Book Title: Splash theory of wealth distribution and creation
Author: Dr. Nicholas Damachi
Publisher: Hank and Whitney
Reviewer: Pius Egbelu, PhD
This book is the result of years of experience gained by the author as a senior civil servant in some ministries and agencies in the Federal Republic of Nigeria. In particular, the author’s experience most pertinent and perhaps, the ones that catalyzed the writing of this book, were the experiences gained through his assignments and deployments at the National Directorate of Employment and also at the Office of the Head of Civil Service. The National Directorate of Employment is an agency that was established in 1986 to address the massive unemployment and underemployment situations in Nigeria at that time. It was during his tenure at the Office of the Head of Civil Service as Director of Training and subsequently as the Permanent Secretary at the Manpower Development Office that he came to see more clearly the relationship between capacity building for public service and training and skill acquisition to equipping the unemployed, many lacking in marketable skills, with the skills they need to enter the workforce, and thus leading to a reduction in the national pool of the unemployed.
Dr. Damachi has done an excellent job in putting forward a theory that if properly applied can provide the government with a systematic approach to planning for the employment of its citizens through direct investments in programs that target job and poverty alleviation.
In the book, the author described the high unemployment problem in Nigeria starting in the 1980s. The problem was that while a large number of the youths were graduating from high schools and universities annually, the economy was not able to provide them the opportunities for employment due to the lack of expansion of the economy at a commensurate pace. This led to the increasing number of the unemployed as new graduates join the pool of the existing unemployed graduates from earlier years. The increasing number of the unemployment and underemployment of the youth represented an economic loss to the economy because it denied them the opportunity to contribute to the national wealth. Equally important was the realization by the government that unemployment and underemployment can lead to other social vices such as crime, a feeling of loss of self-worth, a lack of actualization of personal goals, and the inability to find meaning in life. The author did an excellent job in linking unemployment and underemployment to the growth of national economy, and improvement in the quality and standard of living of the citizens.
The book next presented a review of all the various programs instituted by the Nigerian government over the last 25 years with the goal of alleviating unemployment and poverty. It was the review of these programs that led to the conceptualization and development of the Splash Theory of wealth distribution and creation. In a nutshell, the theory embraces the idea that part of the national wealth should be allocated each year to the training, counseling, and microfinancing of the youth to empower them and lift them out of poverty. In essence, the government should make annual investments targeting the empowerment of the youth to reposition and enhance their employment potentials. In return, the previously unemployed who became employed will start to contribute to the economy to expand the nation’s wealth. The application of the concept advocated by the theory can form the basis and the driver for employment planning on a continuing basis to consequently convert the unemployed to employment status to reduce unemployment. This will not only reposition the youth financially but will also make them contributing members of the population to the national wealth. The author used data from the National Directorate of Employment (NDE) over a 25-year period to develop a regression model to support and demonstrate the power of the Splash Theory. The independent variable in the model was the yearly government financial allocation to NDE while the dependent variable was the number of jobs created yearly. The model provided a basis to estimate or project the number of new jobs that can be created given a level of government resource investment. A special characteristic of the Splash Theory is that national resources should be allocated directly to the agency responsible for youth empowerment for training, counseling, and microfinancing to promote the creation of new jobs. The analytical model developed recognizes that the efficiency of resources allocated by the government may not be at 100%. The recognition of a possible lower efficiency is necessary especially in the Nigerian context where the resource leakage problem is paralyzing. A coefficient, where 100 per cent representing the level of efficiency of resource usage was applied to the model. This efficiency coefficient forms a basis to perform sensitivity analysis on the predicted number of jobs created based on the level of government investment.
Although both the Splash Theory and its associated model are easy to understand, their range of applications is wide. While the model may need to be customized or adapted for each application or scenario, it can be used for employment planning at all levels of government, including states, regions, local governments, and even city governments. It is a quantitative tool to project employment yields at any level of government investment towards the reduction of unemployment. The usability of an analytical model is dependent on the quality of data used.
Poor data quality will undoubtedly produce unreliable predictions. The Splash Theory advocates for the use of an analytical model as an integral component of employment planning at any level of government, especially the federal level.
The Splash Theory recognizes that sustainable growth in employment and the economy should be accompanied by appropriate complementary structural changes in other sectors of the economy. There may have to be changes made in the educational system to ensure that students are graduated with marketable skills. Students should also be graduated with the mindset that they could become entrepreneurs and job creators themselves instead of seeing themselves solely as possible future employees of some organization. Other factors discussed to support the Splash Theory are (i) the need to increase national productivity using industrial engineering techniques since productivity growth is essential for creating jobs and growing the national wealth, (ii) improvement in leadership, (iii) integration of technology in production, and (iv) espousing land reform policies that offer every Nigerian the right to own property. The roles of technology, application of productivity improvement techniques, reform of the educational system to produce market-ready graduates, and thoughtful land reform policies are essential ingredients to boosting the economy and expanding job and wealth creation.
It was mentioned in the book that employment and economic growth in African countries since 1970 have not kept pace with the performance level seen in other developing countries outside the continent. Unfortunately, the author did not discuss further why African countries experienced lower growth rates than their counterparts in other parts of the world. Extended discussion of the basis for the low performance is well in alignment with other issues discussed in the book as performance level does also affect job and wealth creation. Further discussion of the reasons for the underperformance would have helped to shed light if African countries’ resource management practices might have contributed to the high unemployment and lower than the expected growth rate of the economies of the region. As someone who has observed from afar what appears to be the mismanagement of resources by African countries, the reason for the underperformance can only be attributed to the gross mismanagement and massive leakage of resources by individuals in leadership and management positions. In most African economies, it is one thing producing very fine, articulate, and thoughtful plans and planning documents but is another thing implementing the plans. African countries are not lacking in skills of producing quality plans and planning documents. Where they fail is in proper management of the resources allocated for the projects they planned for. Even the best plans, if not executed with dedication and integrity, will produce less than expected results. African countries have been short in properly managing resources earmarked by governments for specific projects.
The book is short but packed with useful information in understanding the efforts made by the federal government since the late 1980s in addressing the vexing problems of unemployment and underemployment.
Dr. Damachi has done an excellent job in putting forward a theory that if properly applied can provide the government with a systematic approach to planning for the employment of its citizens through direct investments in programs that target job and poverty alleviation. The book is short but packed with useful information in understanding the efforts made by the federal government since the late 1980s in addressing the vexing problems of unemployment and underemployment. The book makes a good reading especially for those responsible for employment planning. The book should also be of interest to those who want to understand the policies developed by the federal government of Nigeria in addressing the problem of job and wealth creation. The knowledge gained from the book through the Splash Theory can be applied at any level of government to address the problem of unemployment reduction and other related economic planning situations.
*Egbelu, PhD, FNAE, FNAS, FIIE Distinguished Professor of Management New Jersey Institute of Technology Newark, New Jersey, USA.