Tuesday, December 14, 2010

Made in Nigeria

As a person known to be highly critical of how Nigeria is run,one constant question posed to me is,what can we do to solve this problem.

Yes Julius Umogbai,you have told us the problems,do you have any solutions yourself? I was helped by a friend's suggestion. Why not do a piece on made in Nigeria goods.


Someone is about to stop reading. If we all agree to take the steps enumerated here, we would be contributing to the survival of this our dear country,in our own small way.

I want us to view the world like a game of Monopoly,the financial board game. In Monopoly,everyone cannot win,only one person becomes the overall winner.

In addition to this,every time you give your opponent money,you become poorer,while he gets richer. The game eventually ends when one person cannot afford to pay his bills.He is said to be bankrupt, another way of putting it is that his liabilities are more than his assets.

Goods,and services, are the real world's equivalent of the  Fleet,and Oxford streets,houses,and hotels that we buy in the board game, Monopoly.

In the real world, the players are nations,and they do not play to loose. They protect,and promote, themselves through taxes,tariffs,waivers,policies, and other instruments designed to cause their country's goods,and services to be attractive to others,while discouraging imports. 

For many years now, the rest of the world has been begging China to export less, and import more! It has not worked! China seems to be gobbling up the world in one big game of Monopoly!

So where do you feature in all this? There is a war ,for the soul of the money in your pocket! Every nation on earth wants your money,but you do not have enough to go round!

Each time a consumer,meaning you,buys a product,or purchases a service, he is putting money in the pocket of the company that produced it.

If that company is Nigerian,our economy gets a financial blood transfusion,a job is either created ,or supported. On the other hand, if it was imported,you are exporting a job out of Nigeria, to the country of origin.

In today's "locally globalized" economy, a company does not need to be physically on ground, to make a profit.The stakes are so high, that there is very little margin for error.

A government must get it's policies right from the get go! Yo make a mistake, and your citizens pay the price in unemployment, and a lower quality of life!

In economics, the expression, Cetris paribus, which means, all things being equal,is used to express the availability of the best of conditions. I have lived more than a generation in Nigeria, and what I have seen till now, is that everything is unequal in Nigeria! 

In our own case, Cetris is very much not paribus, at all!

The business person in Nigeria operates in an environment designed to put him/her at a serious disadvantage! He/she is not playing by the rules the rest of the world plays by, all the reasonable, and unreasonable, odds, are stacked against him/her!

I have been in business for more than fourteen years now, and I have seen a few of these disadvantaging situations!

Is it the policy inconsistency of government! With each new government not minding the policies that have gone before, which are not necessarily bad, sometimes, a government policy is designed to target a single individual. It could be to favour such a person, or in the infamous case of Ibeto Cement in Nigeria, to prevent him from doing business. 

In Ibeto's case, he was prevented from importing cement to protect Nigeria's richest man who had just acquired most of the government owned cement factories in a sweet heart deal called privatization!

Then there is the access to cheap credit, or should I just leave it at credit? Businesses that have long periods of gestation, hardly ever secure any finance! The banks are only willing to fund buying, and selling activities, or contracts with quick turn around periods.

One should not blame the banks, they know that in our hostile environment, it is truly a risk to not worth taking! In addition, you have the mad multiple tax regimes. Every tier of government coming like Shylock to cut it's own pound of flesh! The problem is not that businesses do not want to pay tax, it is that too many inane taxes are imposed on them!

Part of the problems also plaguing our businesses is a serious infrastructural deficit. By this I mean infrastructure that ought to be in place, that is not there.This is coupled with the decay of the little that is available!

I know this is not a great public relations piece for Nigeria, but it is the stark reality on ground! 

Need I talk about administrative bottlenecks, and institutional corruption, that add a very heavy cost to operations. 

Businesses have been known to go under simply because the equipment they imported, were not released to them by the customs, and excise department. The reason, the right bribe was not paid.

And then you have the problem of some businesses having to provide all the infrastructure, they need to operate, roads, water, security, electricity, and other nightmarish requirements that are taken for granted in other places!

So imagine the business owner, who has struggled to manufacture a commodity, at great cost, under these harrowing horrendous conditions: imagine him/her  having to compete with cheaply produced imported products? The winner in this particular high-stakes game of Monopoly, is obvious! 

The imported goods will win all the time! Their operating environment gives them wings,like the Red Bull advert says! Ours? Concrete shoes!

That is why sane people were aghast at the latest policy of removing textiles,vehicles, cassava, furniture, and toothpicks, from the import prohibition list.

What did they offer as their reason? That these goods were being imported into neighbouring countries, where they were paying duties to those countries, and were subsequently smuggled into Nigeria! 

So,our solution was to allow these goods to be imported directly into Nigeria, so that government, not the people, can make a few more bucks!

Foolish people,like us, would have assumed that we would go the route of policing our borders properly, but that is actually impossible! The men of the Nigerian Customs service, actually work for themselves! They are more like private business men, who are on government salaries! 

I believe a proper institutional reform would have been more ideal, instead of the silly simplistic sticking tape solution. 

This solution, is a sure way of destroying our moribund productive "incapacity" in the affected industries! It is like cutting off your head, because the headache is too much for you to bear! 

I still do not get it. The irony of the whole situation we have created for ourselves, is that government just gave some money to the textile sector, as a way of bailing them out. 

Seventy billion naira, if you divide this by one hundred and fifty two, you would know the value in dollars.

In addition, the week after the new import policy was announced, the country's vice president, Namadi Sambo, was shown on television, commissioning a reopened textile factory, the United Nigeria Textile Limited in Kaduna, Northern Nigeria!

He touted it, as all politicians do when they are looking at a camera, as a sign of government's commitment to rejuvenating the sector! 

My word! It would have been better for the fellow to actually present them with a death certificate at the event!

So you have heard it, if we want Nigeria to grow, we need to buy made in Nigeria goods. They may not be perfect, but as we persevere, and correct them, they would improve. 

A few years ago, "made in Taiwan" was the expression for describing substandard goods in Nigeria! The picture is radically different today! The Taiwanese have become adept at manufacturing world class goods, and we can get there, if only we buy "Made in Nigeria"


(If you are reading this as a note on Facebook, you can access the rest of the blog at www.standupnigeria.blogspot.com)

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