The Nigerian economy will create more wealth for its 200 million people by changing its approach to trade and focusing more on exports, according to Ogho Okiti, a doctoral degree holder in Economics from the University of Manchester, U.K and Managing Director of BusinessDay Media.
According to Okiti, rather than focus solely on producing to meet local demand, the government should incentivise local businesses to serve the international community in order to earn much-needed foreign exchange and trigger wealth creation.
“If we got 10 companies in Nigeria and asked them to produce for the international community, it would translate to higher foreign exchange earnings for Nigeria and create more wealth locally,” Okiti said.
Okiti questioned Nigeria’s obsession with producing for home when wealthy nations in Europe and Asia are concerned about what they can produce for others.
“Countries don’t prosper because they feed themselves, they prosper because they exchange,” Okiti, who was speaking at the Think Business conference, said.
Nigeria is home to the world’s largest number of poor people, with 87 million people according to a Brookings Institution report, the populations of Spain and Canada combined.
President Muhammadu Buhari is keen to grow the economy and create wealth for the vast majority of Nigerians through agriculture after many years of oil dependence. Buhari’s agriculture policy thrust is centred around the country feeding itself when the actual focus should be more on producing to feed the outside world.
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Critics say Buhari has a penchant for running a closed economy that does not prioritise trading with the outside. In 2019, he shut the land borders for nearly two years to curb smuggling even when it was hurting exporters.
“Policies that make an economy open to trade and investment with the rest of the world are needed for sustained economic growth,” IMF economists said in a report as far back as 2011.
“The evidence on this is clear. No country in recent decades has achieved economic success, in terms of substantial increases in living standards for its people, without being open to the rest of the world,” the IMF said.
Nigeria needs to boost economic growth and improve living standards now more than ever. Average incomes have contracted every year since 2015, according to data by the government data agency, the National Bureau of Statistics (NBS).
While global incomes have tripled since 1960, Nigeria’s average income has only grown by 0.5 percent, according to Okiti, a reflection of the poor living standards in the country.
In the last five years alone, the economy has contracted twice, 2016 and 2020. The first contraction was caused by a sharp decline in oil prices, while the second was induced by the COVID-19 pandemic which yet again caused a sharp dip in oil prices.
The IMF and Economist Intelligence Unit (EIU) see the Nigerian economy recovering next year on the back of higher oil prices and improved production, however that recovery is tipped to fizzle out by 2025 as oil prices begin to cool.
Okiti said the pre-pandemic condition of Nigeria already means it will be difficult for the country to see sustained recovery without addressing underlying issues from rising poverty to escalating debt levels and high unemployment.
