In her first official trip as the new Director General of the World Trade Organization (WTO), Dr Ngozi Okonjo-Iweala reportedly visited Nigeria for two main reasons. While the first was to thank President Buhari and Nigeria for the overwhelming support that contributed to her appointment as the first African and woman Director General of WTO, the second was for interaction with Nigerian government. On the second reason, she also offered some suggestions on the Nigerian economy. At the centre of her counsel was the urgent need for Nigeria to diversify her economy, increase productivity to better contribute, share and leverage the opportunities in both intra-African and global trades.
On our economic policies particularly trade ones, she seems to suggest that Nigeria should adopt more openness or what can be described as neo-liberal economic policies. Pointing to the complaints from European Union on the CBN restriction on the importation of dairy products, Dr Iweala is of the view that restrictions might not be the appropriate approach to protect our local industries.
While most of her suggestions are very valid, commendable, and well known, there are two main issues. First is the need to appreciate our level of industrialization vis-a-vis the counsel to further open the economy and then the unpreparedness of Nigerian government to do what is needed to really support the proper diversification of the economy.
With over 80 million Nigerians described as extremely poor, over 35 million classified as unemployed or underemployed in a country of about 200 million people with only about 25% of the firms involved in international trade, the suggestion to further open the economy with little or no trade restriction might be counter-productive. It will neither increase local competition nor will it help to reduce poverty and unemployment. With Nigeria likely to sustain her status as a major dumping ground for all kinds of import, increase in poverty, unemployment and worsening manufacturing sector might be the outcomes.
During a World Economic Forum (WEF), workshop on ‘Shaping Inclusive Growth’ in the Fourth Industrial Revolution in Africa’ held in Johannesburg- South Africa in 2018, Nigeria expectedly received good attention as the so called ‘giant of Africa’ or the biggest economy in Africa’. With many top economies now in the fourth industrial revolution, a critical and challenging question was what stage of industrialization is Nigeria: first, second, third or fourth industrial revolution? After a critical analysis of our industrialization state and manufacturing capacity, there was a lamentable agreement that Nigeria does not seem to have achieved the first industrial revolution before we talk of the second, third and fourth.
With many top economies now in the fourth industrial revolution, a critical and challenging question was what stage of industrialization is Nigeria: first, second, third or fourth industrial revolution?
Just to clarify, first industrial revolution is a stage of industrialization with a focus on the production of primary and agricultural products using mainly labour-intensive industries. The question then is how and when will the giant of Africa properly start the first industrial revolution? A further question is when will the giant of Africa move from first to second, third and fourth industrial revolution where the developed economies are. A related question is the possibility of achieving a proper first industrial revolution with open trade policy. From the theories of industrialization and experiences of industrialized economies, some form of restriction or protection is normally somewhat needed to jumpstart and protect infant industries before they mature for global competition. This is generally referred to as Import Substitution Industrialization (ISI) before Export Oriented Industrialization (EOI).
The above relates to the signing of AfCFTA with little or no preparation for effective industrialization and manufacturing. A follow up question is our preparedness or unpreparedness for economic diversification and trade. For us to benefit from WTO and AfCFTA, we need to ask serious and sincere questions on what happened to failed firms like Peugeot Assembly Plant and other important industries in Kaduna and Kano. The same goes for Michelin, Beta Glass and others in Trans Amadi, Rivers state. Even with Lagos as the commercial capital of Nigeria, what happened to Dunlop, AG Leventis and many others that have closed? It is the same story in Enugu, Aba, Ibadan, Ilorin, Jos and across Nigeria.
If all these and many more companies have failed without AfCFTA, what will happen to the other few remaining companies with implementation of AfCFTA (for instance) and removal of existing restrictions. As it primarily implies free movement of goods, services and people within the common trade area (Africa), how will the few remaining companies in Nigeria survive and compete when we do not seem to have properly learnt or done anything significantly different from the situation and conditions that contributed to their exponential failures across all sectors of Nigeria. In infrastructure, monetary, fiscal and supply-side policies, nothing has significantly changed. It is even worse in some cases with the terrible state of electricity provision and seaport services as clear examples.
How will Nigeria firms compete when it is cheaper to import a container from China to Lagos than to move the container from Apapa to Agbara all in Lagos. It will be interesting to see how we will benefit from AfCFTA when policies are formulated and executed from political and ethnic sentiments rather than from a nationalistic and patriotic disposition. Unless a miracle happens, it will be almost impossible to benefit from the agreement with only two main functional seaports and about three or four international airports. How can we produce when electricity production is still below 5,000 MW for about 200 million people? While it is good to sign AfCFTA or discuss with Dr Okonjo Iweala, we must appreciate that to effectively participate, lead and benefit from both intra-African and global trade will require more than discussions and documentation. It starts with a determined and patriotic formulation and execution of a detailed and well-integrated economic development plan through which we can appropriately participate, lead and benefit. Unfortunately, with the governance approach of PMB’s government, there is very little sign that we are prepared and ready to benefit from both AfCFTA and WTO.
Dr. Ngwu, is an Economist/Associate Professor of Strategy, Risk Management & Corporate Governance, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- [email protected]
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