Nigeria: Time for backward integration, import substitution (2)

Natural resources leave the shores of Nigeria primarily as raw materials at ridiculously low prices, and are eventually brought back into the economy as finished goods or imported products from industrialised and developed economies (mostly from the West). These industrialised economies are the ones that exploit all the financial benefits through the value addition process on the capital stock, and take every available advantage in international trade. This process is continuously applied without recourse to economic interests or financial gains for the poor nations that produce and provide such raw materials that are subsequently transformed through manufacturing into very expensive finished goods, fit for consumption, and which are eventually sold back at very high prices to the poor nations. It is noteworthy, therefore, to mention that raw materials from Africa essentially constitute the world’s largest source for sustainable global industrialisation activities.

Why does it then appear as if the West has made a vow to keep sub-Saharan Africa (SSA) impoverished, by not allowing it to prosper economically but to permanently remain a raw material provider to the developed economies? This can not be acceptable to Africans as it represents sheer wickedness. There ought to be fair play in dealing with every nation at the international market, where the supply value chain should be vital to the prosperity of all, instead of suppressing a section of people of the world from attaining any height of economic prosperity.

The only way out of this vicious cycle of economic exploitation and suppression by the West is to start now, to strategically apply the economic policy of import substitution. By doing so, foreign imports will gradually be replaced with domestic production. Such arrangement shall equally annul the exploitative international trade that is selfishly designed by the West to perpetuate and keep the African economy impoverished, and from making any meaningful economic progress in terms of growth or development.

Such a radical shift to backward integration as economic strategy means that African countries must endeavour and attempt to reduce their foreign dependency for finished goods, which rather, can be actualised through local production that utilises domestically sourced raw materials, and by value addition, for manufactured goods in their economies. The main reason for this economic policy is simply because the West may actually not mean well (economically) for poorer nations, largely African nations that produce the raw materials, due to their neocolonialism mentality.

African economies should go beyond the raw material producer status by doing something different. They should implement backward integration policy, whereby domestic production of finished goods from indigenously sourced raw materials shall be established. This strategic plan shall go further to activate and enjoy the economic principle of comparative and competitive advantage; by utilising the leveraged opportunity of its raw material abundance to favourably outprice similar foreign made products in countries that are not naturally endowed with such raw materials. This advantage, the initiators and promoters of the African Continental Free Trade Area (AfCFTA) agreement as a global trade institution should leverage on, to grow the African economy beyond every measure! This particular strategic plan (if successfully implemented by abolishing or substantially reducing the import of foreign products and encouraging production in the continental domestic market, especially where quality standard products are not compromised), shall be at play in that ongoing economic structure, with a full manifestation of the import substitution policy within the continent. This is because wealth shall be conserved within the continent which shall positively impact the living standards of the people in the West, and the said wealth should be expected to revolve amongst the economies that signed the multilateral agreement, AfCTFA. The economic advantage indeed, is worth the fight against this brand of economic neocolonialism.

Through manufacturing, African economies should come out of poverty because the production of raw materials and basic agricultural goods cannot improve the continental financial worth in terms of global trade value, from its exports alone. It is therefore the responsibility of the organised private sector, like the Manufacturers Association of Nigeria (MAN), to be part of the vanguard of policy makers and promoters of industrialising each and every member state within the continent, by fully keying into manufacturing. This is because it is the only known avenue from the real sector that shall usher in the desired economic prosperity through AfCTFA trade initiative. In the agricultural sector of the Nigerian economy, for instance, George Thompson Sekibo has shown amazing example of what it takes in fishery business. Local production of goods and finished products for exports should be the line of thought for every African country at this time. Raw materials in Africa are expected to be processed as finished goods for the global export market. 

A catalogue of African raw materials helps to elucidate and reinforce this call for backward integration and import substitution. For instance, for finished gold: Ghana, Mali, and South Africa should be the leading producers. Kenya, Ethiopia and Uganda have the comparative advantage of exporting processed coffee. Factories producing phone screens that are made from indium and tin, are better sited in Democratic Republic of Congo (DRC), Nigeria, Rwanda, Uganda and Burundi. Lithium, manganese, and colt for phone batteries which come from Zimbabwe ought to have value addition there; while copper, cobalt and lithium used for batteries manufacture to power electric vehicles has DRC as the world’s significant producer of copper and cobalt. Platinum used for jewellery, catalytic converters for vehicles, is equally sourced from South Africa, Ethiopia and Zimbabwe. Uranium is produced from Namibia, South Africa and Niger and can be utilised for electricity, defence, medical and industrial purposes within Africa. The leading producers of petroleum in Africa (Algeria, Angola and Nigeria) should be saturated with oil refineries for finished products refined from fossil fuels. Similar investment ideas on diamond could be sited in Botswana, South Africa, and DR Congo. These natural products should be utilised substantially within Africa for continental economic prosperity in the global market.

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