No
Man is an Island:
To my mind, The saying,’
No Man is an Island’ resonates why foreign relationship and interaction among
countries of the world, especially in the economic realm, takes place as all
nations are uniquely and differently blessed with resources, especially
material and natural resources.
Whilst human resources
are easily sourced e.g. through the academic exposure of nationals to the right
environment abroad, thereby being equipped with the right skillset to
significantly contribute to the home economy, resources aren’t met with ease
when not available in the home country.
To ensure the available
of resources not locally sourced, international economic relationship, through
foreign trade comes into play.
The importation of
goods and services is an important tool in international trade, with the
exporting country (seller) the more productive country, whilst the importing
(buyer) is most times considered productive when the goods imported are primary
products or input necessary in furthering production.
The Balance of trade
for example is a very crucial tool to monitor the capabilities of a country’s
international trade as it is the difference between her export and import.
Bringing these home, with
the challenges experienced in Nigeria, the sharp decline in the purchasing
power of her currency - the Naira – as
well as the growing poverty levels and sufferings of Nigerians negates the era
of Change majority of the populace had longed for and voted with so much
enthusiasm. As at 2014, the exchange rate of Naira to USD was N180, two years
down the line, it is N490.
Citeris Paribus:
Citeris
paribus, with a Nation’s annual Gross Domestic Product (GDP) being the sum
total of C + I + G + (X – M), where C represents consumer spending; I, capital
investment and G, government spending, as well as X being export and M,
Import the summation of these puts the icing on the cake on why the Nigerian
economy is at this time very bleak.
From these
5 indices, Government spending has dwindled overtime as evident in the
inability of over 15 states to pay the salaries of their workers, as well as
the declined Capital Investment and trade deficits experienced over the years,
as evident in a host of firms leaving the shores of Nigeria to Ghana since
2009.
Regardless
of these, my thought on the improvement of the Nigerian economy is hinged on
her having an export driven economy where common needs like toothpick, food
supplies, especially Rice, vehicle tyres,
sleepers and electronics etc. are locally produced at home through the
encouragement of Foreign Investment into the country.
According
to tradingeconomics.com,
“Imports
to Nigeria increased 60.4 percent year-on-year to NGN 774998 million in
September of 2016, the biggest rise since July of 2013 as a weaker currency
lifted import prices”.
More so, popular
newspaper, guardian
stated that Nigeria has lost
its status as the aviation hub in West Africa to Ghana primarily due to the
100% increase in the cost of Aviation fuel – Jet A1 – in Nigeria. Other reasons
by venturesafrica
include, scarcity of Aviation fuel, devaluation of the Naira and unfriendly government
policies. The case of unfriendly government policies is not a surprise, as
Nigeria is presently placed 169 out of a possible 190 countries in the Ease of Doing Business Economic
Ranking by The World Bank.
According to the World Bank, “a high ease of doing business ranking means the regulatory environment
is more conducive to the starting and operation of a local firm”
Import
Substitution Industrialization:
Pondering through the way forward for Nigeria and her
economy is a hurricane task, as driving in the right investors in the right
numbers with the right capital is highly dependent on her treating the headaches
encountered in the investment climate.
According to the vanguard,
“statistics obtained from the 2010 annual report by Central Bank of Nigeria
(CBN) shows that the total foreign capital inflow into the Nigerian economy in
2010 was $5.99 billion. The record shows that that FDI represents, 78.1 percent
drop from $3.31 billion in 2009. Analysts attributed the decline in FDI to the
increasing rate of insecurity in the country as well as infrastructural decay”.
No Foreign Investor puts in Capital into an economy
without reaping in good time. As an investor into Nigeria, cost of goods and
services are usually on the high side due to what I call ‘Price Surge
Determinants (PSDs)”.
Encouraging the right investors into the country
increases exports and significantly reduces imports, thereby achieving a favourable
blance of trade (Trade Surplus), thereby strengthening the Naira against the
dollar and other currencies, especially those of Nigeria’s trade partners.
The PSDs include high cost of vehicle maintenance and
transportation of goods due to bad road network, unfavourable tax system, poor
security, poor infrastructure and social amenities, high cost of rents and
little or no incentives by the Government to lure investors into the country.
To counter these PSDs which usually make the prices of
goods and services very expensive to the common man, the government must
provide the following:
·
Significant improvement in the power
sector;
·
Easing and reducing the processes
involved in documentation
·
The availability of motorable roads,
especially in the rural areas – thereby easing the movement of raw materials
from sourced locations to the concerned firms/production location;
·
Strengthened local banking system with
favourable interest rates to encourage borrowing from Local Banks;
·
Acceleration of residency permits by
foreign employees of the foreign investing company,
·
Provision of a minimum of 3 years tax
holidays, as well as an efficient and realistic tax system;
·
Availability of social amenities like
good and affordable hospitals/schools with the best facilities thereby
discouraging hospital tourism abroad
·
Efficient security system, low crime
rate
In conclusion, the raw
material availability and human resource potentials among Nigerians, as well as
her huge population among other factors is a propelling force to the Nigerian
Government leaving no stones unturned at ensuring the economy of Nigeria is
made competitively viable in the global economy.
It is high-time,
impossibility became a banned word in all facets of government activities, as
making the impossible possible got Qatar, Abu-Dhabi amongst other great nations
where they are.
Think Investment, Activate
in Nigeria should be the drive to encouraging Foreign Direct Investment vis-à-vis
Import Substitution approach.
