Import substitution as breeder of industries

Recently, President Muhammadu Buhari was quoted as saying that the quality of education is the key to Nigeria’s industrialisation and development. Represented by the former vice chancellor of the University of Ilorin and the current registrar of the Joint Admissions and Matriculation Board (JAMB), Professor Ishaq Oloyede, the president said it at the 44th convocation ceremony of the University of Benin, Edo State. But the idea that university education is the bedrock of industrialisation isn’t correct. This is incorrect because technology and globalisation have shifted the industrialisation scales from our current traditional educational curriculum to skills acquisition, creativity and learning by doing.

Moreover, the linchpin of the present inchoate industrialisation are self-educated apprentices, not college educated entrepreneurs. In the world today, those icons who gave civilisation a leap forward have not been university graduates. Of the five that come to mind only the winner of the 1921 Nobel prize in physics, Dr. Albert Einstein was a university graduate. People like the Microsoft founder Bill Gates, Steve Jobs, Mark Zuckerberg and Aliko Dangote never had university degrees. It is our misplacement of economic priorities that has cost us membership of G20 which will be meeting at Buenos Aires, Argentina between November 30 and December 1, 2018.

Sadly part of the cause of our economic backwardness is our penchant for anything foreign. And this is stifling the Nigerian economy in general and local industries in particular. Even sadder is the craving for foreign goods and services by our leaders. This has put undue pressure on our foreign exchange market. A drain pipe of our foreign exchange earnings is medical tourism. Earlier this year, the minister of state for health, Osagie Ehanire said that Nigeria lost more than $1 billion every year as a result of medical treatments in the UK, India and the USA among many other countries.

All of these were at the connivance of the federal and state governments who approve these tours. Indeed, despite several calls for government to disclose how much Buhari’s treatment abroad cost Nigeria, the authorities are still refusing to comply. Thus, politicians are as dishonest as the society they politic in. There has never been an honest society and there never will be. Perhaps a more worrying manifestation of our penchant for foreign products and  services is Nigerians going abroad to advertize  Nigerian products for the Nigerian audience. This is implemented through pre -production, shooting and post production of advertisements  executed abroad where the models are foreigners, the production crew are foreigners. The Nigerian client or his representative then travels abroad to supervise and bring back the products to Nigeria.

In addition, the Peoples Democratic Party, the party that promises to eliminate unemployment in Nigeria come 2019, has contracted  a U.S lobbyist Brian Balland for $90,000 per month (N31.5 million) as communications consultant ahead of the 2019 general election. However, as far as economic history goes, import substitution has always been the breeder of industries throughout the world. Import substitution was responsible for the German economic miracle after World War 11. In the same vein, Japan, China, India and South Korea used import substitution and export diversification to become industrial giants they are today.

We cannot become what we want to be by remaining what we are. So, Nigeria must craft an import substitution strategy to grow. Life isn’t about waiting for the storm to pass, it is about learning to dance in the rain. But beware, the messiah might not be a Buhari who is hailing our slave producing and lawyers without goals universities nor Atiku Abubakakar, the generator importing icon and purveyor of education as a business. “We can’t solve problems by using the same kind of thinking we used when we created them,” so said Albert Einstein. Ever heard a fringe party winning the presidency in the English speaking world? That is why the contenders for the 2019 presidency lacked the wherewithal to solve Nigerian economic problems they jointly created decades before.

Thinking the 2019 presidential aspirants can help will result in insanity which is doing the same thing over and over again and expecting different results. To pursue the diversification agenda is to broaden the export base. The balance of payments series from the Central Bank of Nigeria (CBN) shows that products other than oil and gas represented just 7.7 percent of merchandise exports in 2017. Therefore, we must expand the net to include all current account receipts. Thus, oil and gas provided 61.1 percent of total current transfers; non oil products just 4.7 percent.

The top five exports in descending order may come as a surprise: petroleum products, cocoa, urea, sesame seeds and tobacco. The same source has a table with the leading exporting companies as British American tobacco, Olam and Indorama Eleme Fertilizers and Chemicals. Government should do more to promote export diversification. They could start with the settlement of arrears on money due under the export expansion grant. These claims are subjected to an independent audit, amounting to N1.2 million according to the local media.

The exporting sector like the rest of the economy will benefit from fast turn around at the Nigerian ports; improved road network, and increase in power supply.

Certainly, someday, we shall come upon a visionary leader who would dredge the Niger river from Lokoja, Kogi state to Kulama or Akassa, Bayelsa state so that we can travel from Lagos by sea to Akassa and go up by waterway to Lokoja. Which is why we cannot depend on the perverse thinking of the current presidential contenders to liberate Nigeria. While import substitution means requiring importers to manufacture their goods locally within two years, export diversification will involve more. Exporters must process their raw materials in Nigeria to generate employment.

The president of Ghana, Dr Nana Akufo- Addo put it better: Ivory Coast and Ghana together account for 65 percent of global cocoa output, but together earn $6 billion yearly. Whereas the international chocolate industry turns over $100 billion yearly. The gains in employment, incomes, skills transfer and government revenues as a result of local processing are obvious. Nigeria’s palm oil producers are serving the domestic market above all, but they should be aware of the European Union’s stance on sustaining production and related import policies.

Indeed, import diversification should not detract from adequate allocation of government resources, time and incentives from import substitution. According to the National Bureau of Statistics, imports of Agricultural goods and oil products amounted to N890 billion and N2.67 trillion respectively in 2017. The challenge in making savings on imports is far greater in agricultural goods than in oil products. This is because there have been substantial investment in Lake rice: being grown by Lagos and Kebbi states and supported by the CBN anchor borrowers programme.

New local brands of rice are developing and imports of rice from Thailand have crashed. Yet, estimates from the U.S Department of Agriculture suggest that Nigeria will be the second largest importer of rice globally by 2019. However, smuggling from our neighboring countries has soared, since the smuggled product is cheaper than the local brands. The domestic fish industry has similar stories to share. This underpins the argument that government should allocate more money and incentives to import substitution industries. Government should end these years of neglect and indifference by funding and regulating import substitution. We cannot become the industrial giant of our dreams by remaining as we are. Nigerians cannot expect to be led into prosperity by nepotistic leaders and leaders whose companies don’t pay tax to the government.