Buy Nigerian To “Grow” The Naira

China: Made in China

India: Make in India

Nigeria: Buy Naija to save the Naira

If you can’t spot the fundamental difference in those three campaigns, this article should help.

After a period of sustained economic boom, China is using its campaign to encourage technology improvement, innovation among businesses and production of high value products. The Chinese Government wants to develop factory automation capability needed to produce mobile phones, medical devices, energy saving vehicles, jet planes etc. Despite its huge population, this campaign is anchored around EXPORTS.

On the other hand, India’s campaign is being used to attract foreign investment to raise its share of manufacturing activity in Asia. Unlike China, India is more interested in capturing low skilled jobs, especially from companies leaving China. In this case, India’s campaign is anchored around attracting FOREIGN INVESTMENT.

In Nigeria, our lawmakers have used social media to drive a campaign hash-tagged #BuyNaijaToGrowTheNaira. Apart from the grammatically challenged call to “grow” the Naira, this campaign is anchored around the DOMESTIC MARKET. It complements the Central Bank’s exchange rate policy, and suggests the solution to Nigeria’s current economic challenges lies in consuming local products, thereby easing the pressures on the Naira. This is where the campaign misses the point.

By enacting policies that force Nigerians to buy locally produced or services, Nigeria loses the opportunity to drive innovation, efficiency and competition. Instead of hash tags encouraging Nigerians to buy indigenous products, our lawmakers should be creating laws that allow our businesses serve both domestic and foreign markets. That’s where the real work lies.

Focus on Competitiveness…

Nigeria ranks 169 out of 180 countries on the World Bank’s Ease of Doing Business report, According to the report which you can read here, Nigeria is particularly bad at trading across borders, getting electricity, paying taxes and registering property. On these four metrics, we ranked no higher than 181 out of 185 countries; ouch.

The lack of business enablers is especially annoying in Nigeria’s case. Apart from being “blessed” with large hydrocarbon deposits, Nigeria is one of the more attractive African countries with its significant coastal access. If you want to understand why geography is a major factor in enabling trade and economic growth, please watch this video. Nigeria has the natural tools to be a competitive economy and a global trade hub, yet it does not support these natural advantages with the right interventions to spur growth. I’ll list examples to support my argument:

1. Ghana has used its movable asset registry to create a portfolio of 50,000 loans valued at over $1 billion to its small businesses; yet the Nigerian National Assembly has shown no sign of passing the law enabling a similar registry in Nigeria. By ignoring such a significant driver of capital creation, Nigerian businesses are denied a solution that improves access to finance.
2. Rwanda has shown its intent on reforming land administration and registration, while much of Nigeria’s land remains locked, no thanks to a Land Use Act that needs a major amendment. Today, it takes 3 processes usually completed in 32 days, and costs 0.1% of the land’s value to register a title in Rwanda. In Nigeria, the same process will take 77 days, 13 procedures and cost 10% of the property value. I’ve written about what needs to be done here, so there is no need to repeat what our state and federal legislators should do.
3. The country’s infrastructure gap will not be bridged without appropriate legislation to support investment. The railway sector is moribund, yet the Government remains both the sole player and regulator. The same can be said for the power sector, where the Government retains sole rights to transmit electricity, a critical part of the value chain to deliver sustainable electricity to businesses.

These are three examples of many places the National Assembly can help make the economy competitive. With the efforts to reduce corruption gaining momentum and efforts made against insurgents showing progress, it is a good time to focus on the economy. However, our senators needs to understand one thing: without a virile export economy, the ability to buy Nigerian is greatly limited.

According to McKinsey and Company:

Manufacturing takes off when a country’s average income crosses $5,000 and continues to surge till $10,000, when higher wages increase production costs.

This is important, especially for a country like Nigeria whose average income of $3,000 is not quite at the tipping point for significant manufacturing activity, but not far behind either. It means the right focus on building a competitive economy will not only grow income, it will enable the country hit the sweet spot where significant growth is possible without over depending on commodity prices. Instead of issuing a rallying cry appealing to our patriotism, our legislators should focus on creating an environment for businesses to thrive, provide appropriate regulatory framework and watch businesses thrive. I’ll be clear about this, the absence of a clear economic policy is solely the fault of the executive; however our legislative should not worsen the situation with ill-advised populist campaigns.

Oh, and when they forget their role and become town criers of laughable hash tags, we should remind them of Samuel Johnson’s famous words that “patriotism is the last refuge of a scoundrel.”