In the course of fighting the Opium Wars against the West between 1839 and 1860, the Chinese learnt a great lesson: that China must never let itself become weak, hesitant, lethargic, backward, defenceless and vulnerable to other countries. Therefore when the same USA-led western countries were aggressively expanding their economic influence around the world in the mid-19th century, China was effective in responding to the foreign encroachment because it didn’t forget its 1757 strategic approach to foreign trade penetration and domination when the country ordered that only Guangzhou/Canton would be the Chinese port that would be opened to trade with foreigners, and that trading could only take place through licensed Chinese merchants.
Though Great Britain was shipping Indian cotton and British silver to China and Chinese tea and other Chinese goods on return leg to Britain, the balance of trade was heavily in favour of China because the Chinese had no preference for goods produced in Britain and other places outsides its shores. Ever since, China has embraced self-reliance and massive production to satisfy its domestic needs and the yearnings of foreign economies while the Chinese are keeping their own tastes in check. According to EveryCRSReport in its published piece titled: “China’s Economic Rise: History, Trends, Challenges, and Implications for the United States,” Chinese government has made innovation a top priority in its economic planning through a number of high-profile initiatives, such as Made in China 2025, a plan announced in 2015 to upgrade and modernize Chinas manufacturing in 10 key sectors through extensive government assistance in order to make China a major global player in these sectors.
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In his contribution to policy reforms and commitment, A Venables declared that trade policy reforms, and other sorts of reform, are often hampered by the expectation that they may be reversed. Adjusting to reform typically involves investments, but these investments will not be made unless investors are confident that the reform will persist.
This is a challenge Nigeria is also grappling with. Nigeria is hardly consistent with policies to the extent that whenever there is a change of government, you can bet that policies will be reversed, with little consideration for sustainability of gains recorded. This is the lot of the reversal of the 2015 restricted item from official forex market eight years after. According to the Analysts Data Services and Resources in its Policy Brief Number 027 which deals with how CBN’s forex restriction on 43 items affects Nigeria’s import and its borders, the impact of specific policies and programmes needs to be analysed against the background of the intended effects, and identify the unintended but desirable effects which should be consolidated, while also identifying the unintended and undesirable effects that must be ameliorated. Such studies need to be conducted both ex-ante (before) and ex-post (after).
The terrible state of the Nigerian economy is a product of many factors. Using the China experience as a model, economic development and growth is a function of great sacrifice in delaying gratification of today in order to build something better for tomorrow. But Nigeria cannot sacrifice, or at best will pay lip service to sacrifice. Though it is clear that the economy is in bad shape and there is need for a sacrificial reform, and despite the call by the government that the people should make sacrifice, it cannot be seen that the government officials themselves are ready to lead in making the sacrifice. Rather than cutting the costs of governance by opting for lean portfolio to show its commitment to the sacrificial reforms, the very bogus and flamboyant structure is taken to a new height with political appointments and patronages. It is a way to create jobs and employment.
Also, the National Assembly members taste for foreign SUVs is insatiable and they cannot understand why they must shelve the idea of imported cars who costs per unit is put at N200 million and 109 senators as well as 360 House of Representatives members will receive this foreign products. The costs of governance in Nigeria, compared to some selected countries is very instructive. Nigeria operating one of the most expensive democracy in the world. Taking a cue from the United States whose federal system of governance Nigeria borrowed (and later corrupted to unitary-federal), the country has only 15 Secretaries (Ministers). Also Britain operates with smaller cabinet structure than Nigeria. These are economies that rank among the most performing in the world.
Despite the huge costs of governance, Nigeria is poor in productivity and quality of leadership. According to report published by Business Day, February 11, 2021, “Nigeria is rated one of the worst governed countries based on the Ibrahim Index of African Governance. In the report, Nigeria scored 45.8 percent as against the African average of 51.5 percent and ranked 37th out of 52 in the overall governance scale. The country scored lower than the regional average for West Africa which stands at 52.2 percent and ranked 12th out of 15 in the region”. One may need to ask, at this juncture, what exactly are Nigerians paying for as they work hard to pay taxes and all manners of levies and rates?
If the government officials cannot tame their quest for foreign products, can they really implement policies that will enhance local production? This brings this discussion to the issue of unification of the forex market rates and strengthening of the currency. How possible is this? What measures or mechanisms can be introduced as policies to discourage parallel market patronages? Considering the lethargic approach to services by government officials and the high probability of under the table deals at the official market together with man-made scarcity of the forex, how easily can be parallel market patronages be discouraged? The private sector wants prompt and timely services in addition to availability of forex in surplus. Therefore, sourcing from wherever they can get it and at whatever rates, and passing the costs to consumers is what the serious market players will do. In the same vein, can supply to parallel market dry up in view of suppliers looking for best possible rates and values for their sweat?
The fact remains that notwithstanding the rules and regulations guiding international trade and World Trade Organization (WTO) membership obligations, Nigeria needs to deliberately embark on massive local production policy and do more to discourage demands for forex and importation and consumption of foreign products and services. If it is impossible to lock up the economy against foreign products and demands for foreign services (e.g. education and tourism), then regulations, it is necessary that prohibitive import duties and rates be introduced. It is the balance of trade dilemma that has become an intractable challenge to Nigeria, a situation that is largely made so due largely to insatiable tastes and liking for foreign products among the middle class,.the upper class and the government officials. Foreign goods is Nigerias own opium and nothing is too sacred to spare in order to satisfy this unhealthy, economy-damaging hunger. But the country needs a change if it will not become a reference of how not to be a country.
. Emmanuel is a business planning consultant and founder of Leacent Incorporated Trustees, 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 Organisations 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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