Connect with us
iubh
Advertisement
Alpha
Advertisement
Hotflex
Advertisement
Investment One
Advertisement
Advertisement
UBA
Advertisement
Patricia
Advertisement
app

Business News

How local production can boost the Nigerian economy

According to experts, protectionism if properly implemented can help boost Nigeria’s local production and the economy.

Published

on

Manufacturing PMI dips further as recession scare looms, Purchasing Managers' Index

The concept of restricting international trade to support domestic industries is called protectionism. It is usually implemented by developing countries to boost the domestic economy.

The most recent protectionism policy enacted by the federal government is the border closure which started in August 2019. The border was, however, reopened in December 2020. Another notable example is the list of 44 imported goods banned from access to CBN’s official exchange rate.

The result of these policies has often been an increase in inflation rate as seen in 2019, and some level of improvement in domestic production. For instance, according to KPMG 2019 Rice Industry review, rice production grew from 2.8 million tonnes in 2010 to 3.8 million in 2018.

READ: Nigeria generates over N1.2 trillion oil revenue in 3 months, up by 44.1%

At the IMF’s Article IV on Nigeria discussion hosted by the American Business Council, Amaka Anuku, the Practice Head for Africa at Eurasia Group stressed the importance of protection of infant industries to boost Nigeria’s economic performance. She stated that most FDI in Nigeria, have been tied to the oil sector which is why the investment has been on a decline in recent years. She held that for FDI to increase in Nigeria, the first step will be local production.

She supported her proposition by recommending that the CBN unifies all exchange rates, but a cheaper rate should be adopted for local producers as a form of subsidy for their high input cost.

When asked about the negative impact of this protectionism on consumers such as high cost as seen with rice, Amaka gave a simple analogy. If trade remains free, poor people remain poor but can afford the cheaper imported goods because of the efficiency in their production. However, protectionism will increase revenue for local producers and, therefore, will employ more people, increase income for its employees, and in the end, the citizens will be richer and be able to afford the locally produced goods.

READ: Commissioner attributes high cost of rice to increased production cost

Adding to this, Dr. Bongo Adi from the Lagos Business School said trade protectionism has always been a policy popular among emerging and developing economies. The Asian Tigers have also been known to have adopted this in the past. He said the issue however is that protectionism policies in Nigeria have in the past been politicised. He recalled that some of the financed projects through the N300 billion Power and Airline Intervention Fund (PAIF) of 2007 are no longer in existence.

They both concluded that protectionism with good subsidization can be of great advantage to the growth of the Nigerian economy. Dr. Bongo was, however, conservative about whether Nigeria is on the path to this growth, specifically in the manufacturing sector.

British airways

READ: FG to buy only locally assembled vehicles for its use

What this means

  • Inflation rate has been on the rise since August 2019 when the government closed the land borders to curb illicit importation and increase food production in Nigeria.
  • The prices of food items, particularly rice, increased during this period moving from about N15,000/50kg before border closure to N33,000/50kg after the border reopening, according to data obtained from Nairalytics research.
  • If the government continues to implement protectionism policies, prices of goods will continue to increase until local production is efficient enough to meet a substantial part of the Nigerian market demand.
  • Finally, if these policies are not politicised, it is expected that in the future, economic activities will significantly improve in Nigeria.

0

Nairametrics Research team tracks, collates, maintains and manages a rich database of macro-economic and micro-economic data from Nigeria and Africa. Our analysts share some of the data collated on Nairametrics, using formats such as docs, tables and charts etc. The team also publishes research based analysis as articles on a regular basis.

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Appointments

Standard Bank Group appoints Yinka Sanni as new Chief Executive of Africa Regions

Yinka Sanni has been appointed as Standard Bank Group’s Chief Executive of Africa Regions.

Published

on

Stanbic IBTC declares N10.4 billion interim dividend

The Standard Bank Group has announced the appointment of Yinka Sanni as the new Chief Executive of Africa Regions.

This announcement was made by the Group in a post shared via its official LinkedIn account. The bank revealed that Sanni will be replacing Sola David-Borha who is retiring after 31 years of distinguished service to the group.

His appointment will play an integral role in driving the growth of the Standard Bank Group in Africa further in the years ahead.

He is expected to build on the work of David-Borha, a renowned professional who played a key role in growing the Group’s Africa Regions portfolio in terms of capacity, market share and contribution to the group’s headline earnings.

What you should know

  • Yinka Sanni is a Fellow of the Chartered Institute of Stockbrokers of Nigeria.
  • He has served in key positions within the Stanbic Group, as the Chief Executive of Stanbic IBTC Holdings PLC, Chief Executive of Stanbic IBTC Bank PLC, Deputy Chief Executive of the Bank and Executive Director, Corporate & Investment Banking of the Bank.
  • He was also the pioneer Chief Executive, Stanbic IBTC Pension Managers Limited and the pioneer Chief Executive, Stanbic IBTC Asset Management Limited.

0
Continue Reading

Corporate Press Releases

P2P crypto marketplace, Bitzlato (BZ) partners with Lemonade Finance to ease money transfers across Africa

The partnership will enable users on the BZ platform to buy and sell bitcoins and other cryptocurrencies on the marketplace at zero cost.

Published

on

Bitzlato (BZ), the latest P2P Crypto Exchange to enter the African market, has added Lemonade.Finance, a borderless payment platform for Africa, as a payment method to its platform.

Lemonade Finance provides 100% digital payment experience for Africans to seamlessly participate in the global economy from anywhere in the world without any hassle or regardless of where they are from.

The partnership will enable users on the BZ platform to buy and sell bitcoins and other cryptocurrencies on the marketplace at zero cost.

Users in Nigeria will now be able to send Nigerian Naira (NGN) to MPESA at 0% transaction fee.

Speaking about this partnership, Ridwan Olarere, CEO, Lemonade Finance, said:

“We are excited to partner with such an innovative company like Bitzlato to connect more Africans through payment. Many Africans living on the continent face many difficulties when making payments as remittance companies charge high fees and are time-consuming. We are now providing our users with a cost-effective way of sending money to Ghana, Kenya, Uk and Europe.”

Commenting on the opportunities this provides to crypto traders on the BZ platform, Mike Lunov, CEO, BZ, said:

“This partnership will provide a much-needed gateway that enables the markets we serve to seamlessly interact with each other in a borderless and open environment. We seek to break the barriers that presently exist for cross border transfers and enable our users to generate value through the opportunities that accrue from cryptocurrencies trading. The innovation exhibited by the Lemonade platform, and the brilliance of its team assures users of top-notch, secure and reliable transfers going forward.”

Hotflex

According to BZ, during the first month, BZ will refund commissions in manual mode while using Lemonade Finance, but this will be automated at the end of this period.

Following this partnership, BZ is now looking to partner with merchants in the crypto space especially in Nigeria, Ghana, South Africa that have a steady flow of Nigerian Naira (NGN) to increase liquidity on the platform.

British airways

Take advantage of the new Lemonade Finance payment method on BZ, which offers zero transactional fees for money transfers from Nigeria into Kenya. Sign up on BZ and start trading crypto easily today.

+1
Continue Reading

  





Nairametrics | Company Earnings

Access our Live Feed portal for the latest company earnings as they drop.