What Nigeria, African economies must do now to survive tomorrow, by Akinyemi

04 May 2020

What Nigeria, African economies must do now to survive tomorrow, by Akinyemi

A virus pandemic is ravaging economies, and Africa is not an exemption. Could there ever be a positive side to this challenge in terms of restructuring economies post COVID-19?

I think the Post COVID-19 global economy should be different from the pre-COVID-19 economy, in the sense that developing countries do have an opportunity. They would not necessarily be starting off at the bottom zero level like before.

Any attempt in the Pre-COVID-19 era by Third World countries to introduce nationalistic economic measures would always run into a barrage of criticisms by the World Health Organization (WHO) as well as the developed countries. But now, even the developed countries, if they are not careful, are going to be starting off from close to a zero base in rebuilding their own economies. In a point, every country is going to introduce a nationalistic measure to protect their economies as they seek to build up.

This should be an opportunity for third world countries like Nigeria to actually pump palliative funds into its own industries, the industries that have been allowed to collapse due to Chinese goods flooding our economy. There is no reason why Nigeria should not be able to go back to textile industry and also pump funds into the Defence Industries Corporation of Nigeria (DICON). It was established at the same time with the one in Brazil and those ones now make planes, tanks, and our own is producing guns.

I also noticed in the past few weeks that they were able to invent ventilators. The Innoson factory in Nnewi is doing well. But for a country of 200 million people, 50 million are to form an industrial base or hub. There should be more factories like that instead of importing massively on Volkswagen, Toyota and others. This is going to give us an opportunity to build up our own industrial base as well.

You talked about nationalistic approach to economic revival post-COVID-19, how does this tie positively with the fact that Nigeria and some other countries in Africa are now looking for funds and getting loans from international organisations to survive. To what extent could they really be seen to be nationalistic in terms of driving their economies when they will have these loans hanging on their necks post COVID-19?
Don’t forget that once the industries start operating again, people are going to be importing oil. The market in oil would receive a gradual boost. At least, Nigeria and Angola (the oil producing countries) will have an opportunity against that to build up their financial base.

What we need to do is to stop being stupid in the way that we spend that money. We should stop going on a consumption binge where the parliamentarians earn the highest salaries and fringe benefits in the world. We should build up the Sovereign Wealth Fund (SWF); we should allocate a higher percentage of the money we start to make to industrialisation, health and education.

Nigeria just got IMF loan approval of $3.4billion;lawmakers also approved N850billion loan for the Federal Government. Is this really the way to go now?
For now, the answer is yes. But we will have to pay attention to what they are going to spend these loans on. We have no choice. Now, the Ekiti State Government and the Federal Government said they were slashing, by 50 percent, salaries of political office holders. The National Assembly isn’t saying anything about slashing their salaries. I hope this would become a national or federal trend in all states. But there are those who are looking at the COVID-19 fund as an opportunity to spend recklessly.

You talked about paying more attention to industrialisation, health and education. What would be your recommendation to the Federal Government on managing issues arising from the current global lockdown?
I hate to come up with suggestions and advice, (because) we have never faced this kind of pandemic before; we don’t know what would stop it and what will provoke it the more. Scientists disagree among themselves.

I wish the government luck in deciding whether to have a total or partial lockdown or curfew. This is like playing a lottery, if it works, fine; but if it doesn’t, people would blame the government.

My suspicion is that our figures have been very low during this pandemic due to three factors: Heat has helped in dampening down the potency of COVID-19 in Africa. Two, I think we have immunity from Chloroquine that we all consumed as children when we were battling malaria. We have that built-in immunity and it has helped us. Three, basically we have a vegetable based diet, not just in Nigeria but in Africa. (Remember I said these are my guess/suspicion because if the scientists do not know, I can’t too).

But, when you listen and read anecdotes about what has worked, including some of the governors who had it, they talked about garlic, ginger, and what kind of leaves that are safe to use. That is what I meant by vegetable-based diet. We don’t know what worked and what doesn’t work, but I think it’s a combination of all those three factors that has made our figures low.

Going back to your nationalistic economic recovery model, what specific actions do you expect?
People have been talking about this since the 1960s. Import Substitution. The first thing to do is to add value to your exports: Stop importing cocoa and start exporting chocolates; stop exporting cocoa and start exporting derivatives of cocoa (Ghana is already doing it, but we are not). Two, they cut down timber trees and export them to China and other countries but we import toothpick from China and furniture from Italy. Why can we not actually export furniture from our very good caliber timber that (I understand) are among the best in the world?

I have seen where Rose trees from Senegal are exported to china. These are very valuable trees and it is against the law to export them, but they cut them in the middle of the night and ship them to China. If you are going to cut the trees, you might as well make the furniture in Senegal and export it.

It is not every African country that will operate on the same level; there are those that have the natural resources and those are the ones I am addressing. In a place like The Congo, there is foreign interference in its economy because of the mineral resources that they have. People want to make a monopoly and ship them out. That is why they never want a strong central government that would challenge their exploitation.

It is not just those that have natural resources, there are those that have mineral resources. In Nigeria, the media has covered Lebanese and Chinese digging gold and all kinds of mineral resources and shipping them out of Nigeria. This is an opportunity for us to bring in foreign companies from Australia and South Africa who can mine these on an industrial base and at least we get value from it rather than smuggling them out. That is what I meant by a nationalistic-based Industrial revolution in Africa.

What should the private sector be doing at the moment?
I don’t want to go down the road of advising government to dish out palliatives to the private sector. Our private sector has been an exploitative one. They import goods from abroad and distribute. How many of them are really manufacturing products?

Government has often been blamed for not creating the enabling environment for businesses to thrive. The banking sector is not also providing the right financing architecture for the industrial sector…
I am going to point out what the government should be doing. The government should seize this opportunity to put into place an infrastructural enabling environment on which the private sector can build. One is the power supply. You would recall that the late Abba Kyari was supposed to have been sent to Germany to talk to Siemens about coming to make an investment in the power sector and this is why the power sector in Nigeria is simply an exploitative sector. Those who bought the power sector from the Federal Government, how many of them became billionaires from operating that sector?

Why do you think it didn’t happen that way?

Yes, we couldn’t even get meters, whether prepaid meters or post-paid meters. They just wanted to be giving us bills (estimated billing system). Meters could be built in Nigeria but they prefer to import and then hoard.

Can Africa really work in concert to actualise some of these things you have suggested?
Let me focus on Nigeria. I would like to see a symbiotic relationship between the government, the private sectors, and research institutes so that there would be a think tank on industrial development of Nigeria, where government and private sector will regard themselves as partners, not to exploit the country and Nigerians but to develop Nigeria. I do not subscribe to a private sector relationship with the government where you will go to government ministries and get a contract to bring in furniture from Italy to furnish the ministry. That is not a development and that is not the kind of relationship we should be having, because when trouble comes, where another pandemic occurs, everybody will shut down his or her borders again.

Let us draw a red line below which Nigeria should not fall in terms of its ability to supply, whether to secure medical supplies and what have you, because developed countries would have learnt a lesson from this. I can say that they would create a strategic stock of medical equipment for the next pandemic to come even if it takes five years, in which they would not be in a situation where they would be begging for ventilators, Chloroquine tablets and so on.
Let Nigeria learn a lesson now.

source: Guardian