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Support for backward integration policy

The government of President Muhammadu Buhari has remained persistent in its preachment of the need to diversify Nigeria’s economy and  to make the nation move away from  mono product and import- dependency. The realization of this policy will naturally translate into the nation earning revenues  from diverse sources with a quantum leap in its foreign reserves  through  the multiplicity of export  products.
Basic  economics  holds that nations  anxious to  achieve  a balance in international trade work more on achieving higher exports and less imports in a manner that their reserves would be enough to accommodate  longer months of payments at the international markets.
It will amount to standing logic on its head for any nation to ignore the formulation of policies and structures which will aid the development and growth of her industrial base or the real sector, especially manufacturing –  to still want to play big in the export  market  . Indeed,   it is only when manufacturers of goods and services have saturated the local market that the issue of exporting to other countries becomes a natural consequence.
It is against this backdrop that one wonders whether the government of the day is interested in working its talks when it comes to the issue of economic diversification, job creation  and  poverty  alleviation .The point must not be overstretched to note that its only the real sector that holds the singular capacity to tackle these three cankerworms of this economy headlong.
We are of the opinion that the government’s import substitution policy would mean the same thing as backward integration policy to the extent that cutting down on the nation’s quest for foreign made goods would translate to patronizing locally made substitutes.
In a country like Nigeria where government is perceived, and rightly too, as the highest spender, it would amount to hamstringing any sector which is denied of government patronage.The reality  is that the manufacturing sector is not gaining enough support from the government. We are not yet aware of any blueprint to revive the comatose textile companies, for instance.
Even then , the  recent decision by the Federal Government banning its patronage of such things as conference bags, branded shirts, souvenir items  and their like – although may appear to be pedestrian and inconsequential at the face of it- negates  any policy move to strengthen the local manufacturing particularly small scale enterprenuership. In a period of recession , how does government intend to create wealth when local producers of goods and services are denied business opportunities their government?  This   smacks of  lack of understanding of the growth trajectory of some of  today’s big organizations.    Similarly , the  rumour that  government will  ban the holding of functions in hotels and event centers not owned by government is also in line with this policy of stifling local businesses.  While we condemn official abuse of the process, it is our view that complete abrogation is anti – economic revival at a time like this .
When most of the Small and Medium scale Enterprises many of which obtained loans from institutions like the Bank of Industry (BoI) are struggling hard to securing a foothold on the market, the least that they can ask for is patronage of their products from government and large corporations. Government’s backward integration policy should mean enhancing the capacity of local companies and up- coming ones.   Government and its  agencies should act as off takers to these businesses and not  as undertakers as it is currently becoming more apparent. Beyond the campaign for the consumption of locally made products, a campaign which government and its  agencies must lead, there is the urgent need to provide the manufacturers and producers of such goods and services with enough incentives capable of shielding them from hostile competitions from offshore-  which eventually put their products and services in comparative  disadvantage  position with imported substitutes.
For the current effort  to expand the  export base to yield good results, government must do more in the area  of tax holidays to certain categories of manufacturers and also work at  encouraging the development of clusters for industrialists as envisaged in the Export Processing Zone (EPZ) policy. No industrialist can cope with  private provision of utilities that are taken for granted elsewhere in global business competition .  Lending institutions which include but not limited to BoI and Bank of Agriculture should be encouraged to grant loans at single digit interest rates. Such young businesses should rather be protected from double taxation especially by agencies of states and local governments.
The need for an upgrade in infrastructure can not be over emphasized considering the debilitating impact on companies trying to generate their own power, build access roads, mini water schemes, provision of security for workers and equipment among others  on their operations. It is only through planned and radical reduction in cost of locally manufactured goods   and services will the appetite for foreign items -whether on the banned list or not –will  be drastically reduced.
As government continues to search  for a healing balm for the economy, we welcome the recent  directive by the Central Bank of Nigeria,  CBN,  that commercial banks allocate  60 peer cent of their foreign exchange sales to manufacturers and 40 per cent to other users for the purpose of trade and other obligations. This will  gain more grounds in the importation of raw materials for the local manufacturers. The least that government can do therefore is to encourage the local consumption of the products and services of such indigenous firms.
When the nation succeeds in achieving business friendly environment, it will become easier for Nigerians in the  Diaspora  to repatriate their businesses, monies and ingenuity back home. Money follows clear cut pathways just as business decisions are never based on sentiments.

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