Shock Value

Shock Value

The Nigerian economy, like any other, experiences “shocks”— events or policy decisions that can send a ripple of changes through the system. This column zooms in on these ripples in a range of sectors to explore how and why these shocks matter.

***

What is wrong with importing toothpicks?

Ebehi Iyoha

Ebehi Iyoha

Ebehi is an avid reader seeking insights in unexpected places. Her research interests include economic development, political economy and trade.

By now, you have probably seen the clip of Nigeria’s Minister of Agriculture, Audu Ogbeh, complaining about how Nigerians import pizza from London on their smartphones. The claim may have been ludicrous, but the minister was echoing a much more popular sentiment: that Nigeria’s import obsession is bad for the economy.

The Nigerian government characterises our tendency to import as a disease or moral failing; by their logic, our taste for foreign goods leads us to waste our foreign exchange by supporting other economies to the detriment of our own.

But if importation is a disease, Nigeria is only mildly afflicted as we do not import much. In 2017, Nigeria ranked 58th out of 221 countries with $34.2 billion in imports, compared to China ($1.54 trillion) and South Africa (81.9 billion). Furthermore, we export more than we import: we’ve run a trade surplus in all but one year (2016) since 1995.

 

The Case for Trade

More importantly, buying goods and services from other countries is not a bad thing. Many Nigerians cook with palm oil, but how often do we harvest palm fruits and extract the oil ourselves? Instead, we make money by producing or selling other things, then buy palm oil with our earnings. It would be inefficient to make every single thing we use on a daily basis from scratch; trading with other people allows each person to specialise, produce what they do best, and purchase everything else from others.

...
Read More