (1986–1990), which was to
have been launched in 1986, was delayed by abrupt
changes in government. Eventually, the Federal Govern-
ment announced its suspension and decided to adopt a
three-year Rolling Plan strategy.
The Rolling Plan strategy was adopted to consolidate
the achievements that had been made from the Structural
Adjustment Programme (SAP). One major aspect of the
SAP is the operation of an appropriate policy environ-
ment that promotes growth of the direct production sec-
tors of the economy (e.g., agricultural and industrial
sectors) through effective mobilisation of available
development resources, promoting the in-flow of foreign
investment and efficiency in resource allocation through
a pricing system that responds appropriately to market
forces.
The three-year Rolling Plans (1990–1992, 1997–
1999) identified the following as major constraints on
the industrial sector:
1. shortage of industrial raw materials and other inputs.
2. infrastructural constraints;
3. inadequate linkage among industrial sub-sectors; and
4. administrative and institutional constraints.
Even though there were indications of qualitative
changes envisaged for the economy, it was still con-
sidered necessary to have sectoral masterplans contain-
ing details of how those changes were to be programmed
and implemented. As a result, government decided to
embark on an Industrial Master Plan (IMP). The master
plan was aimed at promoting the development of
efficient industrial systems, and the preparation of an
action plan to achieve established objectives and targets.
The development issues to be addressed by the IMP
would include SAP: the new strategy made government
withdraw from certain areas of productive investment,
through its privatisation and commercialisation pro-
gramme.
Despite the various National Development and Rol-
ling Plans put in place to enhance industrialisation, and
in particular manufacturing activities, the economy of
the country still depends on crude oil for foreign
exchange earnings. This is reflected in Table 1, which
shows that crude oil accounted for 94.5 to 98.2% of total
export value between 1989 and 1997. The manufacture
of agricultural and non-agricultural products accounted
for 0.4 to 0.7% of foreign earnings within that period.
Table 2 shows the index of industrial production from
1989 to 1997 using the base value of 1985 as 100%.
The total manufacturing index showed an increase from
154.3 in 1989 to 178.1 in 1991 and then a decline to
136 in 1995. It increased slightly to 138.0 and 138.4 in
1996 and 1997, respectively. Fig. 1 also shows negative
growth in manufacturing production between 1992 and
1995 and slight growth in 1996 and 1997. Similarly, util-
isation of industrial capacity was below 37%.
The growth rate of 0.3% in manufacturing production
(Fig. 1) was below the target of 6.7% for the sub-sector
in the 1997–1999 Rolling Plan. The lull in manufactur-
ing activities within 1989 and 1997 and the inability to
attain the growth target of the 1997–1999 Rolling Plan
have been attributed to a combination of factors, includ-
ing (Anon. 1994, 1997):
1. weak demands for manufactures due to declining pur-
chasing power;
2. increased contracting job opportunities;
3. delayed release of capital votes;
4. legal and illegal influx of cheap imported goods that
compete unfairly with local manufacturers;
5. high cost of production traceable largely to high
 M.O. Ilori et al. / Technovation 22 (2002) 51–60 55

Table 1
Export of major commodities by economic sector in Nigeria

Sector number Commodity Percentage of total export value

1989 1990 1991 1992 1993 1994 1995 1996 1997

1 Major agricultural products 3.7 2.2 2.8 1.5 1.6 1.9 1.6 1.3 1.6
Manufactures and semi-
2 manufactures of agricultural 0.2 0.2 0.2 0.1 0.2 0.2 0.2 0.2 0.4
products
3 Other manufactured export 0.7 0.3 0.5 0.3 0.2 0.3 0.4 0.1 0.2
4 Petroleum (mainly crude oil) 94.9 97.0 96.1 97.9 97.9 97.4 97.6 98.2 97.7
5 Other exports 0.7 0.1 0.1 0.1 0.3 0.1 0.0 0.1 0.0

Source: Anon. (1994, 1997).

Table 2 7. lack of funds to replace/refurbish worn-out machines,

Index of industrial production in Nigeria (base year value of inadequate working capital and an acute shortage of
1985=100%)
petroleum products for a greater part of the years also
Year Manufacturing Mining Electricity disrupted production schedules;
8. expenditure on spare parts, repairs and maintenance
1989 154.3 109.2 165.2 increased and accounted for more than 50% of total
1990 162.9 115.1 124.8 investment; and
1991 178.1 120.1 125.3
1992 169.5 119.9 139.2 9. political instability.
1993 145.5 124.6 142.2
1994 144.2 121.1 152.7
1995 136.3 124.0 150.2 From the discussion above, Nigeria is operating a
1996 138.0 129.0 147.1 mono-resource (crude oil) based economy which is far
1997 138.4 130.6 142.9 away from a manufacturing-based economy. This con-
trasts with some industrialised countries such as Ger-
Source: Anon. (1994, 1997).
many and Japan, which are poorly endowed with natural
resources but have become two of the most affluent
exchange and lending rates and a deterioration in ser- societies in the world through the execution of sound
vices and infrastructural facilities, especially elec- manufacturing strategies clearly devised to produce
tricity, water supply, transportation and telecommuni- high-quality and high-technology (hi-tech) products.
cation, the private provision of which added This had been achieved through massive investment in
substantially to the cost of operations; human resources, R&D, new capital plant and machin-
6. multiple taxes and levels by state and local govern- ery. Data obtained from OECD for some industrial
ments and closure of some factories by revenue-gen- nations between 1950 and 1978 showed that manufactur-
eration task forces in an effort to collect such taxes; ing industries generate a substantial proportion of the

Fig. 1. Growth in manufacturing in Nigeria (base year figure of 1985=100%). Source: Anon. (1994, 1997).
56 M.O. Ilori et al. / Technovation 22 (2002) 51–60
wealth and employ a large part of the working popu-
lations of these countries (De-Lamare, 1991).
5. Strategies for using S&T to establish a
manufacturing-based economy
In order not to be left out of the global competition
there is need for Nigeria to strengthen the manufacturing
sector of her economy. Development in S&T can be used
to achieve this and transform the economy into a manu-
facturing-based one. S&T developments can come in the
following dimensions (Lundvall, 1992; Basant, 1993, pp.
3–5; Ilori and Irefin, 1997).
5.1. By generating S&T knowledge relevant to
manufacturing within the country
This is done through R&D efforts translated into inno-
vations in both public and private organisations.
5.2. By S&T knowledge generated through technology
licensing or transfer and encouragement of foreign
direct investment
Transfer of technology implies the transfer to the
recipient not only of the technical knowledge needed to
produce products, but also of the capacity to master con-
ceptually, develop and later produce autonomously the
technology lying behind these products. One of the
widely accepted conclusions of studies on technology
transfer is that the extent and quality of the transfer pro-
cess depend heavily on the absorptive capacity and struc-
tural characteristics of the recipient economy. This is an
outcome of the growth and technological accumulation
that have taken place prior to the arrival of the trans-
ferred technology (Lundvall, 1992).
Foreign direct investment (FDI) by multinational
enterprises may influence the structure and organisation
of the national system of innovation. It can foster techno-
logical accumulation in particular as a consequence of
the gradual learning and establishment of local skills and
routines entailed in the investment. Learning is cumulat-
ive, since the capacity to learn depends on the com-
plexity of what is already known. Technology is created
and installed in production methods through learning by
doing, and learning by using, building on what has
already been achieved. The extent to which this takes
place depends, however, on the exact form of subsidiary
set up. It may be (1) a down-scaled replica, (2) a ration-
alised subsidiary or (3) a world product mandate subsidi-
ary. The replica subsidiary manufactures the same range
of products in the host country where it is established as
the parent company and may lack innovative capability;
however, some “learning by doing” and “learning to
learn” does take place and can be consolidated by dom-
estic policies. In the nationalised subsidiary the multi-
national enterprises create rationalised operations, with
individual national subsidiaries producing only a limited
part of the multiple product lines, possibly not even rel-
evant to the demand of the country in which it is located.
The subsidiary usually depends on the parent company
for technological development. The world product man-
date subsidiary is a type of subsidiary born out of an
agreement between a multinational enterprise’s parent
company and one subsidiary to grant the subsidiary
exclusive rights to produce and market a product and,
if circumstance warrants, to pursue the necessary R&D
activities (Bonin and Perron, 1986). This subsidiary thus
contributes to the strengthening of the national system
of innovation by building R&D capacity and training the
host country’s S&T personnel (Lundvall, 1992).
5.3. Technology knowledge imitation
With today’s global competition, technology knowl-
edge imitation (TKI), which is an act of “creative copy-
ing”, might sometimes be the only possible way to sur-
vive. It is “copy” because it tries to reproduce the
investor’s technology, and it is “creative” because it
entails introducing modifications and gradual improve-
ments. This improves the functioning of the technology
and thus contributes to adapting it to the different
demands of diverse market segments. This process,
whereby a company profits from another firm’s RSD
efforts, is a function of time and cost needed to replicate
the knowledge base inherent in the technology being
imitated. However, care must be taken by the imitator
to avoid contravening patent rights of the innovator by
focusing on imitations which differ significantly from
the technology being imitated.
For the imitation to succeed, the imitator must gain
access to the knowledge base of the innovation, and the
internal and external characteristics of the context, where
the innovation was first developed or improved. The
technology may be easier or difficult to copy depending
on whether the knowledge base is explicit or tacit.
Explicit knowledge is codified and usually protected by
patent. Technological innovation is easier to copy if it
is codified in people’s minds or incorporated into
machinery. It is also easier to imitate if the imitator has
the complementary assets necessary to exploit the tech-
nology. On the other hand, tacit knowledge forms part
of the industrial know-how, it is not very context-spe-
cific, and it is an invisible asset that is difficult to under-
stand and can only be assimilated over time. The knowl-
edge is difficult to gain access to. It may, however, be
accessed through the acquisition of people possessing
the knowledge. Other forms of knowledge include
nucleus knowledge, which is incorporated in the organis-
ational routine; and knowledge embedded on the culture
of the organisation (Femandex et al., 1999). The infor-
 M.O. Ilori et al. / Technovation 22 (2002) 51–60
mation sources for TKI could be through industrial
espionage (reverse engineering where the product is
broken down, its basic components studied to understand
its working mechanics, and later imitated, with its
internal configuration improved upon). Other sources of
information include journals and analysis of patents.
5.4. Continuous improvement and innovations
Continuous improvement and innovation are used as
a means of achieving and sustaining competitive edge
as part of the overall company culture and philosophy. It
is applied in all areas of business including management.
These improvement initiatives cover everyday activities,
not only products and processes but also the quality of
service, procedures and customer/supplier relationships.
Accumulation of such improvements becomes a substan-
tial innovation. The strategy has helped many companies
to solve complex problems in specialised core business
areas. The success of this programme depends a great
deal on both the characteristics of the individual
employee within the company and the operational cli-
mate within the organisation (Irani and Sharp, 1997).
Once a technology is acquired (locally developed,
imported or imitated), the effectiveness in applying and
sustaining it largely depends on the industrial, social,
political, cultural and financial structure of a country.
That is, an enabling environment must be in place for
the technology to take root, survive, thrive effectively,
make a meaningful contribution in the productive sector
and contribute to development as well as improvement
of the living standards of the citizenry.
6. Enabling environment for technological and
industrial growth
Experience worldwide convincingly demonstrates that
countries with the highest technological growth rate are
endowed with national innovation systems with the fol-
lowing environments (Anon., 1982):
앫 educational systems that engender indigenous techno-
logical development, adaptation of technologies to
local conditions, and furnishing the workforce with
technical and commercial skills;
앫 favourable environment for R&D and innovation;
앫 favourable economic conditions;
앫 stable legal conditions;
앫 good and well-maintained physical infrastructure; and
앫 conducive political conditions.
6.1. Educational systems
The national education and training system is of cen-
tral importance for the innovation system. Investing in
57
education and training, and continuously renewing the
form and content of these activities, are obviously
important ways by which public policy can strengthen
the capability to learn and to innovate. Learning creates
knowledge, knowledge fuels innovation, innovation
breeds change, and change also accelerates learning
(Tovstiga, 1999). If good investment is not made in edu-
cation, the youth of a nation will not be prepared for
creative challenges of the future and consequently they
will constitute a nuisance in the society.
Acquiring new technologies (through R&D efforts,
licensing, continuous improvement and innovation or
knowledge imitation) is one thing, converting the tech-
nologies into goods and services is another. Utilisation
of technologies in industrial production requires a highly
trained workforce in pure and applied sciences. This
workforce must be adequately employed, trained and
retrained (through workshops, seminars, etc.) and
remunerated so as to ensure dedication and commitment.
6.2. Favourable environment for R&D and innovation
Education and training are necessary prerequisites for
creating a favourable R&D environment. Another
important condition for favourable R&D and innovation
is the establishment of research and development insti-
tutions responsible for the generation of technological
knowledge through any of the strategies mentioned
above. These institutions must be adequately staffed and
funded. Lack of adequate funding for R&D and prudent
management of allocated funds will affect the output of
research institutions.
Since innovation is primarily a risk-taking process, the
key to its stimulation is encouragement of the entrepren-
eurial spirit. An environment must exist which offers
sufficient financial rewards to the innovator if he suc-
ceeds. Creating such an environment is primarily the
responsibility of government. One such encouragement
is the funding of venture capital. The following are some
of the requirements for a conducive environment for R&
D and innovation.
앫 Government encouragement to entrepreneurs capable
of exploiting the business opportunities presented by
locally developed or imported technologies, by fund-
ing basic research facilities and helping to disseminate
information on commercially viable technologies
through industrial development centres.
앫 Expansion of R&D efforts by funding the research
institutions adequately with specific mandates to per-
form relevant research and development functions.
R&D programmes must be designed to generate new
ideas, products and processes, and to hasten their
transfer and innovation.
앫 Government should encourage industry–university
partnerships to conduct applied research and allow
58 M.O. Ilori et al. / Technovation 22 (2002) 51–60
firms to pool their resources (facilities and equipment)
to stimulate technological innovation.
앫 Government should encourage venture capital pro-
grammes.
6.3. Economic conditions
Long-term economic growth depends on investment
in the present. Also, long-term technological develop-
ment depends on what we do to prepare the economy
to compete more effectively. In essence there should be
economic stability to induce investment by enterprises.
Taxation policies, interest rate, tariffs and exchange rate,
and other monetary policies should be the ones that will
promote full participation of the private sector in the
economy, so as to encourage entrepreneurial investment.
This goes a long way to promote technological develop-
ment.
Overvalued exchange rates encourage imports and
discriminate against local producers.
The following set of conditions, among others, should
be in place for a good economic environment:
앫 tariff and exchange policies that will protect all
enterprises (large-scale or small-to-medium scale);
앫 a competitive interest rate that will encourage
entrepreneurs to take risk, innovate and create;
앫 a competitive exchange rate that will boost domestic
production and employment;
앫 special incentives to substantially reduce tariffs on
imported industrial and agricultural production tech-
nologies. Such incentives are usually embodied in
investment codes. Exemption from import restrictions
and preferred access to credit and foreign exchange
are part of such incentives;
앫 a successfully managed exchange-rate adjustment.
There must be the right financial discipline and no
artificially supported wage rates; and
앫 there is the need to keep farm products’ prices
remunerative and industrial wage costs inter-
nationally competitive.
6.4. Legal conditions
Government regulations can be beneficial to techno-
logical development when they organise society or force
organisations and individuals to be socially responsible.
Some regulations, however, inhibit decision-making,
distort investment, and transfer resources from one group
to another. In some cases, firms and individuals are able
to profit by subverting market forces and lobbying
government. Therefore, excess bureaucratic interference
breeds lawlessness and sometimes results in increased
costs of doing business. For instance, bribes are only one
sort of cost. Creating unnecessary barriers by restrictive
licensing and registration impedes the development of
local enterprises and discourages them from utilising
modern technologies, which are needed to achieve the
productivity necessary to compete in the international
market. Also, in the financial industries, regulation has
often limited choice, increased costs, stifled innovation,
and distorted investment.
But protecting the public from health and environ-
mental hazards may justify regulation in industries. For
example, environmental regulations force firms to be
accountable for pollution they may cause.
A simple and transparent legal framework, properly
enforced, is indispensable for the long-term success of
enterprises and technology transfer, and hence techno-
logical development. This is because entrepreneurs need
consistent and enforceable laws to innovate and apply
technology.
The requirements for conducive legal conditions are
as follows:
앫 moderation of burdensome regulations to eliminate
hidden costs that many entrepreneurs pay to do busi-
ness;
앫 a legal framework that defines contract and property
rights clearly, and provides an equitable forum for set-
tling disputes;
앫 labour laws and policies that protect workers’ rights
without hamstringing organisations;
앫 development of supporting policies and legislation to
encourage technological R&D effectively;
앫 legislation and policies that will encourage univer-
sities and research institutes to adapt to serve industry
better by awarding them technology-related con-
tracts; and
앫 the institution of “awards” as incentives for adapting
products and technologies to local environments
should be given priority attention.
6.5. Physical infrastructures
Neglected infrastructure such as unreliable utilities
(water and power supplies, communication systems,
transportation facilities, etc.) can create an unconducive
atmosphere for technological and industrial develop-
ment. In Nigeria for example, an unreliable electricity
supply has led virtually all larger industrial firms to
invest in backup generators to avoid temporary shut-
downs. This also affects proper functioning of R&D
institutions that do not have backup generators. Reliable
physical infrastructure for S&T system requires that:
앫 existing infrastructure should be adequately rehabili-
tated or replaced using local S&T experts rather than
investing in new ones. In situations where it is inevi-
 M.O. Ilori et al. / Technovation 22 (2002) 51–60
table to use foreign experts, local contractors should
be used to reduce costs and foster the transfer of tech-
nological know-how to domestic construction indus-
tries;
앫 appropriate pricing is needed for utilities so that ser-
vices can be self-financing; and
앫 managements of the parastatals or utility providers
should improve their performance.
6.6. Political conditions
Unstable political environments in which the official
rules of the game are uncertain exert a heavy price on
enterprises and the economies in which they operate.
Regulations may not operate effectively because govern-
ment is not working properly. Most often political rather
than economic criteria guide investment choice, location
and management, without taking into consideration and
evaluating efficiency and competitiveness.
Governments that set long-term development policies
and stick to them establish credibility that benefits their
economies. Credible policies encourage firms and indi-
viduals (entrepreneurs) to make long-term plans. The
credibility of government is easily measured in the inter-
national marketplace. Once policies are evaluated they
are reflected instantly in the currency prices. The results
may induce inflation or stimulate investments which are
necessary for technological development.
A political environment that will stimulate technologi-
cal development requires:
앫 government that establishes and sticks to credible
policies;
앫 government that concentrates its efforts less on direct
interventions and on supporting others to be pro-
ductive (free enterprise policy);
앫 government that takes measures to improve the per-
formance of public administration and parastatal
enterprises;
앫 public utilities (enterprises) with a clear mandate,
managerial autonomy, and monitorable performance
indicators;
앫 promotion of private-sector competition to provide
services;
앫 local sourcing of government purchases to stimulate
a competitive market;
앫 better disciplined, better trained, and more motivated
public service, with competitive salaries for highly
qualified officials;
앫 free trade that will stimulate economic growth,
increase domestic demand, and allow firms and indi-
viduals to consume a greater variety of goods and ser-
vices;
앫 establishment of linkages that expand, improve and
59
maintain technological services infrastructure,
especially technological information services; and
앫 promotion of public understanding of the importance
of technological development for the achievement of
economic development.
7. Conclusion
The success of some industrialised nations in creating
wealth is due to execution of sound manufacturing tech-
nologies developed through massive investment in
human resources, R&D and innovation efforts. The
declining performance of the manufacturing sector of
Nigeria can be improved and further developed to estab-
lish a manufacturing-based economy. This could be done
by generating S&T knowledge through in-country R&D
and innovation efforts, technology licensing and transfer,
adoption of continuous improvements and innovations,
encouragement of direct foreign investment and techno-
logical knowledge imitation. This is achievable in a
national innovation system with the following enabling
environments: good and well-funded education system;
adequate and well-maintained physical infrastructure;
favourable environment for R&D and innovation; and
stable and favourable economic, legal and political con-
ditions.
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A.A. Adeniyi is a Research Fellow in Industrial Technology Management
at the Technology Planning and Development Unit (TPDU) of Obafemi
Awolowo University, Ile-Ife, Nigeria. He received a B.Sc. degree in Bio-
chemistry from the University of Ife (now Obafemi Awolowo University),
Ile-Ife and an M.Sc. in Technology Management from the same university.
He also had professional training in Brewing Technology at Doemen’s
Technikum, Grafelfing, Germany, where he earned his Brewmaster’s Cer-
tificate. After a brief stay at the Food and Drugs Inspectorate of the Niger-
ian Federal Ministry of Health, he worked in the brewing industry for
about 20 years where he occupied various technical management positions
before joining the Obafemi Awolowo University as a Research Fellow.
Mr Adeniyi is also currently a resource person to the National Centre for
Technology Management (NACETEM), and a member of the Nigerian
Institute of Food Science and Technology and the Nigerian Institute of
Management. He is about to complete a Ph.D. (Technology Management
in the area of maintenance management) at the TPDU, Obafemi Awolowo
University, Ile-Ife, Nigeria.
M.O. Ilori obtained the degrees of B.Sc. in Chemistry and M.Sc. in Food
Science and Technology in 1979 and 1983, respectively, from the Univer-
sity of Ife (now Obafemi Awolowo University), Ile-Ife, Nigeria. His Ph.D.
in Food Technology was obtained from the University of Ibadan, Nigeria.
He is a Principal Research Fellow of the Technology Planning and Devel-
opment Unit, a post-graduate department that runs M.Sc. and Ph.D. pro-
jects in Technology Management. He is also an Associate Staff of the
Department of Management and Accounting, Obafemi Awolowo Univer-
sity, Ile-Ife and of the National Centre for Technology Management
(NACETEM). His research interests are in the areas of science and tech-
nology management, and food processing.
S.A. Sanni is the Executive Director of the National Centre for Tech-
nology Management, located at Obafemi Awolowo University, Ile-Ife,
Nigeria. The Centre is a Parastatal of the Federal Ministry of Science and
Technology mandated to carry out teaching and research in Technology
Management. Professor Sanni is a Professor of Chemical Engineering, and
one of the foundation staff of the Department of Chemical Engineering
of Obafemi Awolowo University. He obtained his B.Sc. and M.Sc. degrees
from Massachusetts Institute of Technology, Cambridge, USA in 1964,
and his Ph.D. from the University of Cambridge, UK in 1967. His fields
of interest in technology management include information technology
management, strategic management of technology R&D and innovation
management, and energy and environmental management. He has many
publications in these fields.
A.A. Oyewale is a Research Fellow at the National Centre for Technology
Management, Obafemi Awolowo University, Ile-Ife, Nigeria. He obtained
a B.Sc. in Agriculture in 1979 and an M.Sc. in Agricultural Economics
in 1984, from the University of Ife (now Obafemi Awolowo University,
Ile-Ife, Nigeria). He also obtained an M.Sc in Technology Policy and Plan-
ning and is presently pursuing a Ph.D. in Technology Management at
the same university. His research interest areas include research–industry
linkage and development of technology-based SME spin-offs.
I.A. Irefin is a Research Fellow at the Technology Planning and Develop-
ment Unit of Obafemi Awolowo University, Ile-Ife, Nigeria. He received
his B.Sc. in Food Science and Technology from the University of Nigeria,
Nsukka, and his M.Sc. in Technology Policy and Planning from Obafemi
Awolowo University. In 1982 he joined African Breweries Limited, Iba-
dan, Nigeria, and rose to the post of Quality Control and Development
Manager. Since 1994 he has been with the Technology Planning and
Development Unit of Obafemi Awolowo University. His current interests
include biotechnology and food policy, application of technology manage-
ment techniques to food processing, and small enterprise development.