As a sequel to last week’s piece, I believe President Bola Tinubu needs no one to remind him that the success, or otherwise, of his tenure in office rests solely on his shoulder. But many Nigerians are not interested in excuses, neither are they waiting for the expiration of his term in office to join the bandwagon in shouting “have we not told you that nothing positive or tangible will happen in his time”. Mr President has made it clear in his order of priorities that he wants to tackle economic reform before any other item on his list of reforms. He repeated this much when The Patriots visited him at the Villa a few weeks ago. However, the truism remains constant: you can’t build something on nothing. Without security of lives and properties and a political structure that recognises the strength and differences of the ethnic groups, which allows each group to grow and flourish at its own pace, spending energy and resources to repair such an economy may end up an exercise in futility.
Now to the tasks of reforming the Nigerian economy, it is important that President Tinubu treats the country’s developing economy as consisting infant industries. With the rates at which industries collapsed in Nigeria between 1983 and now, and with many struggling to find their feet, it is fitting to describe Nigerian economy to be made up of infant industries. Infant industries are those that qualify to be regarded as new, which in their early stages do experience relative difficulties and often incapable in competing with established foreign competitors (notwithstanding their ages). In an economy is made up of these very weak and vulnerable infant industries, it is expected that the government will go all out to support the development of these local infant industries in their early stages. As mentioned in my piece last week, before they started preaching free trade, both the US and Britain rose to become industrial superpowers by first protecting their economies against external competitions. This is one fact that they cannot deny. They had extended periods of time during which they treated their manufacturing companies as infant industries their governments must protect.
This brings us to the 1791 measures that Alexander Hamilton posited that helped protect and helped shape the US economy.
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Hamilton was an American military officer, a statesman, and the founding father of the US economy who served as the first US secretary of the treasury from 1789 to 1795 during George Washington’s presidency. In the almost 80 pages treatise titled ‘Report on Manufactures, Communication to the House of Representatives’ that he submitted December 5, 1791, that the US government owed it (and still owing it) a responsibility to promote and protect the industries in its economy against foreign competitors. Since over two centuries till today, the US has never deviated from this protectionism. According to Ha-Joon Chang, the author of Bad Samaritans, The Myth of Free Trade and the Secret History of Capitalism, the US has also been much more aggressive in using non-tariff protectionist measures when necessary. “Even when it shifted to freer (if not absolutely free) trade, the US government promoted key industries by another means, namely, public funding of R&D between the 1950s and the mid-1990s, US federal government funding accounted for 50-70% of the country’s total R&D funding, which is far above the figure of around 20%, found in such ‘government-led’ countries as Japan and Korea. Without federal government funding for R&D, the US would not have been able to maintain its technological lead over the rest of the world in key industries like computers, semiconductors, life sciences, the internet and aerospace.”
Alex Hamilton’s 1791 infant industry protection measures is a lesson for Nigeria’s President, as he attempts to reform the Nigerian economy. In the almost 80 pages paper, first of, Hamilton believes that the government of a country owes it a duty to ensure that competition is not allowed to import into their market especially when the destined goods were of superior quality. In his words, there should be protecting duties, or duties on those foreign articles, which are the rivals of the domestic ones. “Indeed, all the duties imposed on imported articles, though with an exclusive view to revenue, have the effect in contemplation and except where they fall on raw materials wear a beneficent aspect toward the manufacturers of the country”, he declared. Secondly, there should be prohibitions of rival articles or duties equivalent to prohibitions. According to Hamilton, “this is another and an efficacious means of encouraging national manufactures; but in general it is only fit to be employed when a manufacturer has made such progress and is in so many hands as to insure a due competition and an adequate supply on reasonable terms”.
What about prohibitions of the exportation of the materials of manufacturers? Hamilton was of the opinion (and his opinion still subsist) that “the desire of securing a cheap and plentiful supply for the national workmen, and where the article is either peculiar to the country, or of peculiar quality there, the jealousy of enabling foreign workmen to rival those of the nation with its own materials, are the leading motives to this species of regulation”. This is the case with the Dangote and other local crude refineries that are faced with the challenges of crude feedstock supplies, a raw material, of which those in charge, the IOCs and the regulators are more interested in petrodollars and other pecuniary benefits associated with the importations of the refined premium motor spirit.
What more? Pecuniary bounties, premiums, exemption of materials of manufacture from duty, drawbacks of the duties which are imposed on the materials of manufactures, encouragement of new inventions and discoveries at home and of the introduction into the united states of such as may have been made in other countries, particularly those which relate to machinery are part of the measures he identified are necessary to protect and promote infant industries. Furthermore, judicious regulations for the inspection of manufactured commodities, facilitating of pecuniary remittances from place to place and facilitation of adequate, cheap and sustainable transportation of commodities are measures a country must take to promote and protect her economy from foreign aggressors.
. Emmanuel is a business planning consultant and founder of Leacent Incorporated Trustee, a network of entrepreneurs and group of cooperatives. He works with a team of international consultants to conceptualise and plan agribusiness and housing projects. As a certified trainer authorised to use the International Labour Organisation’s enterprise development modules, he trains entrepreneurs and organises workshops and seminars for potential and practising entrepreneurs as well as business managers and cooperatives. He also speaks and facilitates at leadership and management workshops on invitation. His book, Business Planning Made Easy: Step by Step Guide On How To Turn Your Idea To Profitable Business’ is the latest of the books authored by him. Tel.: +234(0)9068602954 (call and sms), +234(0)8023257707 (WhatsApp only).
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