By Ndubuisi Ekekwe
Yes, Nigeria’s problem is that we do not import a lot. And that means our solution will not come by restricting imports. For Naira to improve, Nigeria needs to import more – and importantly import the RIGHT things.
As I have noted, in 2022, South Korea’s total imports were $808.09 billion while Nigeria did about $60.35 billion for goods; South Korea is about 25% of Nigeria’s population. But if you check, South Korea imports were largely machinery, equipment, etc for production, while Nigeria’s were for finished goods. Also, in 2022, goods worth around $136.21 billion were imported to South Africa, with many of those industrial equipment. Check – more imports have not destroyed South Africa and South Korea’s currencies!
Imagine if our total imports increase to $200 billion where 90% are for equipment, machinery, etc for productive factories (modern and old), would that not be great? I am yet to see any data which shows that Nigeria is importing a lot, in the actual sense. And that is the challenge for the Central Bank of Nigeria. Yes, the $100, $300, etc young people are sending for virtual wallets, songs, music, etc mean nothing if Nigeria can develop a production-first strategy, over the current finance-first strategy.
We need to import more and if we do, we will likely become a hub to serve West Africa with finished goods, and that means export more. Push the nation through policy to redesign the architecture of our economy, out of the SAP mindset of the late 1980s, where we created finance houses and banks, over building and running factories.
Yes, we need to import more but the RIGHT things, and we need policies to make that happen. I am yet to read what the Science & Tech minister is offering during this FX crisis. His or her insights will be as useful as what the central bank governor is doing.
Comment on Feed: Nigeria’s imports should increase to $200 billion? A country with less than $500 billion balance sheet size with FX reserves that hardly click $40 billion? This country cannot achieve that with its economic structure and base infrastructure level.
My Response: Import of machinery is not tied to national reserves. That is connected with investments. Nigeria’s economy is bigger than South Africa’s but it imports 2X. If you have a semiconductor factory, a big refinery, 2 deep seaports, etc . 10 great projects, your import could hit $100B even though your reserves remain unchanged.
Tekedia
