Most or the commerce in Nigeria is focused on import and then distribution. Even the manufacturers have to import a lot of inputs. I remember a project with a bank where we were looking to digitize most of the commercial flows and I realized that import is still a very big part.
A country that depends so much on importation for everything will never really grow. Most people import because the local inputs are not there or are not at scale. I remember Unilever with palm oil in the 90s. They could take up all of Okomu’s production and still need more.
Okomu could not afford to have only one buyer and that created the allocation racket. Many people became rich from just buying from Okomu and selling to Unilever. That increased the cost for Unilever and hence the final cost of product to consumer. That cost became uncompetitive.
The importer of consumer goods could get them to sell below Unilever prices and make a killing. We now had two sets of traders. The middlemen to manufacturers and the importers. Both creating more problems for manufacturing. It became unattractive to many.
I remember when the Calabar free trade zone was created, it amazed me how much value people could add on their products from much cheaper inputs that were imported without tarrifs. I kept wondering why we never focused on developing local sourcing in Nigeria?
The answer was research and technology funding was largely nonexistent. Even when you manage to scale that hurdle, capital to fund ventures was also expensive or not even there. Most people ended up becoming traders.
What we are praising as ”technology innovation” today in Nigeria is still largely serving trading and not creating enough value to change this deficit. This is why I am happy that someone like Sim Shagaya left eCommerce (serving traders) for education. Education is very important.
The first thing we did to destroy Nigeria’s competitiveness was the over-centralization of governance. Even at each state and LGA level, we still have a replica of the military regime structures of command and control. It meant that sensible policies were not being made.
My business school professor in Macro Economics (Prof Okojie) in 1993 had written an article on the dangers of a mono-product economy without focusing on other sectors. The centralized government in Nigeria became drunk on cheap money from crude oil sales. So bad we import fuel.
Fuel importation became another major source of creating ”low quality” millionaires and billionaires (thanks to DoubleEph- Feyi Fawehinmi) and we all basked in this illusion of economic growth without any investments made in education, research and innovation. Everyone was a trader.
That trading created a bubble without the corresponding infrastructure investments. We were putting money in the wrong things and are now paying for it. Manufacturing was hit again by the fact that it didn’t make sense for you to produce with a high cost of getting to the market.
At every stage of the nation’s growth in population, the infrastructure deteriorated. I was surprised to still see Abacha PTF signs on a road in Ondo state last decade. Abacha PTF constructed the road to Okomu to enable the company grow as more produce could be lifted to markets.
I keep saying that ”Nigeria is not a real place” as many parts of Nigeria have been forgotten and ignored. People are isolated and fend for themselves. They create their own local way of doing things and depend totally on each other.
This is like going back to the stone age.
We had a Clubhouse conversation yesterday on ”Mekunu Fintech” and it started with the talk of phones for poor people and products startups can build on them. I mentioned that most of Africa is still off-grid and without electricity. They are those isolated communities.
Until we leave this mentality of ”helping the poor” and realize that we are helping ourselves by creating new markets from infrastructure, there will not be progress. I also said something there yesterday which I rarely say publicly. Telcos had no choice but to invest heavily.
They had a $285m hole from licensing that they had to cover and they had to spend heavily to create markets before covering the hole. Maybe that is what we need to start looking at. Nigeria can only make progress from concessions and less governance.
Commission large parts of the economy to capitalists at great cost so they will invest. The real problem we have are mekunu capitalists and traders. We are also now having mekunu innovators and mekunu startups. Until we start doing things very big, there will be no hope.
See what serious investment does as compared to mekunu or sachet investments? Telcos invested monkey and ran more efficient businesses while improving infrastructure. Efosa Ojomo and team could have just used them as an example alone in ”prosperity paradox” and be accurate.
Sadly, those investments will come only if people trust the government to keep their word. Despite all what they have tried to do to MTN in this regime, they have thrived and saved us from our selves. That still won’t make others comfortable.
Nigeria has to change.