₦airaland Forum

GoldHorse:
Blue3k

If you are into production or manufacturing you won't write all the things you wrote above

grandstar:
This so called economist must have been solely educated I'm Nigeria because most of them just have some head knowledge. They are the equivalent of the computer science graduates from the nation's public universities with little knowledge about computing. Just theory and book work

How can an economist say that the country is spending half of the budget deficit on imported textiles? What correlation does that have? The government isn't the one spending the money on importing the textiles. Textile importers simply source the forex from the CBN and they pay for it! They didn't dash them this money or lent it to them.

If I sell you $500,000 at 360 to a $1 and you pay me 180m and you use the $500,000 to import textiles and the ship carrying it capsizes and you lose all stock, that one no concern me. I don collect my 180m

This ban from the CBN will simply put massive pressure on the black market and there'll be a massive gap between it and the investor window down for forex.

A government trying to fight corruption should do it's utmost for all business to be done above ground and not below it where corruption is bound to thrive.

Also,there's nothing wrong in importing textiles. How will the textile factories be competitive when there's inadequate power and high lending rates. This is doomed to fail from the word go. The Bank of Industry lent them 200b in the past which I'm sure a good chunk we t down the drain

It's time government focused on an export or perish mentality because that's the proper way to industrialise and not through import substitution which forces you to pour resources on areas lack comparative advantage.

What kind of third world country is this that does not have a textile sector that is a massive exporter of textiles and garments? If the nation has failed in that, it shows there are deep-rooted problems why the textile industry is dormant here.


to promote importation and exportation which one is more important to you. Nigeria dont produce dollars they source for it, and if the country spent the dollars on commodities or goods that she can produce, of what economics importance is that?

this is in a way of making the textile sector attractive for investors to come in ( both local and foreign)

mind you, government can not create all the necessary jobs that we need rather their job is to create the enabling environment for private investors to strive, monitor/ regulate. this move is commendable though it will be tough at the beginning.

urahara:
The problem with Nigeria is that it's infant industries have not grown up since 1960.

jayfolarin:
Which is because Nigerian leaders (willingly or ignorantly) bought into the free-market storyline of the west! Local industries weren't allowed to grow and Nigerians were bombarded with foreign goods right, left and centre!

jayfolarin:
Which is because Nigerian leaders (willingly or ignorantly) bought into the free-market storyline of the west! Local industries weren't allowed to grow and Nigerians were bombarded with foreign goods right, left and centre!

GidiWoodsMan:
How can local industries be competitive without regular power? Do you have any sense at all?

GrossPrice:
How has MTN, GLO, Airtel, DSTV, GOTV competed without regular power?

urahara:
Nope , it's because the s.a.p required them to open up and the infant industries which were never ready to be competitive from day one were destroyed .

Sagay212:
Before telling them to come open factories here, do you have steady power and good roads plus security? Or you want them to come and spend more money running generators and risking their lives? Why not tell your leaders to stop travelling abroad for treatment and shopping?

Why not tell them to stop sponsoring people to Mecca or Jerusalem to go and pray to God as if God is not in Nigeria.

StevenOba:
Steady power is not a criteria . Various FMCG's are running a successful business in Nigeria and are making good money. To run an industry such as textile you definitely can't depend only on PHCN/NEPA or whatever it's called. You can as well tell them too abi no be Nigerian you be too...when we all keep telling them and voting them out perhaps that change we truly seek will come. But my initial point was this is a good omen for the textile industry it's about time....or wouldn't you agree sir?

Tianamen1:
Of the original 41 banned items, how many have Nigerians started producing locally?

Governments everywhere are the worst allocators of resources. Once they start choosing to give special interest rates to industries, corruption will certainly follow. In fact, only countries like China where people are killed for corruption can such policies as these work.

Grandstar, a focus on exports will also not work the same way you now realise import substitution does not work.

Any form of government intervention to spur a specific sector hardly ever works because people are inherently corrupt.

When the US Economy was collapsing in 2008, the federal reserve reduced interest rates to close to zero percent to help spur lending but the banks still refused to lend money out. They simply used the money to speculate in the markets and to buy back their stocks. This created an illusion of a recovery in the US economy however, common Americans did not benefit in anyway so inequality grew, and social unrest is currently at the highest levels in decades.

In the Eurozone, the biggest cost to Britain is payments to subsidize farmers in other European countries. Apart from issues with immigration, this is the biggest reason for Brexit.

A government's role in an economy should not go beyond providing Education, healthcare, security and Law and order. In order to achieve these things, infrastructure such as electricity, roads, transportation systems, communication technology, public water works, etc will have to be developed. In most climes, their central banks only have one purpose which is to fight inflation.

How much did our government invest in our musicians and our film industry, yet today both are robust and are contributing to our GDP and also creating lots of employment.

Our fight should be for a reduced civil service and an increase in spending on public goods such as education as earlier stated.

Sagay212:
Unfortunately you cannot force anybody to come have their factories in the country. If it was profitable and wise to do, I am very sure some of these foreign brands would have come open their factories here. If you think steady power is not criteria to you becaue yiu are used to naija style, it is an important criteria to others. If dem tell you make you buy innoson now, you no go gree. There is no need for us to do gra gra. We need to put things in place and move gradually. Even when we start producing enough, we can't force people to buy what they don't like especially if the quality is below par.

lastempero:
At least I have seen someone that understand what we are talking about here,I have first hand information on that of cement, our people at the helm of affair don't factor all that you mentioned above into consideration b4 taking their backward decision.

jomoh:
Lol

Your analysis didn’t give any solution that can be considered better than that of the federal government. You’re just using your knowledge of the economy of foreign countries to bamboozle the obvious majority of economic illiterates on this site.

Remind me again the difference between what the federal government has done and what trump is doing with China presently?


At the bold paragraph. I don’t know how old you were between 2001-2007 but I remember the federal government did the same thing in our entertainment industry.

What did they do?

Ban all radio and TV stations from playing Foreign musics and films.

The result is what we see today.

Same thing was done on football but as we all know, the ROI on football is quite low especially in a country like nigeria where we only have the talents but lack the expertise to nurture talents.


Same thing was done partially in the auto industry by GEJ but failed because there was no steel industry to service the auto makers.

jomoh:
This is why it is good to stay in GNS 101 classes

Compare the two bold statements and you will understand the point of that economist




I know you might still not understand, so let me help you.

In the larger context, that man was referring to the whole “country” literarily(meaning the general populace or the textile importers) as against your own interpretation of referring to the “country” as the federal government.



Exactly. No Nigerian bank will give you loan when they know you have foeriegn competetors that can put you out of business.

This is another good develpopment to boost our textile industry.


Every government policy must have casualties but as long as its for the long term good of the country’s economy then it is welcome.

Tianamen1:
I am going to give you 5 names of different influential men in global economics. Google them a learn what the true reason for the crisis America is facing and not the simplistic view you and Trump share

Ray Dalio
Billionaire trader

Tom piketty
Best selling Author of book about capitalism

Paul Krugman
2008 Nobel prize winner in Economics

Peter Schiff
Popular media personality, and strong proponent of the Austrian School of thought

Jeff gundlach, the bond king, American investor.

Things that seem obvious are not always as they seem. There are always multiple stories.

Import subtracted from exports is only 1 component of GDP. A country can be very rich having fewer exports than imports if it meets most of its people's needs.
Have a great day

grandstar:
Cc: Tianamen1

The game changer for the Nigerian movie was the film "Living in bondage".produced in 1992/93. That was the start of Nollywood. Google "first Nigerian movie". It wasn't any so called ban.

Everyone of that generation knew where he or she was when they first watched it. I watched it in a friend's house in Ilupeju in 1993.

Trump's stiff action against China and other countries has been condemned by American economists. The trade war he is waging is against China's unfair trade policies. He wants China to open up it's economy and end unfair subsidies to state owned enterprises. Anyway, his policies lack the backing of American economist and may lead to a slowdown in world growth

Protection has failed miserably to industrialise the country. Manufacturing accounts for less than 10% of GDP, which is disappointing instead of at least 20%.

The definition of madness is to keep doing the same thing and expecting a different results.

The government needs new policies to spur manufacturing such as cheap and abundant credit, low corporate taxes, export processing zones which huge incentives for manufacturers to set up shop, improve power supply etc.

Protectionism has simply made the country a smugglers paradise. Imports are also good for you and the best economists in the world are champions of free trade.

grandstar:
What good has import bans had on the manufacturing sector. Very little. Manufacturing accounts for less than 10% of GDP

While countries like Bangladesh and Pakistan are increasing their exports of textiles and garments, Nigeria is stuck in the stone age.

Until the country opens it's borders and deal with the manufacturing sector the way it should, it will remain in the state it is today.

jomoh:
The same good it has had on dangote cement, sugar, salt etc when he was the only company allowed to sell the last two(sugar and salt).

The same good that happened to the music industry when a ban was placed on foreign musics by local radio and tv stations.

The same good that is presently happening to Rice production in the country.



This last two paragraphs are contradictory and it shows your ignorance about the economics of import and export viz-a-viz manufacturing and production. If the likes of turkey and Bangladesh, Pakistan opened their borders to all sorts of textiles when they were growing their industries do you think they will be where they are?

How can you aim to produce and export when your borders are open to foreign superior products?

Who will buy an Aba made bag when you can easily get a better China made at a cheaper price?

This is the same kind of Skcepticism that made you guys shout to high heavens when the ban was placed on rice, toothpick, pencil etc but today, we now have a pencil making factory in Akwa Ibom, a toothpick factory somewhere in the east and we are currently the largest rice producer in Africa.

That is what protectionism does.

Stop studying the western economists who’s stock in trade is to keep third world countries perpetually poor in other for their factories to remain in business. This is reality right here and the Nigerian economists who are quite learned than you and I have spoken.

grandstar:
Can you provide some firsthand jist? Have always been curious to know how much damage the ban on cement importation caused

lastempero:
First the price of cement skyrocketed by more than 100% and that affected the construction sector,as you can see alot of abandoned project littered everywhere and I am not talking about thousands of jobs lost.iam a registered distributor with ibeto,u need to see how many distributors and sub distributors that started their life afresh because of the useless policy and no mechanism to control the pricing,ibeto told us that the final production price of a cement is less than 500 but the greedy ones drove ibeto out of the business because he is always crashing d price of cement and remember this guy pays a huge sum of money as tax,all those are gone, right now construction sector is half dead.

grandstar:
What do you mean stop studying western economists who's stock in trade is to keep third world countries perpetually poor? This is preposterous! That is completely wrong!

The US and EU gives duty free access to their economies. We can export most goods duty free. This is the biggest proof that they have your interest at heart. If Nigeria grabbed it with both hands it would be a prosperous nation.

The same ideas these Western economist promote are the same one's the Soludo's and Utomi's promote. Let's proceed however to other issues

The ban on cement led to Nigerians paying through the nose for cement and made Dangote a billionaire. Nigeria still massively imports sugar and I'm sure the average consumer is paying a premium for sugar now. Import bans most often simply increases the local price for the consumer. It is regressive in nature

Also research as shown that more jobs are lost than are gained with protectionism. The ban on cement which made cement very expensive adversely affected the amount of property that could have been built. For every job Dangote created in his factories I'm sure nothing less than 10 were lost in the larger economy.

The ban on rice is the most preposterous. The country has no comparative advantage whatsoever in rice production and that's why the country remained a net importer of large quantities of rice. For Nigeria to produce rice, sky high import duty has to be placed on it so that othewrwise cheaper imported rice is no longer affordable and people now have no choice to buy the really expensive local equivalent. Consumers are being ripped off. And for you info about 2m tons of rice is smuggled from Benin Republic and Cameroon into Nigeria annually. The government is losing huge revenue.

Many manufacturers simply left the country when some bans were introduced. The ban on access to forex from the Central Bank for importation of palm oil for instance chased some manufacturers from here to Ghana. These bans destroy critical supply chains for their business.

Turkey by the way is into customs union with the EU. That means goods from the EU enter it duty free yet its' textile and shoe industry
are booming.

You keep promoting redundant policies that has kept the country's manufacturing sector backwards. The best economist will lecture you that free trade is it. Protectionism simply forces you to pour resources into areas you have no comparative advantage in.

Ghana with an economy far more open to trade than Nigeria has a capacity utilisation of 65.8% compared to Nigeria's 54.8%. Benin Republic with it's open borders was 62.3%. So a countries manufacturing sector can still thrive with open trade.

But let me here focus on what matters.

A country does best when it focuses resources in areas it has comparative advantage. Let's take crude oil for instance.

What made Nigeria prosperous at one time was crude oil. It's something we have a natural comparative advantage in as it is found on the country's soil. Look at how much it has benefited the country. Let's go a bit further

Imagine if Nigeria fully developed its' oil industry. Imagine if the country was refining at least 3m barrels of crude oil daily, was the largest petrochemical producer in Africa as well as gas and fertilizer. Its oil services industry was also the most advanced in Africa and was also the largest producer and exporter of electricity in Africa. Now how big do you think the economy would be? Probably about 4-6 times it's present size.

Now imagine if Nigeria had 5 or 6 sectors like that? It would become a rich country! That is what makes country's prosperous.

Germany the largest exporter in Europe dominates many niches and sub-niches. You'd find a German Mittelsand controlling half the worlds supply of a certain product. And there are hundreds of companies like that in Germany.

It is time Nigeria focuses resources on areas it has comparative advantage. It has been said Nigeria could earn as high as $2b from the export of Shea butter for instance. This can easily pay for the imports of rice a product the country has no comparative advantage in.

What of snails? I'm sure the country can earn up to a $1bn from export of snails if not more. China will be a huge market for it. If the New Zealanders could teach the world to eat the kiwi fruit the same can be done with snails which are very healthy!

Protectionism has scored an F9 in industrialisng the country and any promotion of it in any guise will continue to get the same lamentable results.

urahara:
What a really beautiful answer , thank you so much !!!!