Leveraging on Re-Surging Economic Nationalism For Nigeria’s Economic Growth
- Posted By Vitalis_Obidiaghaa | On September-26-2020 14:53:10
- “Rather than being distracted by the western hypocritical campaign, the CBN and the Nigerian authorities should brace up to exploit avenues for maximizing the potentials of domestic economy with a view to achieving higher domestic production of goods and services, creating higher employment opportunities for our teeming youthful population” By VITALIS UCHENNA OBIDIAGHA
Just the other day, I accompanied my wife to the market to buy some household consumables. Before we left the house for the market, we had developed a shopping list with a budget for our proposed expenditures. Rice, being one of our favourable staple foods, was the first on our list. When we got to the market, as we entered one of the shops where bags of rice were on display, we met a middle-aged woman, named Olajumoke, who also came to buy rice. Amongst the brands of rice we saw on display were ebony rice and umza rice. We were later informed that ebony and umza brands of rice; were amongst the products that benefited from the Anchor Borrowers Programme, an Agricultural interventionist policy of the Central bank of Nigeria.
We had come to the shop with a budgeted sum of Naira to buy one bag of ‘foreign’ rice, which used to be our usual brand even from our childhood. But to our surprise, Olajumoke told us that ebony and umza rice are wholly Nigerian brands of rice and began to preach to us about the need to patronize Nigerian brands to help grow our domestic economy. We stood there listening as she continued lecturing on the basic philosophy of economic nationalism. Convinced of her common sense logic, my wife asked her if she was an economist, she responded by saying that she was a teacher, but that she has become ‘a later-day convert and self-appointed advocate of made in Nigeria products.’ My wife went further and asked her what fuels her motivation; she said; “It is just common sense my dear sister. How long shall we continue to support other people’s economy by consuming what we do not produce, which we can easily produce here in Nigeria?” Her response was too powerful to ignore. We finally bought the ebony brand of rice, went home and it has proven to be a wise decision.
As I got home and reflected over the conversation between Olajumoke and my wife, Olajumoke’s words got me thinking for a very long time. I must confess that it made me think critically about my views. I looked at myself from head to toe and saw the urgent need for Olajumoke’s advocacy. For the first time, I realized that almost all the garments that I was wearing were all made by foreigners. Astonishingly, it doesn’t stop at just my garments. It gets to my phones, shoes, wrist watches, papers, bags, electronics and even the pen I’m using to articulate these thoughts of mine. In fact, the more I think of it, the more I realize that almost all my basic necessities are made by foreigners. Then I came to a point where I had to reflectively ask myself “What then do I produce?” I have now come to realize how my naïve consumption habit is manufacturing poverty in my own fatherland while making other nations richer.
As a ‘social’ economist, I do not know any better definition of “willful poverty” other than to depend absolutely on others for my basic needs without producing to also serve others. Thank God I met Olajumoke; I have also become a later-day convert and advocate of made in Nigeria products “I was once ‘economically’ blind, but now I can see”
Before you judge me too quickly or even harshly for being naïve before meeting Olajumoke, please remember that I am amongst the millions of our citizens who swallowed the doctrine of global free trade “hook, line and sinker” without any reflective thoughts. Remember that for the last half century, many economists have championed the “doctrine of free trade”, promoting what they called “globalization.” They argue that only by removing restrictions on trade (such as tariffs) can goods and money flow freely around the world and global markets develop without inhibition.
The argument over free trade dates back to the mercantilist era, which began in Europe in the 16th century and continued until the late 18th century. With the rise of Dutch and English seaborne trade, wealth began to shift from southern Europe toward the north. This was also the age when nation-states began to emerge, along with the idea of the wealth of the nation, which was measured by the amount of “treasure” (gold and silver) it possessed. Mercantilists believed that the world drew from a “limited pot,” so the wealth of each nation depended on ensuring a favorable “balance of trade,” in which more gold flows into the nation than out. If an excess of gold flows out, the nation’s prosperity declines, wages fall, and jobs are lost. England sought to cut the outflow of gold by imposing sumptuary laws, which aimed to limit the consumption of foreign goods. For instance, laws were passed restricting the types of fabric that could be used for clothes, reducing the demand for fine foreign cotton and silk.
Amongst the notable economists who challenged global free trade was Gerard de Malynes (1586–1641), an English expert on foreign exchange. He believed that the outflow of gold should be restricted. If too much flowed out, he argued, the value of English currency would fall. However, the century’s greatest mercantilist theorist, Englishman Thomas Mun, insisted that what matters is not the fact that payments are made abroad, but how trade and payments finally balance out. Mun wanted to boost exports and cut imports through more frugal consumption of domestic produce. However, he saw no problem in spending gold abroad if it was used to acquire goods that were then re-exported for a larger sum, ultimately returning more gold to the country than had initially been spent. This would boost trade, provide work for the shipping industry, and increase England’s treasure.
In the 18th century, Adam Smith was to disagree with this view. What matters, he insisted in The Wealth of Nations, is not the wealth of individual nations but the wealth of all nations. Nor is the pot fixed; it can grow over time—but only if trade between nations is unrestricted. If left free, Smith insisted, the market would always grow to enrich all countries eventually. For the last half century, Smith’s view has dominated, because most Western economists argue that restrictions on trade between nations hobble their economies. Today, free trade areas such as the EU (European Union), ASEAN (Association of Southeast Asian Nations), and NAFTA (North American Free Trade Agreement) are the norm, while global organizations such as the World Trade Organization (WTO) and the International Monetary Fund (IMF) urge countries, especially the developing ones, to reduce tariffs and other trade barriers to allow foreign firms to enter their domestic markets. The creation of barriers to foreign trade is criticized now as protectionism.
However, some economists and economic protectionist-advocates like Olajumoke (named above) are concerned that exposure to large global businesses has the potential to damage developing countries who are unable to nurture infant industries without protective policies. Thus, they disagree, arguing that where there is a huge imbalance of trade between two countries, it can impact jobs and wealth. Their position seems to be based on the practical reality of the times. Since the advent of global financial crisis in 2009 and the attendant dire consequences that sent economies of several countries on a tailspin, technocrats and politicians alike, have been in a search for a new economic management order for their respective countries. Indeed, this marked the end of globalization and its popular maxim of borderless global economy.
Before now, globalization was the prevailing macroeconomic management doctrine as religious application of Washington Consensus and its recommendations became the standard gauge that determined economic progress. Washington Consensus essentially refers to a set of free market economic criteria enunciated by western economists and Washington-based Breton Wood institutions (World Bank, the IMF), the United States and the European Union.
Key doctrines of Washington Consensus, which is an offshoot of Smith’s philosophy, dwell on free trade, free floating exchange rates, free markets and macroeconomic stability. It insists on privatization of public enterprises, deregulation or the abolition of regulations that obstruct market entry or restrict competition. It also includes the removal of subsidies in the pricing of critical infrastructure and public goods. Other tenets of Washington Consensus involve trade liberalization and tax reforms aimed at broadening the tax base with moderate tax rates.
For me, the doctrine of “free trade” as championed by Western economists and the Washington Consensus is a mythical sophistry to deceive developing economies. Anyone with common sense and a basic understanding of economic principles would know that there is nothing free, even in Free-town. So, anytime you hear the word “free” from such economic hypocrites, just remember that there is no free lunch anywhere under the sun, “everything has a cost in economics.”
It is in the light of the above that it’s hardly surprising, the subtle oppositions emanating from the western economic and financial establishments to the innovative import substitution strategy being adopted by the Central Bank of Nigeria (CBN) to steer the Nigerian economy out of recession. Ironically, it is inconceivable that the same Western democracies that opted for Brexit, and enthroned Donald Trump, which are clear preference for economic nationalism and protectionism, would turn around to frown at Nigeria for adopting similar measures of economic nationalism to stabilize its economy. This explains why the CBN denying importers of 41 items access to FOREX in the inter-bank market window runs counter to established norms.
I solicit that rather than being distracted by the western hypocritical campaign, the CBN and the Nigerian authorities should brace up to exploit avenues for maximizing the potentials of our domestic economy with a view to achieving higher domestic production of goods and services, creating higher employment opportunities for our teeming youthful population. Nigerians and the country would be better off, if a similar scheme to the CBN Anchor Borrowers Programme (ABP) on rice production could be replicated and extended to the manufacturing sector given the huge domestic market.
While not advocating for the adoption of autarkic measures as option in solving the Nigerian macroeconomic challenges, looking inward as a strategy to solve our economic problems may prove rewarding, given the resurging economic nationalism sweeping across the globe. “Time makes more convert than reason.”