• Thursday, March 28, 2024
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Adebayo, the new trade minister, has his work cut out for him

Adeniyi Adebayo

Congratulations are, of course, in order. So, first, I congratulate Adeniyi Adebayo on his appointment as Nigeria’s new minister of industry, trade and investment. He has one of the most critical economic jobs in President Buhari’s second-term administration. Surely, if Nigeria is to come out of the economic woods, each of the three elements of Adebayo’s portfolio – industry, trade and investment – must be performing extremely well.

In his 2020 budget, President Buhari predicated his huge revenue projection of N8.155 trillion on an estimated GDP growth rate of 2.93 percent, which he said would be driven “largely by non-oil output, as economic diversification accelerates, and the enabling business environment improves”. But if President Buhari is to achieve such a rise in non-oil output, underpinned by accelerated economic diversification and a hospitable business environment, he needs the ministry of industry, trade and investment, under Adebayo, to be firing on all cylinders, driving robust industrial, trade and investment performances. Of course, other economic ministries must also be working in tandem, but Adebayo’s tasks of enhancing the productive capacities of industries, boosting trade and attracting significant foreign investment are critical to reviving Nigeria’s ailing economy.

But, arguably, he has been handed a poisoned chalice. He inherits an industrial sector that is shackled by significant supply-side constraints, such as poor infrastructure, excessive regulations, multiple taxes and lack of access to capital and foreign exchange. He also takes over a trade regime that is driven by blind protectionism. As I write, the government is still closing Nigeria’s borders to protect local industries, but this beggar-thy-neighbour policy is likely to provoke tit-for-tat retaliations that will harm Nigeria’s ability to export its non-oil products. Furthermore, he inherits a business environment that still lacks sufficient incentives to attract significant private capital and investment.

So far, it is not clear how Adebayo intends to tackle these challenges. He said immediately after he and Mariam Katagum, the minister of state, resumed duties that “We will attract investment and boost trade”. But since then, Adebayo has made no significant speech, setting out his agenda. Although he has a Twitter account, he has, as at last week, tweeted only one message, the picture of his inauguration on 27 August. Indeed, the Twitter account of the ministry of industry, trade and investment, MITI, with 2042 tweets in over four years, still has, as I write, Okechukwu Enelamah as minister and Aisha Abubakar as minister of state, nearly three months after Adebayo and Katagum have replaced them!

Why, you might ask, do all these matter? Well, they matter because no other ministry should be more outward-facing than that of industry, trade and investment. It’s a ministry that has the whole world as its platform, and if foreign investors, traders and policymakers want to follow developments on Nigeria’s industrial, trade and investment policies, they might want to see what the minister and/or the ministry is tweeting. Truth is, ministries and ministers of trade and investment should be engaging actively with the outside world. For instance, the three-year-old UK Department for International Trade tweets regularly, with 25,800 tweets, as at last week, while its secretary of state, Liz Truss, has made 6,480 tweets, to date!

To be sure, none of this is intended to say that Adebayo doesn’t take his responsibilities seriously. Of course, he does. As he said recently, “I believe in hard work”. He has attended a number of industry events in Nigeria, and recently attended the Commonwealth Trade Ministers meeting in London. What’s more, like his predecessor, Okechukwu Enelamah, who, before becoming a minister, had a career spanning over two decades in the private sector as a finance and investment guru, Adebayo also has a strong private-sector experience, having been a commercial lawyer for several decades, with expertise in project finance, oil and gas, contract procurement and business facilitation, representing both local and international businesses. So, there is little doubt that he has what it takes to succeed as minister of industry, trade and investment.

Of course, as always with Nigeria, policy intentions are hardly matched with the right actions. For instance, the central bank’s infamous list of 43 imported items deemed ineligible for foreign exchange through the official window, the extension of the forex ban to all food imports and the recent closure of Nigerian borders were bound to have damaging impacts on industries and foreign trade

Of course, Adebayo, the first civilian governor of Ekiti State, is also a politician. Thus, in a sense, being a seasoned commercial lawyer and politician, the new trade minister brings to the job a mix of technocratic and political skills. He needs both. The job of industry, trade and investment minister requires the technocratic ability to create the right institutions and policies for driving productivity in Nigeria’s industries, boosting trade and attracting significant foreign investment. But it also requires the political skills to win the support of a wide range of stakeholders for such institutions and policies. So far, however, by not setting out his priorities, it’s hard to tell how Adebayo intends to perform his pivotal role.

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In contrast, shortly after being sworn in 2016, Dr Enelamah gave his inaugural speech. In the speech, which was strong on vision and policy direction, he declared: “We would like Nigerians and the world to regard MITI as the ‘Ministry of Enabling Environment’”. He went on to set out what he described as the “four pillars” of his ministry, namely: to create an enabling environment for industry, trade and investment; to implement the Nigerian Industrial Revolution Plan (NIRP), developed by the Goodluck Jonathan administration; to champion the cause of micro, small and medium enterprises (MSMEs); and to attract proactively long-term foreign investment. Later on, a fifth pillar was added:  to promote the integration of Nigerian businesses into the regional and global value chains.

Of course, as always with Nigeria, policy intentions are hardly matched with the right actions. For instance, the central bank’s infamous list of 43 imported items deemed ineligible for foreign exchange through the official window, the extension of the forex ban to all food imports and the recent closure of Nigerian borders were bound to have damaging impacts on industries and foreign trade. Similarly, the existence of multiple foreign exchange windows and the heavy-handed treatment of MTN, HSBC and UBS were bound to harm foreign investors’ confidence in Nigeria. As a result of these misguided policies, the manufacturing sector’s contribution to GDP growth remains very low, non-oil exports are declining and, according to a recent UN report, foreign investment into Nigeria has dropped by 44 percent. So, in those respects, some of MITI’s five pillars have not proved to be successful.

But there are areas of significant success. Last week, the World Bank’s 2020 Doing Business Index showed that Nigeria has moved up 15 places and now ranks 131st (from 146th last year) out of 190 countries; Nigeria has, indeed, moved up 39 places since 2016. This is certainly a huge credit to MITI’s dogged commitment to the ease of doing business agenda under Enelamah. Another area of significant achievement is the successful negotiation of the agreement creating the African Continental Free Trade Area, AfCFTA, and Nigeria’s signing of the agreement. Of course, Enelamah and the late Ambassador Chiedu Osakwe led the negotiations at the ministerial and technical levels. But Nigeria must build on the favourable Doing Business ranking and the AfCFTA to derive tangible benefits from them.

This is why it’s important to know Adebayo’s agenda and priorities. How would he build on MITI’s successes and reverse its failures? For instance, how is he going to stem the tide of protectionism in this country? And how does he plan to ensure speedy ratification and domestication of the AfCFTA agreement and create the institutions and policies needed to support its implementation?

Surely, Adebayo has a pivotal yet tough job. But with the right mix of technocratic and political skills, which he possesses, he can do it. Good luck to him!