TECHNOLOGY POLICY
and
PRACTICE in AFRICA

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

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

October 1995

ISBN: 0-88936-790-6

A microfiche edition is available.

Material contained in this report is produced as submitted to IDRC Books. Unless otherwise stated, copyright for material in this report is held by the authors. Mention of a proprietary name does not constitute endorsement of the product and is given only for information.

Contents

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.

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

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.

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).

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.

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.

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:

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.

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

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.

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.

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

Table 2. Summary of findings on technical changes.

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

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:

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:

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.

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.

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.

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.

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

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 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).

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).

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.

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.

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).

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).

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).

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).

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).

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.

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.

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).