Emefiele’s toothpick model as antidote to recession
Its two high-yielding varieties grow naturally in the forests,especially along the flood flains of River Niger, Benue, and their numerous tributaries.
Like most African countries, Nigeria is fortunate to have been blessed with 1.7 million hectares of its native variety making it abundant in valuable quantities.
It is known to have immense economic value given that it could be used for numerous commercial purposes.
The beauty of this giant woody grass that is popularly known as bamboo is that it is found in large quantities across the country’s geopolitical zones.
Among others, it is a primary source of raw materials for the production of toothpick—a product that had been on Nigeria’s import list for a long time.
Indeed, its abundant availability in the country suggested that all products made from it could as well be substantially present in the country.
Sadly, that had not been the case as Nigerians in 2014 and 2015, reportedly spent $2.71 and $1.32 million respectively importing toothpick into the country.
This sounded incredible but that is the absolute truth about a nation that failed to utilize its God-given resources.
Some northern states were known for the commercial production of cotton, a primary source of raw material for textile industries. But the collapse of the northern textile industries paved the way for total reliance on foreign textiles in a country where the states like Kano and Kaduna among others were the leading textile hubs in Africa.
Nigeria has the biggest textile market in Africa. So, the question is; with abundant cotton, what is hindering the nation from hosting the biggest textile manufacturing industry on the continent?
Norway has $873 billion in its sovereign wealth funds, yet the mainstay of its economy is fishing! Nigeria can also do same through the commercial production of the goods we import
Regretting the state of the textile industry, the Dangote Group, in a report, observed that only five percent of clothes worn by Nigerians are produced in Nigeria.
It was on the strength of this that the Central Bank of Nigeria,CBN, in 2015, said importers of such product will no longer access Foreign Exchange from CBN, banks, and bureaux de change for such importation.
The CBN Governor, Mr. Godwin Emefiele, who made it known, said the measure would prevent further depletion of the country’s foreign reserve.
He said the country was spending a huge amount to import things that could be produced locally, adding that the apex bank would not continue to support the importation of such items through the use of the hard earned foreign exchange.
It was this measure that birthed the 41 items highlighted on the import prohibition list.
Some of the surprising products, the nation had spent its foreign exchange on include margarine, palm kernel, palm oil products, meat and processed meat products, vegetables, private airplanes and jets, Indian incense, tinned fish, galvanised steel sheet, roofing sheet and furniture, among others.
Expectedly, the ban on these products appeared hard on the country given the absence of production capacity in the economy.
However, more than one year after the policy, things are certainly looking up for the production of the aforementioned items. The reason for that was simple.
While some importers were lamenting the policy which is aimed at stimulating the manufacturing sector, others keyed into the new policy regime by embarking on the local production of the items we needlessly waste forex on.
Interestingly, some monetary policies created to cushion the effects of the development like the Anchor Borrower Scheme assisted manufacturers in adjusting to local production.
Obliviously, some made in Nigerian products which have commenced making inroad into the markets now, heralding enthusiasm among those who are not ignorant of the underlying reasons behind the stoppage of importation of most products.
Even amid the prevailing economic hardship today, there are testimonies which could be found in the production of the following: toothpicks, tomato paste, rice and polyethylene bags, among others
Attesting to this during a chat with newsmen in Lagos, Emefiele narrated an interesting encounter he had with Vice President Yemi Osinbajo.
“I can say that for the first time I’m seeing a toothpick that is produced in Nigeria. The VP gave me a sample of that toothpick on Wednesday. And what does it take to produce toothpick, bamboo and the machine you need to produce toothpick is less than $50,000 to buy the machine. The machine can be installed in a room that is half the size of this place we are right now.
Gentlemen, by the Forex restriction on the importation of toothpick, we now have toothpicks being produced at Sango Ota, in Ogun State from Bamboo. That company has created jobs for Nigerians.
‘’I can go on to add that a popular retail store, no longer imports its yellow nylon from South Africa, it now buys made-in-Nigeria. Potatoes for chips are now largely sourced in Nigeria. Tomato paste is now largely produced in Nigeria.
‘’Edward Mackey, a US senator who visited Nigeria a number of weeks ago, said Africa, and indeed Nigeria, missed out on the industrial revolution, calling on Nigerians not to miss the internet revolution happening around the world. Mackey was right that we missed industrial revolution. But who says we cannot re-create the revolution or drive our own industrial revolution?”
However, the modest gains recorded within this short time, suggest that if the CBN’s policy could stimulate the local production of the said items, other imported goods could also be produced here if importers key into the present scheme.
If such is done, sustainable growth and industrial revolution would be ultimately driven and Nigeria will no longer be at the mercy of oil prices.
Unfortunately, some uninformed commentators are often quick to point at the CBN as being responsible for the recession.
That is absolutely false and misleading. Nigeria’s history is littered with recessions that were all occasioned by the collapse in oil prices.
And the current economic decline is not different from others the nation had experienced, as elementary economics states that a fall in commodity prices leads to a fall in the economy.
Historically, findings showed that Nigeria had experienced seven economic recessions with the current downturn making it eight, according to the World Bank .
Indeed, there is no economy that is immune to recession. Corroborating that, the National Bureau of Economic Research, NBER, a firm known for monitoring recessions in the United States, stated in a report that the US which is the world’s largest economy had been through recession 49 times in 240 years.
For instance, the US has had at least, one recession in five years, while Nigeria, on the average, records one in seven years.
Comparatively, in the past decade Japan, Brazil, Russia, United Kingdom and South Africa, had experienced economic decline.
This, however, shows that recession is a global occurrence that happens to countries.
Now, it is imperative to state that countries go into recession and come out stronger as had been seen in Nigeria, United States, and other countries.
According to the Economist, the US became a dominant economy, immediately after the American civil war of 1861 to 1865. Its economic stature grew taller after the second world war indicating that the country became bigger and stronger after each recession.
After the American civil war, there was an industrial revolution, which led to an explosion of the American economy.
Accordingly,industries were on the rise, exports soared, growth was phenomenal. That was the turning point for the American economy.
But Nigeria has never had that kind of revolution, as it had often been boom and bust and the cycle continues.
However, Emefiele’s policies have turned the present times to industrial revolution given the modest gains being recorded.
In Nigeria, the first economic meltdown was recorded during the civil war between 1067-1970.
However, there was an economic recovery at the end of the war. That came with the oil boom and resumption of economic activities around agriculture and mining.
Statistics indicate that in 1970, the economy recorded growth of 25 percent which was the highest in the country’s history at the time. This happened even though oil prices declined by over 12 percent, from 1966 to 1970. Experts, however, attributed the growth to the sound state of the economic fundamentals at that time.
Nonetheless, the rise in oil prices from 1970 to 1974, gradually weaned Nigeria off its dependence on agriculture and other forms of production.
In 1975, oil prices began to drop and Nigeria was by no means prepared, leading to the nation’s second recession in 1975.
The country recovered following the rise in prices of oil to $35.5 per barrel in 1980. That also skyrocketed the national appetite for foreign products. With that, came reckless importation.
The fall in oil prices in 1981 resulted in the longest recession which lasted from 1981-1984.
Instructively, all recessions after 1984, were driven by a fall in oil price and political unrest within the military era. Remarkably, since oil prices began to recover after 1995, Nigeria never slipped into any recession. There was enough money to push the economy and drive growth but the country got fixated on oil wealth.
It was this systemic failure to invest in the future of the country through industrisaltion and infrastructural revolution that brought Nigeria to this point today.
The country mismanaged its years of boom to the extent that a popular retail store owned by South Africans, actually sought forex to import polyethylene bags into Nigeria from its home country.
In the face of this, the only option needed to save Nigeria was the industrialization policies of the CBN.
Nonetheless, many were surprised that some members of the House of Representatives had called for the removal of the CBN boss over the state of the economy.
Though the move popularly failed, it showed how ignorant people could be to the fundamental realities in the country.
The confidence the Presidency has in the CBN boss, speaks loads about how remarkable the economic reforms enunciated by the CBN had been at a time like this.
With this kind of support, it is not in doubt that the CBN would guide Nigeria from these troubled times to a period of enduring boom.