When faced with a problem, the human mind is designed to analyze the problem, think of a possible solution, and implement such solution. While this approach works most times, sometimes, the complexity of a challenge creates a scenario where no simplistic solution exists. Rather, an effective solution considers the links between all the factors at play, and is at best, a line-of-best-fit. The Nigerian economy faces such a complex challenge; there is no simple solution—not even the patriotic purchase of local products.
Between 1956 when the first commercial oil well was drilled, and the post-civil war 1970s, Nigeria completed a move from a multi-pillar economy to a mono-economy dependent on crude oil, fondly called “black gold”. This move brought Nigeria into the league of “commodity countries” whose economies depend on unprocessed exports subject to the whims of easily fluctuating global prices. With the surge in foreign exchange, earnings came increased appetite for everything foreign. As long as there was foreign exchange to meet local demand for imports, the local economy was ignored. Now the bubble has burst.
In two years, the crash in crude oil prices has wiped off almost 70% of Nigeria’s main foreign exchange earnings. With oil accounting for about 90% of Nigeria’s foreign receipts, this means that Nigeria currently receives about 30% of what it used to earn. This income slash has not been accompanied by reduced demand. Rather, the demand for foreign currencies has stayed put with the drop in supply, ensuring an economic certainty—rise in prices.
With the fall in the naira’s value, outspoken Senator Ben Murray-Bruce and several other Nigerians have launched a campaign for Nigerians to patronize locally made goods, and thereby help to reduce the demand for foreign products. This patriotic campaign is a noble one that can contribute to rescuing Nigeria’s economy. However, the intertwined nature of the global economy coupled with local factors mean that this solution is not as straightforward as it seems.
For one, the issue of motivation is key. Should Nigerians buy Naija-made products simply because the producer is based in Nigeria? There is so much that patriotism can do—just so much. Beyond a certain point, coerced patriotism would only create resentment and a motivation to bend rules. Although many Nigerian products are of high quality, many local products are simply too local, representing inferiority at its very best. Anyone who has ever bought a shoe whose sole pulled at the mere sight of water can understand this better.
Nigeria has a serious problem with substandard products. While Nigerians are nudged to buy local goods, what plan exists to remedy this problem? It is obvious that excellence is not achieved in one day. Nigerian producers need time to catch up with global quality trends. However, the Nigerian consumer must see evidence that the producer of his bleached Ankara fabric is steadfastly working towards improving the quality of the next batch of fabrics. Then, the consumer would know that his patronage is helping local production to improve. Without this assurance, no matter the coercion, after series of frustrations, the Nigerian consumer would begin to crave higher quality foreign products.
Second is the issue of regulation, which is linked to the first. Monopolies, more especially in Nigeria, have a history of treating consumers poorly. Poor consumer service is a gift commonly received by Nigerians. After begging or coercing Nigerians to buy local products, what is the guarantee that many local producers would not continue their culture of cutting corners? So far, the numerous regulatory agencies have not shown capability as good sheriffs. Beyond the issue of quality, customer satisfaction is also important. Assuming that foreign products were banned and a Nigerian producer were to achieve a monopolistic status for a certain product, what would keep such a producer from shitting on Nigerians, knowing that there is no alternative to its product? If proper regulation were not enforced, patriotic feelings would be dumped in the Atlantic.
Third is the issue of the business environment. Nigeria has been ranked as one of the worst places to do business. This shameful tag is detrimental to the growth of local production. The government should look at the Nigerian business environment and actively fix the behemoths that trigger business collapse. Infrastructure, security, law, taxation and waivers are some areas that need fixing. This would help local producers, especially in reducing production cost. If the cost of production were high, it would reflect in a seller’s price. High prices would force Nigerians into the arms of cheaper foreign alternatives.
Last is the issue of the global economy. In an era of free trade agreements in different guises, nationalistic stances do not bode well in international diplomacy. Every government is (supposedly) selfishly seeking the interest of its citizens. No government would see you close your borders to its products, and still allow your own products through its borders (except it is Nigeria!). Conceding that a kind of import restriction is needed to give nascent local producers space to grow, the #BuyNaijaToGrowNaira campaigners should know that at some point, the right of Nigerians to choose would have to be respected. If the earlier issues have been adequately addressed at this point, Nigerians would be willing to choose Nigerian products from a logical economic perspective, and not fickle patriotism. In addition, Nigerian producers would need to export their products. The competition between local and foreign producers would further push local production to improve. However, if issues of quality and production cost are unresolved at this point, foreign producers would once again trump the local players.
While we continue to grapple with the state of the economy, Nigerians should know that not all is lost. Challenges, by design, are meant to be surmounted. This painful crisis provides an opportunity to fix decades of profligacy and inefficiency. I hope that we would have the sense to fix our mess and not wait for oil’s price to rise.