₦airaland Forum

IbeOkehie:
I think the major reason Nigeria doesn't process raw materials is the overvalued naira.

I was shocked to learn some years ago that Nigerian cashew nuts are shipped to Vietnam and some other Asian countries for processing BEFORE being exported to Europe.

I was shocked. Currency control is destructive.

Have a good day.

You are right to point out that the overvalued naira is a major reason why Nigeria does not process its raw materials. When the naira is overvalued, it makes imported goods cheaper than locally produced goods. This makes it more profitable for businesses to import processed goods than to process raw materials locally.

The cashew nut example you gave is a perfect illustration of this problem. Cashew nuts are a major export crop for Nigeria, but most of the processing is done in other countries. This is because the naira is overvalued, making it cheaper to import processed cashew nuts than to process them locally.

Currency control can also be destructive. When the government controls the exchange rate of the currency, it can make it difficult for businesses to import the goods and services they need to operate. This can also make it difficult for businesses to export their products, as they may not be able to get a fair price for their goods in foreign markets.

The government of Nigeria has taken some steps to address the problem of overvalued naira. In 2016, the government floated the naira, which means that the exchange rate is now determined by market forces. This has made the naira more competitive, but it has also led to higher inflation.

The government is also trying to promote the processing of raw materials in Nigeria. In 2019, the government launched the National Industrial Revolution Plan (NIRP), which includes a number of initiatives aimed at promoting industrialization. The NIRP includes a focus on processing raw materials, as well as other measures such as improving infrastructure and providing tax incentives for businesses.

It will take time for these measures to have an impact, but they are a step in the right direction. If the government can successfully address the problem of overvalued naira and promote the processing of raw materials, it will help to create jobs and boost economic growth in Nigeria.

Here is a link to allexamnotes.com: https://www.allexamnotes.com/tag/business/ for more information on this topic.