Highway to self-reliance
AS the Federal Government is crossing the Ts and dotting the Is on its 2016 budget proposals it must signify to Nigerians that it means to change the way we live. After the squandering of the riches of the past decades we have to seriously reform our economy in such a way that we can get on to the path of a nation that wants to be self-reliant. We simply cannot go on like this.
Every year we imported millions of tonnes of rice from Thailand, America and other places whereas we have enough land to produce enough rice to feed the nation. Kebbi State produces such a large quantity of rice that it is nicknamed “the state of rice” so do Ebonyi, Bauchi and a few other states but Nigerians would hardly eat the local rice which is actually more nutritious than the polished imported rice. They claim that it is sandy and tasteless. They nickname it “ofada rice.” May be we should call it “uncle ofada’s rice” to make it as attractive to us as Uncle Ben’s rice.
Today Nigeria produces no steel despite the huge sums of money thrown into the steel mills at Aladja and Ajaokuta. We listened to the propaganda of the Western steel makers that we were better off importing steel than producing it. Our steel companies remain dormant whited sepulchres, a damning statement of our obtuseness. How can any country hope to achieve any measure of industrialisation without steel? Brazil is where it is industrially because it invested in steel and today exports excellent quality steel to various parts of the world apart from utilising it in its pre-eminent manufacturing sector.
Today Nigeria produces no paper, not even a piece of paper yet the country has three paper factories at Jebba, Iwopin and Oku Iboku. We import every piece of paper we need for our schools and factories and newspapers. Is it not likely that when we no longer have money to import paper we all will become progressively illiterate?
Today we import food, tonnes and tonnes of food yet we have the land. We import fish, lots of it yet we have rivers. We import petrol, yet we have crude oil. We import tooth pick yet we have trees. We import shoes yet we have leather, we import cotton clothes yet we have cotton. In fact, there are not very many things that cannot grow on our soil with improved fertiliser quality and improved crop seedlings. So why are we where we are? Answer: Crude oil made us stupid and lazy.
What President Muhammadu Buhari needs to do is to protect Nigeria from product dumping as other countries have done. That will be a very important step on the path to self-reliance.
Here are the facts; the United States keeps its markets closed to imported milk and sugar and maintains high tariffs on T shirts (16.5%), canvass tennis shoes (18.6%) and pick-up trucks (25%).
In March 2002, President George Bush imposed new steel tariffs to make American steel competitive in order to save the American steel industry. In January 2009, the United States House of Representatives added a protectionist clause in President Barack Obama’s $819 billion stimulus package. The clause required that infrastructure projects covered under the plan must use only American made steel. Europe kicked hard but that changed nothing.
A few years ago, Canada and Mexico dragged the United States before the WTO over a case in which a United States law prescribed that all beef imported into the country must be labelled by country of origin. The WTO ruled that the labelling requirement was a free trade infringement.
Since the 2008 global financial crisis, America at both state and federal levels has introduced several “Buy America” policies that subtly discriminate against products from other countries.
The European Union States have also devised their own measures to protect their economies. For instance, the EU has imposed anti-dumping taxes to fight cut-price subsidised imports on Chinese wire, iron and steel pipes and aluminium foil from Armenia, Brazil and China. Also, the European Union States have imposed tariffs of up to 60 per cent on imported Chinese candles. And more protectionist policies may be on the way because as recession bites harder European workers are asking their governments to impose stricter conditions for work permits. For instance, Irish construction workers want jobs in construction companies restricted to Irish labourers only. In Russia, the law prohibits imports of fruits, vegetables, meat and other foods from the United States, EU, Australia, Canada and Norway.
In the days ahead as the jobs vaporise, many countries may devise more strategies to protect their industries, infant or adult, so as to keep trouble beneath the surface. In 2009, Ernst & Young did a study in Germany which indicated that 78 per cent of small and medium size companies favour the state embracing protectionist measures to shield them from the global recession.
Most other countries including Argentina, India, Brazil, Indonesia, South Africa and China also utilise one form of protectionist policy or the other to cushion the effects of the global recession. China, the second biggest economy in the world, has employed a wide range of non-tariff measures to curb imports of corn, cotton and distilleries dried grains. It has also imposed taxes of 3-6 per cent on coal imports. This affects about $8 billion worth of exports from Australian mines.
According to WTO statistics, China had only 25 food safety and animal and plant barriers in 2012. By 2013, it had increased the barriers to 89. It also increased technical barriers from 27 in 2012 to 79 in 2013. These technical barriers have shut the door against products from several countries.
There is a tit-for-tat approach in many countries to protectionism because of the downturn in the global economy. Nigeria is no exception. With the sharp decline in Nigeria’s revenue due to the dwindling price of crude, Nigeria’s premier export product, Nigeria’s Central Bank had no choice but to take some steps to reduce the access of importers of certain products to foreign exchange from its official window. This has affected 41 products from which Nigeria spent $1.18 trillion in the last 17 months. The products include fish, milk, textiles, rice, furniture and wait for it, toothpicks. This was a courageous and patriotic decision by the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, even though some vested interests think differently.
And yet the crude oil market continues to soften. A few months ago, 15 cargoes of Nigerian crude had remained unsold which forced the NNPC to cut its official selling price formula for Bonny Light and Qua Iboe to a 10-year low. The U.S. which used to buy about 30% of our crude has virtually abandoned Nigeria because of its new oil fields, its shale oil and its robust commitment to renewable energy.
In 2012 China, the second largest consumer in the world had become an alternative market for Nigeria’s crude, following warming imports from Nigeria. But today China has virtually abandoned Nigeria’s crude. Also India, which was buying a large quantity of Nigeria’s crude in the last few years, is reducing its imports in favour of crude from Latin America. And we cannot even turn to Europe because the North Sea and Mediterranean oil seems to be more attractive to European buyers. Apart from the glut in the market, the other reasons why Nigeria’s oil is not a hot item with European buyers is because of the high freight charges for cargoes and loading delays from West Africa generally.
Right now Nigeria’s economy is on a tail spin. Unemployment in 2000 was 13.9 per cent. In 2012 it rose to 23.95 per cent and yet for the past seven years Nigeria has been reporting a growth rate of 7 per cent per year. This growth is wacky because it is growth without goodness.
The working population in Nigeria’s public and private sectors is groaning. Why? There is a big pile of unpaid salaries running into several billions and several months. The governors of the states are asking the Federal Government to throw them a lifebuoy otherwise they will drown. The Federal Government itself is battling with lean resources and huge unpaid bills it inherited from the Goodluck Jonathan’s administration. For the Federal Government to survive, and to find funds to fight the security battles in the North Eastern part of the country and meet its obligation to the people according to its election promises, it has to make drastic expenditure cuts. It also has to find new ways of boosting its revenue by restructuring the economy, drastically improving exports, reducing imports, adding value to primary products and sinking its teeth into the solid minerals quagmire. In essence, the Federal Government must learn to swim against the tide of normalcy for these are no normal times.
Some years ago, President Ibrahim Babangida banned the importation of wheat and flour and hops as part of his Structural Adjustment Programme. Nigerian brewers started to brew their beer with whatever ingredients they could find locally. Bread bakers started producing cassava bread and we all watched as Babangida munched the stuff displaying the sheer deliciousness of cassava bread on television with consummate artistry.
When he left office, cassava bread died with his departure. His successor, Sani Abacha, was too busy loading dollars into bullion vans at the Central Bank and sending them to various coded accounts in Europe and elsewhere. Cassava bread was not his problem.
However, President Olusegun Obasanjo on his reincarnation in 1999 brought cassava bread back. We also watched him delightfully munching it and washing it down with vintage palm wine. This too was on television. President Jonathan followed in the footsteps of those who carved the cassava path before him. He, too, ate it on television.
So where is cassava bread today? Not in our stomachs, not in the supermarkets, not in the restaurants, not in the food-is-ready bukaterias, not anywhere. Why is this so? Answer: Policy instability.
The cassava bread policy was a blow for self-reliance. Buhari must think along the line that the CBN Governor has done: take some hard decisions to curb importation of goods that can be produced here or that are not absolutely necessary. If he also wants to chew cassava bread he is welcome but the bread must be available elsewhere other than on television.