Emefiele And His Philosophy of Economic Nationalism
- Posted By Vitalis_Obidiaghaa | On September-29-2020 07:57:33
- Determined to conserve Forex, stimulate agriculture, manufacturing and promote exports; Godwin Emefiele is deepening his crusade of economic nationalism. By; Vitalis Uchenna Obidiaghaa
Testifying at a Tariff Public Hearing in United States of America’s Congress on December 21, 1908, Dale Carnegie, the then steel magnate in America roared with boisterous confidence, “Take back your protection, we are now men and we can beat the world at the manufacture of steel”. These words from Mr. Carnegie would definitely evoke some degree of emotions especially in those who have the basic understanding of ‘competition of nations’ and the role of protectionism in stabilizing domestic economies, particularly those of developing nations.
As a concerned citizen of Nigeria, I read those words with one question in my mind; what gave Mr. Carnegie the audacity to ask the United Sates’ Congress to take back their ‘protection’? As I thought over that question, I couldn’t help but engage in deep thoughts; thinking firstly on the state of our economy and then, on what we must do to attain self-sufficiency in some of our basic needs as a people, before we even talk of beating the world in the manufacture of one simple commodity, even if it is palm oil. My curiosity drove me into some simple studies and some facts began to emerge which helped me understand that the United States of America practiced economic nationalism during the nineteenth and early twentieth century. This was done primarily through the imposition of high tariffs and the acquisition of markets in Central and South America. High tariffs were the norm in America’s economic life at that time. They were also the favoured economic policies of Presidents Washington, Lincoln, Grant and Theodore Roosevelt.
Wikipedia defines economic nationalism as “an umbrella term that includes economic policies and theories designed to improve the domestic economy relative to foreign economies. It therefore subsumes theories such as economic patriotism, protectionism, and mercantilism, all of which are different forms of economic nationalism. Economic nationalists oppose globalization, or at least question the benefits of unrestricted free trade. Economic patriotism is the coordinated and promoted behaviour of consumers or companies (both private and public) that consists of favouring the goods or services produced in their country. Economic patriotism can be practiced either through demand stimulation (encouraging consumers to purchase the goods and services of their own country) or through supply protection, the shielding of the domestic market from foreign competition through tariffs or quotas (protectionism).”
Leading economies of the world have traditionally had a strong interest in preserving their economic strength, and have therefore sought to use the tools at their disposal; particularly tax structure, foreign exchange regulation and discretionary spending to stimulate domestic economic growth. This has been the case even in the early-modern period, especially when warfare was endemic: a strong economy often meant the difference between political independence and conquest by a foreign power. This resulted in the economic system generally known as mercantilism. Great Britain pursued economic nationalistic policies during the seventeenth and eighteenth centuries. The two pillars of its economic strategy were: (1) high tariff rates and (2) acquiring new markets for its products. In the mid-1700s, the average tariff rate in Britain was 30%, by the 1820s it had grown to 57%. This shut out foreign manufactured goods from British markets, and was one of the primary conditions enabling the Industrial Revolution.
Speaking during his inaugural speech, the newly elected President of the United States of America, Mr. Donald Trump stated the following; “From this moment on, it’s going to be America First. Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Protection will lead to great prosperity and strength.” He emphasized that they “will follow two simple rules: Buy American and hire American.” Mr. Trump has repeatedly said that “Buy American and hire American it is not just a motto” that, “it is a pledge.” This is an economic philosophy which some economists have termed ‘Trumponomics’. A viewpoint also considered by some as a (partial) return to the economic nationalism of the Theodore Roosevelt Era. This has translated to the present-day “Be American, Buy American” campaign in America.
Just recently, at a colloquium to mark his 65th birthday, Asiwaju Bola Ahmed Tinubu, the national leader of the All Progressives Congress, (APC) while delivering a speech he titled; “Nigeria, meeting current challenges” opined that, “we must learn from England which barred the migration of its master craftsmen and the export looms at the dawn of the Industrial Revolution; to America and the high tariffs it imposed on foreign manufactured goods for over 150 years from its independence until after the second world war; to China, which implemented a most radical and comprehensive protectionist regime to become the world’s most prolific manufacturing nation…Whether we decide to focus our attention on steel, textiles, cars, machinery components or other items, the truth is that we must focus on manufacturing important, useful things.” The theme of the colloquium was very instructive; “Make it in Nigeria; use what we make, make what we use.”
To better understand why economic nationalists are opposed to unrestricted free trade, you must consider the fact that there is no such thing as free lunch. It doesn’t exist, not even in your family. What if someone buys your lunch? Yes, someone may pay for your lunch, but it is never free. It is merely a shift in the cost of lunch; it is not an elimination of cost. Come to think of it, is it really free to you? Have you considered how else you could have spent your time if you had not gone to the lunch? This simple explanation would help you make common sense of the theory of opportunity cost in economics, which is simply defined as the best alternative foregone. It is an established fact that the fundamental problem of economics is the issue of scarcity. We are always concerned with the optimal use and distribution of scarce resources. Wherever there is scarcity, we are forced to make choices both as individuals and as nations. If you have 12 hours at your disposal during the day, you could either spend these hours in work or leisure. The opportunity cost of spending all your day watching TV, is that you are not able to do any productive work during the day.
Take the production of rice for instance. We depended solely on importation of rice for over a decade and felt comfortable because some folks we didn’t even know in Thailand and other Asian nations were busy producing and we were busy consuming. We literally made those nations rich at the expense of our domestic economy. We felt comfortable in our satiation and self-delusion, because we had some few undependable petro-dollars to pay for our mindless consumption. Predictably, oil price plummeted and our external reserve nose-dived; leaving us in a state of economic “higihaga” (to borrow a phrase from our intellectual wordsmith, Hon. Patrick Obahiagbon).
To the discerning, an annual expenditure of $11 billion on food importation is alarming enough, with rice importation alone constituting about N365 billion ($2.4 billion or one-fifth of total annual food import bill) annually, meaning that nearly N1 billion has been spent daily for rice importation for so many years. If you see that figure as the actual cost, then you need to re-study your Economics 101. Yes, we may have paid that sum, but that is far from the true cost, it is merely part of the actual cost. What then is the actual cost of consuming such quantity of rice which we could have produced locally? What is the cost of consuming foreign-made tomato pastes when we have tons of tomato fruits wasting away in Jos? What is the opportunity cost of consuming foreign-made orange juices when we have tons of orange fruits wasting away in Benue? The opportunity cost is the best alternative forgone. Thus, they are the things we could have done with that amount of money if we had invested it in agriculture, especially the local production of rice during those years. The effect of that best alternative forgone is the high level of unemployment for our youth, depletion of foreign reserves and of course, a feebler economy, especially, when our over dependency on oil and its earnings is no longer sustainable.
It is against this background that we should put aside sentiments and pay closer attention to Emefiele and his gospel of economic nationalism. When he came in as the governor of the Central Bank of Nigeria and began to preach this gospel, he was sounding as a lone voice in the wilderness. When he matched his words with action, restricting Forex to some 41 items, the CBN governor, Godwin Emefiele, argued that most of those items can be manufactured locally, if the country sets its mind to it. However, some self-serving individuals who have failed to understand CBN’s patriotic position resorted to sponsorship of serial propaganda to misinform and mislead the public on the noble objectives of this policy.
But just like Dr. Eddie Mbadiwe would say, “At the end of the day, you either have excuses or results; excuses do not matter, results are what count.” Fortunately, the results of Mr. Emefiele’s efforts are already counting, especially in Agriculture. Ask Chief Audu Ogbe, the Minister of Agriculture and Rural Development and he would confidently tell you that Nigeria would be self-sufficient in rice production in 2019. That is no political statement. It is a verifiable fact! Just go to Anambra, Kebbi and Ebonyi and you would be amazed at the level of rice revolution that is going on presently in those states. Thanks to CBN’s Anchor Borrower’s Scheme for farmers. What began as a sincere effort to help reposition our domestic economy is now becoming a revolution. Who could have believed that Nigeria would become self-sufficient in rice production in this medium term?
When the Anchor Borrowers Programme (ABP) was launched in 2015, some people felt that it was just another initiative that would be forgotten with time. But, within just few years, the CBN has encouraged our local farmers in Kebbi, Adamawa, Anambra and Ebonyi to increase the production of rice from barely a visible presence in the market in 2016 to a situation where in 2020, Nigerian brands of rice are now commanding leadership positions in the market. Billions in forex has been saved by this transformation alone. This shows the possibility that abounds to us as a nation, if we can put aside selfish considerations and commit ourselves to taking hard decisions that have the potential to positively influence the living standard of our citizens. Whether they are the farmers in Kebbi, Adamawa, Anambra or Ebonyi, one decision can make so much difference and economic nationalism makes common sense.