Economy

Why Restricting FX For Food Import is a Misplaced Priority

When you look at the size of Nigeria’s neighbours, you wonder what all the fuss is about. You worry about smuggling but look at the total size of Benin’s imports – ridiculously low. Others too.

How are these tiny, poor countries preventing Nigeria’s industrialisation?

I deliberately included the last column to show that as a share of import to GDP, Nigeria’s imports are very low. SSA is around 21%. Benin is outperforming, but even if you look at the gap (the excess consumption in Benin which is flowing to Nigeria), it is ridiculously tiny.

This is the simple calculation. If you compare with SSA (SSA imports/SSA GDP), Benin is the only country that is importing well above normal. Even then, the excess is only $1.1bn.

Nigeria has a shortage of imports to the tune of $38.6bn – please don’t let Emefiele see this.

What if our neighbours import just as much as we do? In this case, you find that the excess import from the four countries is $4.75bn. If all that flows into Nigeria, it raises our import to GDP ratio by only 1.1% to 13.4%.

If this tiny amount ($4.75bn or 1.1% of GDP) can make such a difference in consumer prices, then you wonder where the Nigerian economy is at. This means you don’t actually need a lot of import to support cheaper prices for consumers.

Of course, this trade is not only food. It makes you wonder why we are so particular about restricting FX for food imports or blocking food trade.

Nigeria and its neighbours are poor. Nigeria doesn’t import enough. Neighbours are too poor to impede industrialization in Nigeria.

And like I have said: “What we import (at least what is captured officially) is not seedless grapes, toothpick and pizza. Most of our imports are for further production, which is great. Others are goods we lack the capacity to produce (processed fuel, cars etc).”

See you in 2021.

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