There has been an increase in calls for the reversal of the Central Bank of Nigeria removal of 41 items on the eligible for foreign exchange list following a misconception of a circular it issued on foreign exchange for small businesses last week.
However the need for the country to continue on the path of developing local industries through import substitution and making forex available for local manufacturers sourcing raw materials from abroad cannot be overemphasized.
Asides this, the country needs to become more self sufficient, tapping into it vast resources that are spread across the country.With these resources which vary across all sectors and a large market, Nigeria has a great potential to be self sufficient, however, the contrary is the case as the country is heavily reliant on import even for basic items. This had called for an import substitution regime by the Federal Government as a way to reduce the county’s dependence on imports from developed countries.
The implementation of this policy focuses on protection and incubation of domestic infant industries so they may emerge to compete with imported goods and make the local economy more self-sufficient. Following his assumption of the office of the President of Nigeria, President Muhammadu Buhari had promised to create a more conducive atmosphere for entrepreneurs.
Buhari was quoted as saying that “with high interest rates and entrepreneurs needing trillions of naira to buy machinery, we are virtually back at Ground Zero as far as industrial development is concerned. So, we will shun all anti-development policies, and make the climate more suitable for entrepreneurs. We will create the environment for them to thrive.
“Generating employment was one of our key campaign promises and we will keep that promise. We will no longer allow our markets to be flooded with things we can produce ourselves. We must believe in our system,” Buhari reportedly told the delegation.
Basically Nigeria spends billions of its foreign exchange on importing food items, clothes, electrical items and a host of other things that could Ben produced locally. According to the Director, Monetary Policy at the Central Bank of Nigeria, Moses Tulewe Nigeria spent $575 million importing wheat. In the same period, we imported fish worth $374 million.
“We have land and farmers in abundance. We should not forget that agriculture contributes about 85 per cent of our Gross Domestic Product. Are we saying we cannot produce fish locally? What are we doing with all the fish farms in the country?
“In addition, the nation spent $349 million in the same period importing electrical and electronics; this can only happen here. In other countries they will insist that you set up manufacturing plants in their country, but here we are quick to import. Must we continue to grow other nation’s economies, keeping their factories running to the detriment of ours?”
Also, having been appointed the Minister for Agriculture, Audu Ogbeh has affirmed his resolve to follow up on the polices of his predecessor, in working towards making Nigeria self sufficient in food production. This would not only reduce the amount of foreign exchange being expended by the country and conserve the external reserves.
To the Director-General of LCCI, Mr. Muda Yusuf, “Agriculture is a sector we must focus on. We have lots and lots of solid mineral resources and we should focus on developing them. Most importantly, we have to patronise local products. Every Nigerian should de-emphasize consumption of imported goods, because by doing so, we are helping other countries. We should all patronise locally made goods.”
With interest rates at the commercial banks hovering around 25 per cents, special intervention funds have become essential so as to provide cheaper funding for entrepreneurs particularly those in the Agric sector the country especially as financing has always been chief on the numerous list of various challenges facing Small and Medium Enterprises (SMEs).
In view of the persistent financing gap for real sector development, the Central Bank of Nigeria (CBN) has continued to actively promote the flow of funds to the sector and improve access to finance by micro, small, and medium enterprises (MSMEs).
However despite the various interventions by the apex bank to boost the manufacturing industry at all levels, the sector continues to suffer and contribute less than it ought to to the nation’s GDP.
This is due to several factors some of which include inconsistent and unfavorable government policies, harsh operating environment, porous borders amongst others. The Nigerian textile industry for example which used to be the second largest employer of labour in the country in times past have become less than a shadow of itself.
The industry which now has less than 20,000 workers from close to 300,000 workers in the 80s has been hit largely by a gradual breakdown in infrastructure and legal and illegal importation of textile products.
According to the CBN governor, the fall of the Nigerian textile industry, is one of the contributing factors to the unemployment rate in the country. President of the textile workers union, Isa Aremu noted that almost all the families in the northern part of the country had been affected directly or indirectly as textile companies in the region closed down one after the other.
Aside the textile industry, Agriculture is another sector that ought to have been a major employment generator in the country. With a vast area of arable land and a favorable weather condition, Nigeria should be at the top of the list of Agric produce expedites I the world.
On the contrary, the country is one of the largest importers of rice in the world and almost every food is imported. The country’s well endowed land is able to produce enough rice to feed its 170 million population, but it still spends over N1 billion on rice imports.
According to Citi Bank Africa managing director, David Cowan, “it is a scandal that Nigeria imports tomato paste. You all use it in cooking everyday and the country can produce more than enough tomatoes.
Cowan in an interview had urged that farmers should be encouraged to grow more and industrialists to be encourage to invest in the Agric value chain. This had been one of the major motives of the CBN when it took the decision to take out 41 items from its list eligible for foreign exchange products.
Although many had taken the move of the apex bank with a pinch of salt and some had outrightly condemned it, it is one that is targeted not only at preserving the nation’s reserves and reducing pressure at foreign exchange market but one that would generate employment and take Nigeria beyond the dependence on oil revenue.