Nigeria’s Rice Delusion

Nigeria’s Rice Delusion

In this piece I argued that the reflexive fixation of Nigeria’s policy makers on import eradication as a solution to our economic problem is misplaced. I submitted that policy intervention should be informed by the peculiarities of our trade reality.

It is arguable that, one of the reasons Nigeria has remained hobbled by the scourge of multidimensional poverty may be the unfortunate mismatch between our manifest trade realities and Government policy interventions. Oftentimes, policy intervention is aimed at curing us of chronic import addiction. The former Minister of Agriculture Audu Ogbeh was seen in a video making the rounds on social media in 2018, lamenting with evangelical zeal   Nigeria’s shameful importation of trade merchandise. What was most embarrassing and unacceptable to Ogbeh is our lowly importation of something as mundane as toothpick. This unrelenting anti-importation crusade that is at odd with our trade reality has fostered a pervasive, erroneous and injurious believe on the street of Nigeria that our lingering economic malaise is nurtured by our insatiable appetite for all things foreign. While it is nominally true that Nigerians have an appetite for foreign consumer merchandise, our trade data for the year 2018, the same year Audu Ogbe launched his anti-Importation tirade shows altogether a different reality.

According to  data available on the website of OEC (Observatory of economic complexity),quoted here in Fig.1 Below,  Nigeria experienced  trade surplus in billions of Dollars in 2018.The value of the surplus may not be something to mount a celebratory jamboree over, but surplus it is. Our Trade export per capita is about 50$ more than our trade import per capita. Trade export in absolute terms exceeds imports by a value slightly in excess of $10B. This data, hidden in plain sight rubbishes Ogbhe’s claim that source of our economic growth tragedy is excessive importation. Rather, relative to our potential if we were serious and resourceful enough about economic growth, our import and export value per capita is low. We honestly cannot improve our fortune without a commensurate increase in our import and export value. The example of Indonesia comes to mind in this regard. Her Impressive GDP of 1.04 Trillion was brought about by export and import value four times that of Nigeria. Similarly, the difference between export and import per capita in Indonesia just like Nigeria is less than $100.

The manic pursuit of crude Agrarian protectionist policies cannot help us turn our situation around. Rice delusion and toothpick importation mania has continued to afflict our monetary, fiscal and trade policy handlers to an epidemic proportion. Should our policy handlers not be ashamed that the article of trade that has enjoyed their most generous policy patronage and unproductive incentive is not on the top five list of our import items as FIG 2 below demonstrate. We spend much more importing finished pharmaceutical products and a host of other items than we expend on rice importation but Still, the object of policy infatuation is Rice and rice and more rice. Any wonder then that the returns on our crude Agrarian protectionist policies have been run away food price inflation that has deepened misery and hunger in the land.  We may be better of as a people if the manic incentives thrown at rice are mobilized to deepen our capacity in Cocoa beans (another agricultural) export. The export value of this item is a reflection on some unmaximized comparative advantage in Cocoa bean production. Redirecting the shambolic incentives thrown at rice cultivation to cocoa cultivation with a express goal of quadrupling the $621m export value cocoa could impact more positively on our GDP growth.

Reversing the trend in our import of finished pharmaceutical product is another pursuit that can have a significant impact on our economic growth rate. Giving the purchasing power of Nigerians and the level of development of our health infrastructure one can speculate that the bulk of the finished pharmaceutical product imported to the tune of a billion are off-patent medicines. Because these products are off patent, there is zero intellectual property barrier to manufacture them. All that is require is some tactical reverse engineering capability, which our local drug manufacturers have in abundance.  We import these medicines while our Pharmaceutical manufacturing sector languish in under development. Strategic and important as that sector is, it hardly gets serious attention in government economic development initiatives. The most recent Economic recovery and Growth plan adopted by President Muhammad Buhari in 2017 alienate the pharmaceutical manufacturing sector entirely from policy focus despite Finished pharmaceuticals being on the list of our top five import. That this is a sector where industrial policy intersects with social policies in the health sector seem entirely lost on our economic and trade policy makers. While the Automobile industry,  being one of our high import areas has been patronized by Government with an ambitious strategy and clearly articulated  plan of action, Our Pharmaceutical manufacturing sector with similar import value as not be similarly patronized with specific developmental strategy and plan of action.

This mismatch of Trade realities and policy intervention may explain why, despite an oil windfall, we were only able to grow the economy at a paltry compound rate of 17.9% from 2008-2018. average of 1.79% per annum Indonesia grew at a massive compound rate of 104% within the same time. Ethiopia, our geopolitical neighbor grew at 212% during the same time window. It is utterly impossible to make our great escape from the walloping poverty rate with such an anemic growth rate. Our GDP/per capita growth rate shrunk by 9.57% in the same period decade because our population growth rate exceeded that anemic growth rate. If our population growth rate remains constant (which is undesirable) we must grow at a frenetic 10% year on year to keep crushing poverty at bay. Sadly, none of the policies we pursue at present, in isolation or as a collective can deliver a double-digit growth. Our Agricultural policies while desirable are misdirected and ill-conceived, the mining sector seem rudderless and out of control, and Industrial policies in this  key sector is virtually nonexistent.

The rate limiting step in our growth redemption is to exorcise the demon of Rice delusion and toothpick importation mania from the rank and file of state actors. The lay citizenry must also be continually re-enlightened and re-orientated into sound economic thinking. Through this ritual of re-enlightenment and spiritual deliverance the generality of Nigerians may agree that what is more desirable is a change in the volume and character of our import and export. The next decade should see our import dominated by heavy machineries that will be deployed for the local manufacture of internationally tradable products with higher PCI (Product complexity index).

 

NIGERIA’S TRADE DATA (OEC 2018)
Item Value
Product Export $59.5B
Export per capita $304
Product Import $48.7 B
Import per capita $248
Service export $2.74B
Service Import $15.6B
GDP growth (2008-2018) 17.90%
GDP/Per Capita growth (2008-2018) -9.57%

Fig 1.

NIGERIA’S TRADE DATA (OEC 2018)
TOP EXPORT TOP IMPORT
Item Value Item Value
Crude Petroleum $44.8B Refined Petroleum Product $9.95B
Petroleum Gas $8.61B Special Purpose-Built Ship $4B
Refined Petroleum $940M Wheat $1.64B
Cocoa Beans $621M Cars $1.27B
Gold $577M Packaged Medicament $1.04B

Fig 2.

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