'Downplay import substitution, get on global market' - Adesina charges Nigeria

Reeling out data from across the world on how export has changed the fate of economies, President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, urged Nigeria to dump the layback economic models and survival mode while joining the Asian countries to compete for the huge export market.

In his tradition, the former Nigeria’s minister of agriculture, yesterday in Lagos, spoke excitedly about the huge potential of the economy but warned that the import substitution policy option would continue to mask the opportunities to transform the country to the real “lion king” and increase the economic growth substantially.

At 2.31 year-on-year (Y/Y) growth in quarter one, Adesina, who spoke at BusinessDay CEO Forum 2023, said the country is developing too slowly and well below its potential, charging “the lion king in the making” to learn how to roar.

“The key to unleashing Nigeria’s lionhood is engineering an industrial revolution, the likes of which we have not seen before. It must be deliberate and intentional,” the AfDB boss noted.

Part of the engineering, he said, would require de-emphasizing the historical focus on the restrictive import substitution model and taking the path of the Asian countries in exploring the unlimited opportunities in export. He regretted that Nigeria’s manufacturing sector represents only three per cent of the total revenue from exports whereas it accounts for 50 per cent of the country’s imports.

“Import substitution, while important, is a very restrictive vision. It is focused primarily on survival, instead of looking to create wealth through greater export markets and value diversification. The result is a manufacturing sector that cannot even develop to reach its full potential nor compete globally. Rather, it is limited to a ‘survival mode’, and not a ‘global manufacturing growth mode’.

“Nigeria should have greater ambition for its manufacturing sector, by shifting toward being integrated into and moving up global and regional value chains, in areas of comparative advantage, specialisation and competitiveness. A well-developed and policy-enabled manufacturing sector, with export orientation, will spur greater innovation, accelerate business and investment-friendly industrial policies to drive export market development and structural transformations of the economy,” he said.

The success stories of Singapore, Malaysia, India and China, he said, are practical examples of how the country could jumpstart high growth with manufacturing.

As far back as 1990. He recalled Malaysia’s exports totaled $32.8 billion, about the same figure Nigeria is doing three decades after, suggesting there much work to do in unlocking the export potential of the country.

He asked: “What is the take-home message here? While Nigeria’s export basket has hardly changed, Malaysia and Vietnam have used aggressive horizontal and vertical industrial manufacturing diversification to move from low-value products to high-value market products. The result is seen in the comparative wealth of the three countries. While export value per capita is $7,100 for Malaysia and $3,600 for Vietnam, it is only $160 for Nigeria.”

An undoing and ironical character of the economy is Nigeria’s export of raw materials such as crude while relying on other economies for the by-products of the resource. With the right policies, including focusing on export-market-driven industrial manufacturing that is integrated into global production and logistics value chain, he noted, the country’s export revenue could grow by over 10 times and “unleash a new wave of wealth”.