Unbridled Imports Crippling Nigeria
Despite huge natural resources and vast tracts of arable land, Nigeria, sub-Saharan Africa s second largest economy and the continent's most populous nation, largely relies on imports.
The once agro-driven and food self-reliant economy, Nigeria has in recent decades relied more and more on oil, becoming a net importer of even the most basic goods.
'We import almost everything, from the important items such as food and medicines to the frivolous ones such as toothpick and razor blade,' said Ibrahim Ayagi, economic adviser to former president Olusegun Obasanjo.
'We have become a classical importer nation,' lamented Ayagi, ex-chairman of a government think tank, the National Economic Intelligence Committee (NEIC).
In 2007, Nigeria spent about 39 billion dollars (26 billion euros) on imports according to the World Bank, while the CIA factbook puts the value of imports for 2008 at 46 billion dollars.
Agriculture Minister, Abba Sayyadi Ruma recently said a billion dollars is spent on fruit juice imports yearly. In a bid to encourage local production, the government in October banned the consumption of foreign alcohol at official events as it launched an ambitious 'Made-in-Nigeria' campaign.
Manufacturers see imports as more profitable than producing in a country desperately starved of electricity. The discovery 50 years ago, of oil, which provides the country with 95 per cent of its foreign exchange earnings and some 80 percent of budgetary income, is seen as largely responsible for some of Nigeria's woes.
About 70 per cent of Nigeria’s 150 million people engage in subsistence farming and before the oil boom in the 1970s, the country grew enough to feed itself and export surplus.
Agriculture then accounted for nearly 60 per cent of GDP, but this has tumbled to just over 30 percent. 'A country’s economy is gauged by its GDP.
Its volume of production determines its economic growth and the fact that we don’t produce much explains our economic woes,' Abdullahi Adamu, head of National Agricultural Foundation of Nigeria said.
He said only half of arable land is under cultivation, suggesting 90 million Nigerians are food insecure. Nigeria used to rely on cash crops for its foreign exchange earnings with cocoa, rubber, cotton and groundnuts as its major export earners but with the discovery of oil in the 1950s, crude export took over as the major export earner.
Easy oil money lured the government to abandon industrial development and concentrate on oil export, leading to the 'national culture of oil export for commodities import,' Ayagi said.
The country now ranks as the world’s eighth largest oil producer with an estimated daily output of around two million barrels per day. But it even imports most of the refined oil as its refineries are ailing.
'The problem started with the discovery of oil and worsened over time to this moment where we virtually import everything,' said Ayagi, also an economics professor.
The non-oil sector accounts for 3.9 percent of GDP, according to the country's statistical office.
The World Bank put that figure at 2.6 percent in 2007.
Nigeria grapples with woeful power shortages due to dilapidated equipment and corruption. It needs a minimum of 20,000 megawatts but currently generates some 3,000 megawatts, according to National Electricity Regulatory Commission.
'Many factory owners have abandoned their factories for imports, particularly from Asia,' said Ali Madugu of the Manufacturers Association of Nigeria in Kano.
Umar Sani Marshall is one of such manufacturer-turned importer. He abandoned his pasta and biscuits factory in Kano and turned to automobile and electronics imports from Asia.
'To operate my factory I needed to spend 10,000 dollars every week to power my machines, which translated into 40,000 dollars a month.
You can’t make any profit with such ridiculous overhead cost,' Marshall said as he gave an AFP reporter a tour of his dusty and desolate factory.
'I can make a fortune from 40,000 dollars worth of imported goods,' Marshall said with a wink.