Why we cannot export our way out of this crisis

The one constant in the domestic export equation over the last century ― a poorly run local economy ― ought to offer some clue to the error in an economic development strategy that is so focused on the economy’s external dimensions. Evidently, something about the local economy makes it difficult for us to profitably use export earnings (whether it is crude oil exports and the famous process by which it supposedly accretes to the gross external reserves), or personal home remittances…

Over the weekend, on one of the very few WhatsApp forums that I subscribe to, a friend elatedly announced the presence of lithium deposits in commercial quantities in the Federal Capital Territory, Abuja, and in Niger, Nasarawa, Kwara, Oyo, Kaduna, Jos, Bauchi, Kebbi, Zamfara, and Taraba States.

Certainly, along with other fancy metals like cobalt, lithium is a key component of a diverse range of batteries. And as economies across the world accelerate the energy transition that they must go through if humankind is not to turn the world into one large furnace, lithium will remain (for those countries able to profitably mine it) a key source of export revenue. Predictably, most responses to the original post on the WhatsApp platform agreed that this “discovery” is a “game changer for the domestic economy”.

Which is not saying much given the current state of the economy. Nigeria’s ever more despairing need for a Deus ex machina is more so, when crude oil export ― our current main source of export earnings ― is beset by frightening levels of incompetence at home (that has resulted in a severe cut in installed production capacity), and by the implication of hydrocarbons in the warming of the globe (a fact which now threatens to turn much of our national endowment of fossil fuels into a stranded asset). Nonetheless, a pivot from crude oil export into lithium export (or the export of any other item for that matter) as a solution to our domestic economic woes, is as wrong as it is ahistorical.

Since independence (and arguably, even before then) Nigeria has continued to export, with no noticeable improvement to its economy. Indeed, our export mix has come full cycle. In pre-colonial times, human labour (slavery) was our main export earner. Then we went through a commodity cycle (palm oil, cocoa, groundnut, etc.). Followed by a cycle based on the extraction of fossil fuels (coal, oil, and gas). Now we are back to shipping human labour abroad (the “Japa” phenomenon as end of the cycle) as our primary source of export revenue.

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…it is not just that the public sector over-regulates domestic businesses. As with the Central Bank’s handling of the ongoing banknotes, the public sector’s over-reach has become a leprous hand ― hurting industry in very strange, and to be fair, often unintended…ways.

The one constant in the domestic export equation over the last century ― a poorly run local economy ― ought to offer some clue to the error in an economic development strategy that is so focused on the economy’s external dimensions. Evidently, something about the local economy makes it difficult for us to profitably use export earnings (whether it is crude oil exports and the famous process by which it supposedly accretes to the gross external reserves), or personal home remittances (and the covert processes by which it bypasses official channels to reach its intended recipients).

With a little under 200 million people (depending on who is sitting across the table from you), the domestic economy is a value proposition with very strong potential. On the internet last week, someone put up a video of the number of authorisations one needs to obtain if one is to remain in business in the domestic agriculture space. Money spent paying to obtain those receipts erodes profit.

Time spent visiting the different agencies of the state, waiting on the inevitable queues that poor organisation in those places naturally generate, or paying baksheesh to be rid of the ancillary bother, is the very definition of ineptitude. Watching that video, my sense was that it takes a tinge of Sadomasochism to remain in private business in this country.

Now, it is not just that the public sector over-regulates domestic businesses. As with the Central Bank’s handling of the ongoing banknotes, the public sector’s over-reach has become a leprous hand ― hurting industry in very strange, and to be fair, often unintended (because little thinking attends either policy formulation or implementation in these parts) ways.

…our central task over the next ten years is to re-organise the domestic economy as a growth engine. The only way to do this is to remove most restrictions (some of them erected on pre-colonial era statutes) on the activities of domestic economic entities ― and it ought not to matter whether these entities are organised as businesses or as discrete actors.

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The Nigeria Police Force, in this broad sense, is shorthand for government’s dead hand. Rather than facilitate trade and commerce within the country, our governments and their innumerable agencies distort enterprise the same way the Mafia does in Italy’s south. While the protection monies we pay may oil a less than salutary form of enterprise, as in Italy’s south, it has exorcised the animal spirits that the economy needs to survive and thrive.

Put this way, our central task over the next ten years is to re-organise the domestic economy as a growth engine. The only way to do this is to remove most restrictions (some of them erected on pre-colonial era statutes) on the activities of domestic economic entities ― and it ought not to matter whether these entities are organised as businesses or as discrete actors. In addition, we must soften the incidence of whatever burdens remain. Only this way may we also profitably use whatever we earn from exports.