Quality infrastructure refers “to all aspects of metrology, standardization, testing, quality management, certification and accreditation that have a bearing on conformity assessment. This includes both public and private institutions and the regulatory framework within which they operate.” (BMZ, 2004)
This institutional complex plays a vital role within national innovation systems, especially in a context of rapid growth of global trade and value chains, and higher concerns with consumers and environmental protection. Accurately assessing the impacts of quality services contributes decisively to improve the understanding at the political, entrepreneurial and academic levels about the relevance of quality infrastructures to the functioning of innovation systems, how they enhance the performance of economic agents and improve the outcomes of social, economic and environmental policies.
High-quality infrastructure plays an essential role in realizing economic growth and unlocking Nigeria’s true potential. Takeshi Nakano, Director, Trade Promotion Division, Trade and Economic Cooperation Bureau, Japan’s Ministry of Economy, opined that Trade and Industry Quality infrastructure is the principle for developing countries to develop appropriate infrastructure within limited resources. He added that; although, FDI is a key driver for sustainable economic development, infrastructures which can attract foreign companies is essential.
Quality infrastructure development is important for encouraging foreign direct investment to Nigeria. Infrastructure plays a vital role in Nigeria’s economic growth, and building quality into every stage of the life-cycle of projects is essential if investment in infrastructure is to have a positive impact on the economic development of the continent and its citizens. While increasing funding for infrastructure development is important, this must be accompanied by improvements to the quality and sustainability of infrastructure. Providing infrastructure that is economically efficient, socially inclusive, safe, resilient and sustainable requires building-in concepts of quality throughout the project life-cycle, from feasibility planning and design, through to appropriate technology, operation and maintenance.
To compete in export markets, it is not enough for developing countries to increase the volume and range of products they sell: they also have to compete in a global trading system where increasingly stringent requirements apply with regard to product quality, safety, health and environmental impacts. Exporters, moreover, need proof from internationally recognized institutions that their products conform to these requirements. The resulting improvements are not only reflected in export figures: higher standards can benefit the domestic labour force, consumer and environment as well. Achieving this requires a variety of support services.
In order to understand the importance of quality infrastructure as a tool for economic growth, there are two key characteristics of quality infrastructures that need to be addressed when designing an impact study in this field. On one side, the effective performance of an individual quality service depends on the functioning of the quality system as a whole. This poses a challenge when establishing the causal relation between intervention and impact: which service is responsible for each impact?
On the other side, quality services, according to their nature and the idiosyncrasies of each society, are performed not only by private institutions, but also by public bodies. For this reason, the impacts have to be assessed taking in consideration the reasoning of public intervention, recognizing the various perspectives associated with the quality service and the medium-long run objectives associated with services as such, hereby creating an additional challenge: how to analyse the public interest of a service?
As a tool for economic growth in Nigeria, Quality Infrastructure can;
· Network effects through enhancing interoperability:
Quality infrastructures increase the value of goods with network externalities and promote the development of networks as long as they allow products to work as a part of a larger number of productive systems. By ensuring compatibility between products, their integration in a broader number of value chains is facilitated, hence increasing the number of economic agents that derive benefits from using them. The linkages between firms and industries are multiplied, more information is exchanged and the cooperation in research increased.
· Better management procedures:
Quality infrastructures aim at improving not only production related procedures, but also management practices which “may generate improvements in all aspects of a company: better quality, new schemes of internal organization and of service delivery, and also facilitate the creation of new products and services.”
· Knowledge transfer:
Through metrology, standardization or accreditation, a quality system is providing information about the state of the art of a certain technology. As this information is freely available to everyone (both to market agents and non-market agents such as research institutes), they are able to internalize it and use to generate new products or processes.
· Competition (Opening Markets):
The development of a quality infrastructure may reduce the dependency of businesses to a small number of suppliers, hence opening the markets. By guaranteeing comparability, traceability, conformity, a quality system broadens the buying possibilities of companies, increases the competition among suppliers and the confidence of buyers on the quality and reliability of those suppliers that conform to the norms.
· Reducing entry barriers:
Quality infrastructures enhance transparency and help firms reaching new markets. According to European Commission (2007), companies are able, through the information contained in standards, to appropriate the preferences of consumers in foreign markets and the required technical specifications. Furthermore, through certification and accreditation, local firms obtain more easily the trust from the foreign consumers as it guarantees that their products are in conformity to the specified norms.
· Economic efficiency:
Economies of scale (the cost reduction associated with a larger scale of production). A quality infrastructure, namely through standardization processes, reduces variety in the sense that it sets limits to a certain number of characteristics of products. This enables lower per-unit costs for suppliers since they do not need to produce a specific good for each buyer. Instead, they produce a homogenous good that serves all their clients.
· Reduction of transaction costs:
As long as the supplier complies with the standard, the product is certified, and there is trust regarding the certification, the consumer does not have to incur in costs associated, for instance, with double testing to check whether the product conforms to the requirements.
· Reduction of search costs:
The effort of finding a product that has some specific characteristics is substantially reduced given that there are standards that specify those properties and compliance is assured through certification.
· Reduction of adverse selection:
A well-functioning quality infrastructure enables producers to differentiate their products in terms of quality (the producers that comply and those that do not comply with certain norms). Through the conformity assessment framework, innovators are allowed to differentiate their product/service offer or to improve their internal processes. That is a major incentive as through this differentiation innovators are able to charge a price premium (a higher price than their competitors) for their innovative products, hence compensating the investment made with higher revenues.
· Consumers and environmental protection:
Concerns of consumers and environmental protection are increasing and quality infrastructure is a means to safeguard such interests. For example, if a certain chemical is regarded as harmful for the health of consumers or for the environment, metrology instruments can be developed to measure the levels that products contain of that chemical; a technical regulation (a mandatory standard) can be established forbidding the existence of this chemical beyond a certain level; conformity assessment guarantees that products effectively follow the norm.
In a nutshell, it can be established that quality infrastructure also create jobs, additional income, price stability, diversification of local technological and industrial capacities.
Dr. Franklyn Akinyosoye, ISO 9001, 22000 and 14001 certified, mIOD, CMD, BDSP.