The Federal Government proposes to launch a campaign to urge the public to patronise made-in-Nigeria products. It was the same objective that informed the erstwhile import-substitution approach to industrialisation in the 1970s but which the Federal Government mismanaged. (Made-in-Nigeria products in the present context extend to services and financial offerings).
However, because of the drastic reduction in accruals of foreign exchange to the public sector owing to low crude oil prices and militancy in the oil fields, the National Planning Commission (NPC) and the Nigerian Economic Summit Group (NESG) have chosen the theme, “Made in Nigeria” for the latter’s 22nd summit in October in order “to galvanise support from stakeholders on the need to commit to structural and fiscal changes required to strengthen the Nigerian economy.”
The above excerpted phrase from the address to the summit planning committee by the Minister of Budget and National Planning, Udo Udoma, is a pointer to the fact that the FG does not determine and direct how the economy is run. Take a little history for corroboration: the Nigerian Economic Summit, which was initiated in 1993 by the Interim National Government, was incorporated under NESG in 1996. NESG is a “private sector think tank that conducts robust research and analysis of economic and critical reform issues”. It self-proclaims having made a major imprint in the repeal of the Nigerian Enterprises Promotion Decree and the formulation and adoption of the Foreign Exchange Act 1995, National Economic Empowerment and Development Strategy, Vision 20:2020 and the various government economic policies under the democratic dispensation.
Now, curiously, the Foreign Exchange Act 1995 provides the basis for the injurious segmented naira exchange rates that have engendered, one, dollarisation, treasury looting and stashing abroad of the country’s forex earnings (this is the key source of finance for the so-called “imports without forex cover”); two, very high cost of imported machinery and intermediate inputs which push up the cost of domestic manufactures; three, high import dependency and corresponding low consumption of domestic output; four, preference of foreign loans by the public and private sectors while the financial sector’s humongous lending capacity lies largely unutilised; five, all-comers’ access to forex for importing sub-standard and dumped and expired final products; and so on. Is there any wonder that the Nigerian economy remains stunted?
Worse still, despite the tumbling of the naira in the so-called flexible forex market that is fed mainly by official (withheld Federation Account) dollar allocations, the CBN has chosen to accelerate the fall of the national currency by directing that inward money remittances from abroad (read remittances from Nigerians in the Diaspora which currently amount to over US$22 billion annually) be sold by deposit money banks not directly to eligible importers but to bureaux de change.
Hence, BDCs and holders of forex in domiciliary accounts are encouraged to circumventively finance at great profit imports of the 41 items excluded from the flexible forex market to the detriment of domestic manufacturers and producers of those items. So what is the essence of a “buy made-in-Nigerian products” campaign knowing full well that official and deliberate mismanagement of the country’s public and private sector forex earnings will put such products (if by chance available) beyond the reach of consumers?
With regard to NEEDS and Vision 20:2020, they all failed. The NESG objective of “a modern globally competitive Nigerian economy (that delivers) inclusive growth in a sustainable way through measurable outcomes” has proved unrealisable. But NESG self-absolvingly blames “implementation has fallen short of expectation particularly with respect to the coordination of all the elements in the planning process”. It will be recalled that the Nigerian Industrial Revolution Plan (NIRP) promised globally competitive domestic manufacturing. NIRP is a five-year plan some aspects of which began to be implemented in 2011. As at year-end 2015, its final year, GDP growth had slowed to 2 per cent. So NIRP also has failed.
Like the failed economic programmes before it, the seed of NIRP’s failure is contained in Chapter 2 of NIRP Release 1 which highlighted inflation fluctuating between 8 per cent and 9 per cent (it is now 16.5 per cent) alongside average budget deficit of less than 2 per cent over 10 years. In truth, such outcomes are mutually exclusive. By ascertaining the actual deficit levels that are consistent with the inflation rates, NPC economists and NESG researchers/analysts will have discovered the cause of the unremitting macroeconomic instability that derailed all the economic programmes.
Instructively, section 8.6 of the NIRP Release identifies and rightly prioritises a protected local market in order to deepen industrialisation. “The local market provides a strong base from which Nigerian products (and services) can refine their standards (and competitiveness), build a strong base, and then subsequently proceed into the global export markets”. Yet, the FG has been implementing NESG’s converse recommendations at great damage to the economy for 23 years. That was time enough for a well managed Nigerian economy to advance “From Third World To First” world status.
It amounts to paying lip service to made-in-Nigeria products and industrialisation with its beneficial linkages, lifting the masses from poverty and rapid national development when the FG, one, fails to restrict items procured for government business to what is produced locally in the first instance; two, pretends not to realise that import tariffs are a tool for protecting domestic production and consumption rather than an avenue for amassing public revenue.
Hence, to whimsically grant import duty waivers on rice, palm/vegetable oil, and other goods undermines local agricultural production and its value chain; three, neglects proper management of the national currency thereby precipitating macroeconomic instability and preventing the FG from accumulating ample external reserves (irrespective of the Federation Account sharing formula and political restructuring) with which to finance critical projects without recourse to external loan; four, on the one hand abandons completion of the Ajaokuta Steel Complex while railway lines/metrolines are being constructed and refurbished with imported steel and on the other hand watches tyre and textile factories shut down while cotton growing falls off and imported expired and used tyres and second-hand clothes flood the market; five, fails to direct DISCOs to install locally manufactured prepaid electricity meters before importing any shortfall in supply; six, harbours Standards Organisation of Nigeria and NAFDAC which license foreign-based firms to manufacture final products for the Nigerian market and also superintends a National Planning Commission that merely churns out budgetary projections not based on facts instead of ascertaining and monitoring national production levels and required import volumes on item-by-item basis in order to check dissipation of forex and shield domestic production; and seven, fails to adopt appropriate political structure to enable the economy to function optimally.
All in all, NESG recommendations since its inception have not produced the desired results. Its policy offers foisted false or non-inclusive GDP growth rates manifesting in the persistently rising absolute poverty level that stood at 72 per cent in 2012 (this indicator has not been updated since then) in spite of ample crude oil receipts at the time. In the light of the obvious policy gaps in the above exposition, the FG should make amends and rethink the NESG’s close involvement in shaping economic policies and directing subsequent action. The proposed “Buy made-in-Nigeria” campaign is diversionary and uncalled-for. Buhari should, therefore, urgently accede to the trenchant demand for national restructuring and free the country to focus on realising its great potential.