Being a keynote address presented by ABIA STATE GOVERNOR, DR. OKEZIE IKPEAZU at the Public Policy Lecture series of Business Hallmark Newspapers at the Chattered Institute Of Bankers House, Victoria Island, Lagos on Thursday, August 24, 2017
It gives me great pleasure to be at this event today. I am always elated whenever I have an opportunity to share my perspective on issues of national relevance. First, as an academic naturally given to the interrogation of phenomena to understand their underlying effects and implications and also as a political leader with an eye on charting a positive path for the development of our collective space.
I am impressed with the quality of attendance at this event. In this hall, I see the people who are all involved in changing our narrative from an over-dependence on foreign consumption to a pivot towards our local peculiarities, goods and services. I commend the organizers of this event for attracting such quality participants at this forum.
I do believe that we have had enough conferences and seminars where enough solutions have been proffered for every conceivable malaise afflicting our country but I have accepted to be here today because the topic of discussion is one that is dear to me and one to which I have dedicated considerable time, passion, energy and resources to propagate and promote. I have walked my talk with great results to show for it and it is my belief that if we are to harken to the solutions I will outline hereunder, we will make great progress as a nation.
I will break this presentation down into segments for appreciation of the individual topic they seek to address and in the end, I will tie all the topics together to coalesce into a recommendation on the way forward. I invite you to lend me your ears for the next couple of minutes as we interrogate this topic.
1.1 What Is The Position Of The Nigerian Economy/Where Are We Today?
At the inception of the current national democratic dispensation in 2015, Nigeria was on its way into a recession. Being a monolithic economy dependent on sale of crude oil for the majority of our income, sharp decline in oil prices depleted our foreign reserves and we could no longer fund our huge imports. As a result of the economic downturn, we experienced the following challenges:
· Our factories started experiencing low production capacity because Raw Materials Importation could no longer be sustained.
· Companies began folding up largely because of low capacity utilization
· We were experiencing rapid job loss
· Low purchasing power of the Naira
· Foreign Reserves depleted such that we experienced foreign exchange scarcity
Of all the reasons that contributed to economic woes, perhaps the most profound amongst them is the one I describe as Consumer Complex Syndrome. This is a state of the consumer’s mind that consistently predisposes him to foreign products. These campaigns like the ‘Buy Made In Aba’, “Buy Naija”, “Proudly Aba”, etc are meant to instill pride in nationhood and to grow the Nigerian economy.
1.2.1 Some comparative data to support our assertions.
A recent report by the Nigerian Textile Manufacturers Association (NTMA) says that Nigerians spend over $4Billion (N1.3 Trillion) annually on the importation of Textile materials and already-made clothes. Transportation Minister, Rotimi Amaechi on his part during a recent interview put the amount spent importing agricultural products annually at $2B (N600M). Everything from eggs to vegetables are imported into Nigeria. About 30% of the animals slaughtered in Nigeria daily are imported from neighbouring countries. Minister of State for Trade and Investment, Hajiya Aisha Abubakar on her part, put the figure for general goods import into Nigeria at N7 Trillion Annualy.
1.2.2 The Theories of Consumer Complex Syndrome
a. Theory of Superiority:- This suggests that the consumers see non-local brands as a determinant of quality and brand desirability (Elliot & Cameron 1994). Some people believe that “if a white man did it, then it is good”. This theory is reported to hold sway mostly in developing economies (Okechukwu & Onyema, 1999)
b. Theory of Ethnocentrism:- This theory unearthed a psychological notion of pride in consumers, which leads them to prefer products and brands from their own country (Sharma et al, 1995). This construct has been identified as one of the significant factors that engendered China’s economic rise (Wayne, 2017).
c. Theory of Animosity:- In situations where no domestic substitutes exist to permit ethnocentrism, Watson and Wright (2000) discovered that consumers resort to foreign products from countries to which they have a cultural affinity. On the other hand, animosity (historical, political, cultural and other factors) against a country negates this preference.
d. Theory of Transition:- Non-utilitarian product attributes such as status display, are more prevalent in developing countries where interpersonal relationships are of prime importance. This is because of the economic transition, income disparities and high status mobility which find expression in the tendency to claim differential status through the exotic foreign brands one consumes (Batra et al, 2000). This construct applies to Nigeria where some people take pride in foreign exotic brands and make it a yardstick for status definition.
e. Theory of Missing Link – Consumption Complex:- Review of existing literature has little explanation for a situation where consumers have no objectively verifiable and consistent rationale for preferring foreign brands (irrespective of origin).
Consumption Complex Syndrome is put forth here to encapsulate this phenomenon. Consumption Complex appears to be an ideology formed by the combination of superiority theory and transition theory. Consumers who display this syndrome usually imagine that foreign brands are more qualitative and more durable and they often tend to brandish foreign products to show eminence or feel important. However, this is a myth. There is no objective truth in this belief
1.3 What has been the Implication of Dependence on Foreign Consumption on Our Economy?
A report released by Euromonitor indicates that since 2013, Nigeria has been the 2nd highest consumers of Champagne globally 2nd only to France where most of it is produced. We spend £50M (N25B) annually on Champagne importation. It will interest you to note that we consume more champagne than the USA, the United Kingdom and China. Imagine if we grew our Palmwine Industry and our local gin industry? Why are we importing bitters from Ghana? Don’t we have bitters here? Instead of chasing around our boys who make gins and tagging them illicit, shouldn’t we regularize them, encourage them and grant them appropriate licenses and permits to meet the local market? From paraga to shekpe, jiko to etetem (local gin), monkey tail to agbo, we give derogatory and condemnatory narratives to our own while promoting everything foreign. How do we expect to grow?
The same Euromonitor report places Nigerian tourists as the 4th biggest spenders in the United Kingdom spending an average of £500 in each shop they enter compared to the Britons themselves who spend £100 on each purchase. Only citizens of Arab nations shop more than us, Saudi and Emirati Royals. Perhaps you should compare their GDP with ours.
We place so much emphasis on ostentation, waste and living profligate and obscene lives. We knot ties and wear heavy woolen suits despite our humid and hot weather.
What happened to our own fabrics? They are light, they are free flowing, they suit our weather and our culture. Why do we jettison them?
The effects of our over-dependence on foreign goods are too numerous to mention but I will outline a few for the benefit of this discuss.
i. Loss of Jobs
When Nigerians continue to patronize foreign goods, the attendant effect is that there will be low capacity utilization and low-production in Nigerian companies and industries and when those industries can no longer sustain their operations, they close shop and disengage their workforce which are predominantly Nigerians. Loss of jobs is also directly intertwined with decreased productivity and capacity.
ii. Loss of Identity
Because we are overdependent on foreign goods, we soon begin to lose the essence of our own identity. You encounter a Nigerian and he is driving a foreign car, fully dressed in foreign clothes, serves you foreign food and even speaks in a foreign accent. What then makes him a Nigerian? Our young ones have even lost the knowledge of how to speak our languages. They were raised to speak only English language by Nigerian parents of the same ethnic background here in Nigeria but they were never taught their mother-tongue. They proudly proclaim that they don’t like eating Nigerian food and soon lose a taste for it. Our cusisines are gradually disappearing. Some of the staple food I grew up with in my native Obingwa village in Abia State are no longer available today. You cannot find akidi, ede, even Garri is going extinct.
iii. Harm to GDP
There is no way an import-dependent economy can grow its local economy. The bulk of the funds that should circulate locally to stimulate the economy are transferred to foreign producers for the importation of the goods being used locally. Traders in those foreign goods may post high turnovers but the bulk of the funds end up in foreign economies.
iv. Loss of confidence by local producers
When local producers watch daily as everyone ignores their products and embrace the foreign ones being sold by their counterparts, they soon lose confidence in their products and resort to affixing fake labels on their local products. They are robbed of the patent of their creation.
v. Weakening of our currency
Because of the huge demand placed on foreign exchange which is the trading currency for imports, the local currency is weakened and cannot grow or compete favourably with international currencies. The recent recession exposed the trouble with over-dependence on foreign goods as the Central Bank of Nigeria continued to shore up the Naira against the Dollar and introduced all kinds of measures to stem the free fall of the Naira.
vi. Heightened Unemployment, Youth Restiveness and Deviant Behaviour/High Rate of Crime in the Society
The more we are unable to patronize our own products, the more the companies producing these products are unable to retain their employees and this leads to loss of jobs and heightened unemployment which has as a major attendant effect, youth restiveness and deviant behaviour.
2.0 Tools that can be Deployed to Move The Nigerian Economy Out of Recession
i. Agriculture:- We need to pay more attention on growing food crops both for subsistent and local consumption and for Export.
ii. This will reduce FOREX demand on imported food items
iii. We need to stimulate local production through the use of our own Raw Materials
iv. We need to urgently Stabilize our Foreign Exchange Regime
v. We need to aggressively pursue Foreign Direct Investment
vi. We need to drastically increase expenditure on local infrastructure
vii. We need to encourage local manufacturing of goods
viii. We need to support the growth of new/novel aspects of our economy vis the creative industry (Nollywood, Music, Arts) and Informatiotion and Communications Technolgy (ICT) through the support of our emerging tech ecosystem.
2.1 Impact of the Promotion of the Made In Nigeria Campaign as a Panacea to Reverse the Tide of our Dwindling Economy
This campaign is a call for attitudinal change and a new approach to solving our problems. The impact, if properly implemented will lead to:
i. Job Creation
ii. Stimulation of an Export-Based Economy
iii. Strengthening of our Foreign Reserves and Growth of our GDP
iv. Maximization of our Tourism Potentials
v. Increased Self-Confidence in our local producers
vi Boost to the creativity of our local population due to increased patronage
vii. Reduced Crime Rate
2.2 When Did the Made In Nigeria Campaign Start & Why Has It Not Had the Desired Impact?
Renowned Journalist, Reuben Abati, in a recent article, reminds us that the conversation did not start today. “We must be reminded nonetheless, that this buy Nigeria campaign, or proudly Nigerian, as it was once called, has been promoted in one form or the other for more than 30 years. At a time, federal ministers chose to wear Ankara fabrics, which are supposed to be locally made, and at another time, the Federal Government only patronised Peugeot Motors, which then had a thriving car manufacturing company in Kaduna. Virtually every government has tried to promote Nigerian goods at one time or another”.
I wish to posit that the campaign as hitherto ran did not make the desired impact because we were never able to move it from the realm of sloganeering into the proud ownership of the Nigerian Brand. Many public officials indeed had the official Peugeot cars allocated to them by government but those cars were relegated to running domestic errands.
The officials preferred to use their imported luxury cars and there were no consequences for such acts of National sabotage.
2.3.1 Efforts of Past Governments to Promote Made In Nigeria and Problems Encountered
There have also been efforts by previous governments dating back several decades to promote local production by introducing restrictions on the importation of certain goods to assist local producers of the same goods to take control of the market but the bane of those policies have always been insincerity and corruption. The same goods for which import is restricted through formal channels end up having unrestricted leeway to be brought in informally thus ensuring sabotage of government genuine intentions.
In 1986, Government, through the Structural Adjustment Programme(SAP) had attempted to tackle the consumption-fuelled import-mania and smuggling . In the year 2004, Government introduced an Import Prohibition List including footwear hoping that it would lead to import substitution but the same officials of Government who were supposed to enforce the ban were all regularly using foreign products. Smuggling in of those products that were banned went on unabated with tacit support of the officials.
With quality upheld as the attractive pro-foreign attribute, investigation however showed that not only were the home-made shoes cheaper than the foreign ones, their quality was comparably high due to tropicalised finishing. Since most of the inputs used in making the local shoes were equally imported, this simply showed that the perceived superiority of foreign-made goods over Nigerian goods was simply a myth – merely a thing of the mindset and undeniably, a Consumer Complex Syndrome. Moreover, even if there is any merit in this belief that foreign goods are superior, the overriding need to grow the local economy, to create jobs and to share in the pride of Nationhood should suffice to warrant a rethink. This is the rationale behind the Made-In-Nigeria Campaign.
2.3.2 Efforts of the Federal Government at Reversing the Trend and Strengthening the Made In Nigeria Campaign·
President Muhammadu Buhari at the 22nd Nigerian Economic Summit in Abuja in 2016 called on Nigerians to change their habits by patronising made-in-Nigeria goods and services.He said increasing local production of goods and services would not only create jobs for the youths but move Nigeria from an import-based to an export-based economy.
· Executive Order No.3 has been signed by the Ag. President, Prof. Yemi Osinbajo mandating MDAs to exhaust local options before buying anything from abroad.
· The Senate President, Dr. Bukola Saraki, has launched the #MadeInNigeria Challenge, which is scheduled to run for an initial three months. It is meant to showcase local alternatives for imported goods. The finalists will be invited to a Made-in-Nigeria Roundtable at the Senate. Saraki was inspired to embrace the effort after encounters with local manufacturers and their products in Aba.
· The Federal Government has through the Inauguration of the Presidential Enabling Business Environment Council, committed to the removal of Bottle-necks in our local production process and increased support for the activities of SME/MSMEs leading to increased local manufacturing.
· Efforts are on-going to provide critical infrastructure and funding channels for the growth and development of the local production industry.
· In March 2016, the Chief of Air Staff, Air Marshall Sadique Abubakar, on behalf of the Nigerian Air Force, signed an MOU with Nnewi, Anambra State-based Innoson Vehicle Manufacturing Company (IVM) for the manufacture of certain parts for their Alpha Jets, which had been grounded due to lack of foreign exchange. The Army later followed suit, and ordered for 50,000 pairs of military boots from Aba shoe makers.
3.0 The Abia Example: What Are we Doing Differently?
I. Right from the period I was campaigning to be Governor of Abia State, I had already outlined the steps I would take to revive Aba and use it as a springboard for the revival of the economy of Abia State. Upon assumption of office, I took up the role of the Chief Brand Marketer of Made- in- Aba products. This was because I understood the comparative investment advantage of Abia State to include location in the middle of 7 States with a captive population of more than 20M people, 17 Railway Stations, proximity to 4 airports & home to the largest MSME hub in West Africa.
If I, as the Governor of Abia State, has consistently branded myself Proudly Made-in-Aba and consistently spoken about it with pride, it means that the self-worth of those that produce those things is improved one way or the other.
Beyond this, the value chain is already expanding. Two corps members, serving in Port Harcourt, who schooled in Abia, sent me a test message recently that they are now vendors of Made-in-Aba shoes and sandals in Port Harcourt. So, it has opened a line of trade for these young ones and I am going to encourage them with N250,000 each, to come to Aba and buy whatever they find that is in demand in Port Harcourt.
We are going to take deliberate steps to popularise made-in-Aba shoes in Lagos and if possible take it beyond the shores of Nigeria. Our determination and zeal to promote this comes from our heart. And that is one activity that will remain in the front burner of activities of this administration. We recently held a Made-In-Aba Fashion Show in Abuja where Aba Fashion Label Owners showcased their products to a hall full of cheering spectators. We are taking the campaign to New York next month. Our ultimate projection is that at some point, just as you have Louis Vuitton and Gucci Shops in Lagos, you will also have Fadamasi and Ngolongolo Shops in New York and Paris.
We have taken this campaign even to the World Bank. The last time I participated in a World Bank programme and I had the opportunity to speak, I spoke about the capacity and capabilities of our people to produce things.
We are proud owners of the Made In Nigeria Brand. We are not just sloganeering, we have imbibed the spirits and ethos into our everyday activities in the following ways:
ii. We are running a deep and wholistic campaign. From the wordings of our State Anthem, which is rendered in Igbo Language, to our greetings, our cuisines and the promotion of our heritage, we are deliberate in drilling the tenets of the campaign into our people and they have taken individual ownership of the campaign independent of government coercion.
iii. We have placed emphasis on our skills and innate abilities as tools for development. We have adopted the China Model of not only encouraging Aba producers to produce to the highest standard but we are also promoting Make In Abia which seeks to encourage industries to come and set up shop in Abia and produce even for export.
iv. Our survival strategy is organically linked with our culture and our people and what we already have in our hands. This is hinged on Exodus 4 V2 “And The Lord said to him (Moses), what is in thine hands? A Staff, He replied”. The Staff in our hands are our skills and enterprising spirit and we intend to use it to the maximum.
Some of our milestones thus far include:
i. Direct orders to the tune of N2B into Aba as a result of the Made In Aba Campaign. From the Armed Forces, Companies, IDPs, etc.
ii. Full embrace of the campaign by the Federal Government with the Vice President, Prof. Yemi Osinbajo leading the entire Heads of Agencies charged with trade promotion and MSME support to Aba to flag-off the MSME Clinic Initiative of the Federal Government.
iii. I have taken the campaign to major political and opinion leaders from Former President Olusegun Obasanjo to Senate President Bukola Saraki
iv. Improved GDP of Aba and Abia State as the campaign has seen to the spiking of commercial activities in all the value chains in the State.
v. Increased confidence of the producers in the marketability of their inventions and products as more and more people are now proud to identify with Made In Aba.
vi. During the tenure of Dr. Ngozi Okonjo-Iweala as Minister for Finance, the World Bank President, Mr. James Wolfensson visited Ariaria International Market, Aba and promised to assist us develop our infrastructure. Today, Abia State is on the verge of benefitting from a World Bank $200M Loan aimed at regenerating Aba and Abia State into a modern business environment where roads, electricity and security will become key enablers for the actualization of the Abia Dream.
3.1 What can we do better?
Since China performed best in terms of GDP growth and Power Generation numbers within the period under review, I will use them as an example. I know a plethora of published work exist on the China Model of Industrial Revolution but I will limit my treatise to practical experience and what I have seen the few times I have been to China.
In all of their quest for globalization and expansion, the Chinese have maintained their culture and identity and stubbornly stuck to their way of life. You attend lunch with the Chinese and they are serving you their food, in their plates and dishing style, with their cutlery and in most instances, the principal, although versed in English language, will speak in Chinese and allow someone else to interpret what he has said to you in English. The life expectancy of the Chinese is quite high and they embrace healthy lifestyles. It is not news that there is nothing you want to make that you cannot make in China. But you are aware that at some point, they closed their doors and said whoever wants the Chinese to use anything should come and make it in China while simultaneously encouraging Chinese manufacturers to replicate what they produce elsewhere locally.
Today, over 90% of goods used in China are produced locally while the country has gone on to become a global manufacturing powerhouse. For those who insist on importing, prohibitive import duties are slapped on the foreign goods and only brand puritans and rebels end up bothering with importation of goods.
There is no country that has managed to transform itself without adequate industrial growth or wholesome dependence on imported goods. Therefore, we need to empower local industries, and this could only be done by embracing locally made goods. Recent giant strides in the cement industry have sufficiently demonstrated that local industries could act as catalysts for economic growth if only the needed impetus for growth and development are put in place.
4.0 Conclusion and Recommendations
i. Make In Nigeria: I would recommend that we adopt the strategy employed by China at an epoch in their industrial drive. Government must make policies that insist that those who seek to sell in the Nigerian market, must set up their factories here in Nigeria. There is no doubt that we have all the raw materials that may be needed for the production of most of the finished goods we import from all over the world. Again, I quote Reuben Abati “If Toyota and Nissan want to sell cars in Nigeria, then they must produce the cars inside Nigeria and source their materials and labour majorly from here, and brand the vehicles Made in Nigeria and export them to other parts of the world.
The point is not about being local; it is about developing the capacity to turn Nigeria into a world-class production and economic centre”. I am aware that we are signatories to the World Trade Organisation [WTO] protocols which force us to open our markets to others, I am however convinced that there are enough provisions in the protocols to enable us undertake a measure of protection for our local industries for some years. This is the basis for the Made In Aba Season II Campaigned christened ‘Make In Aba’. Where we are encouraging local and foreign industries to come and set up manufacturing factories in our industrial zones.
Walk the Talk: Government must walk the talk and encourage local production by leading by example. All foods to be served at government events must be locally produced. Government officials should be encouraged to dress in local attire while gifts and souvenirs distributed at government events must be local products. If guests visit Government Houses in the North, let them be served with Fura da Nono and Tuwo with miyan kuka. When they go to the South West, let them be served Amala and Ewedu with Gbegiri. When they come to the South East, let us serve them akidi, ede and Egusi soup.
ii. Enforce Standards: The campaign should not just be an emotional one or hinged on blackmail. Those who patronize Mace In Nigeria should do so because they are good and can compete favourably with international alternatives and not out of any sense of pity or patriotism. To achieve this, governments at all levels must take steps to ensure that goods being produced anywhere in Nigeria are of top quality standard.
iii. Technical Education Training: We must as a matter of urgency, encourage our youths to embrace Technical and Vocational Education. These components need to be compulsorily thought in schools so that each graduating student has a skill-set that could lead to self-dependence and entrepreneurship. There is way too much emphasis on blue-collar jobs and this is a major cause of unemployment in the country. If more youths are encouraged and supported to learn skills, they will be meaningfully engaged and this will reduce the level of unemployment in the society.
iv. Fix Infrastructure: There is no gainsaying the fact that reliable levers of production are sine qua non to the stimulation of the local production economy. Factories need cheap, reliable and stable power to operate maximally and turn profits. Road and other infrastructure too. The cost of providing alternative infrastructure is cutting deep into the production cost of our local industries and hurting their continuous existence.
Mr. Chairman, Distinguished guests, I have no doubt that the Made In Nigeria Campaign is a vehicle with all the requirements to take us to our economic destination. I urge you to reflect on all these countries I listed earlier on which were at par and even less than Nigeria and where they all are today. If they did it with positive results, we have no excuses. Let us therefore purpose to walk the talk and move from sloganeering and lip service to actual implementation of the measures required to promote our local products. I have no doubt that when we do this, our economy will be the better for it.
I thank you all for listening and I wish you all the best.
Okezie Victor Ikpeazu, Ph.D