Building economy through indigenous products

The current Nigerian economy plundered into recession in the third quarter of 2014. Since then, the economy has been in recession but all hope is no lost as the economy can be rebuilt though the consumption of home made goods, popularly called, Made-in-Nigeria goods.

To realise this objective,the Chief Consultant, B. Adedipe Associates Limited (BAA Consult), Dr. ‘Biodun Adedipe has stressed the need for increased patronages of goods and services made in Nigeria, in order to stimulate economic activities and attain sustainable growth.

Adedipe, who said this at the “Half Year 2017 Economic Review and Outlook for the second half of the year,” organised by members of the Finance Correspondents’ Association of Nigeria (FICAN), recently, in Lagos, advocated that in terms of production that Nigeria should copy the examples of China and India, especially the latter, that promotes ‘Make-in-India’.

Also, on consumption, the economist said Nigerian economic agents (governments, corporate and individuals) should buy ‘Made-in-Nigeria goods.’

By adopting such economic policy, Adedipe held the view that trade would thrive on internal activities, while the country would engage in international trade to complement its earnings.

Nigeria, according to him, should endeavor to significantly export more products other than crude oil which has been its major foreign exchange earner for decades.

He noted that any country that does not produce a significant proportion of what it consumes would always be at the mercy of those countries that are producing the goods and services it needs.

Nigeria has estimated population of 190.88 million, as at 1st July 2017 (7th largest in the world, with potential to become 3rd by 2050) ;and with a huge appetite for consumption of just about anything imported into the market for any tradable commodity.

“My take on the episodic economic troubles Nigeria falls into, is simply that: We produce what we don’t consume (natural resources that we harvest and export). We consume what we don’t produce – largely import dependent for all conceivable things.

“The salvation for the Nigerian economy, beyond engendering recovery from the abating recession, is found in promoting aggressively the ‘Made-in-Nigeria’ campaign.

In Nigeria, most of the things that catch our fancy, we actually don’t produce them. We therefore end up creating jobs offshore,” he added.
Adedipe supported the “unorthodox” monetary policy stance of the Central Bank of Nigeria, saying, it should continue until the economy achieves stability.

“The issue is using your orthodox policy for as long as your financial system is at risk, once you are outside of the risk region, that is, where your economy is no longer fragile, you abandon it and you turn to orthodox management.

“In my latest encounter with the CBN, they said no we haven’t got to a comfortable level yet. But I understand that because they know that if government is spending to expand the economy, that’s expansionary fiscal operation; and that would trigger interest rate, and so they recognise that even if they drop interest rate it will more or less demoralise the situation.”

This will spur huge domestic economic activities and prick the balloon of unemployment. He listed factors that will grow businesses to include relevance, innovation, knowledge and value added.

So he said Nigerians should endeavor to be relevant interms of adding value to whatever they offer in their businesses. So also being innovative in terms of taking a fresh look at every situation encountered. Knowledge base, he said, is also important with regards to understanding the terrain and bring that as added advantage and assuring that customers will get value for their money.

He further stated that the Central Bank of Nigeria (CBN) has the capacity to sustain ongoing foreign exchange (forex) interventions, despite the pressure on the foreign exchange reserves.

The economist disclosed that on the 30-day moving average, the reserves have risen from $29.07 billion at end of 2015 to $30.36 billion in July 11.
Adedipe said the liquid portion of the reserves stood at $29.62 billion, which translates to 12.31 months of imports cover.

He said the exchange rate has gradually depreciated and been devalued to N168 to dollar at the end of 2014; N197 to dollar at end of 2015; N305 to dollar at the end of 2016 and N305.85 to dollar as at July 19, 2017.

Adedipe, said the required international benchmark was for external reserves to be able to sustain at least, six months of the import bill adding that Nigeria is still doing great with its reserves covering over 12 months import cover.

The economist, said Nigeria’s total import figure for the first half of this year was N2.2 trillion ($7.218 billion), with an average monthly figure of $2.406 billion.

He explained that due to recession, the current import figure was a decline from $14.171 billion or monthly average of $4.724 billion in the first quarter of 2015. He said that foreign trade had picked up since the first quarter of last year, with imports declining.

Adedipe described as aberration, calls on the CBN to freely float the naira, adding that no country in the world adopts such approach to exchange rate management. He said the ongoing spike in naira exchange rate occurred after the CBN was pressured by several stakeholders to adopt flexible exchange rate system and freely float the Naira.

“That of course, was a huge aberration, as there is no country that freely floats its currency (even the US) – the job of the central bank is to defend and protect its currency by intervening in the markets as necessary. The voices are coming from too many experts that know nothing other than to echo what the Breton Woods institutions have said,” Adedipe stated.

Operators in the financial economy, such as, Small and Medium Scale Enterprises, SMEs, also canvass patronages of indigenous products so as to revive the economy, create jobs, empower people and reduce poverty.

For example, the Chairman, Association of Small and Medium Enterprises, Lagos State Chapter, Mr. Kuti George said, “With adequate papatronage of locally made products, Nigeria could grow the nation’s Gross Domestic Product, GDP, create more jobs and reduce poverty across the country.

He said Made-In -Nigeria product has the capability to revive the economy, reduce tension in the land, more so as the country has huge and diverse population, land mass and excellent weather to grow agricultural products, among other things.