Removal of Import Restrictions should not be a Priority. At least in the face of dearth of foreign exchange and when moving from consumption to production is the mantra.
It was recently reported by a section of the media that the Labour Party’s Presidential Candidate, Peter Obi has promised to remove import restrictions, which to many sounds like a good idea to solve Nigeria’s current economic challenges.
Source: Google
Alluding to such a report therefore, it would be necessary to educate us a bit on the disadvantages of the alleged proposition of Mr. Obi.
First and foremost, importation is not cheap. It is very expensive and we pay for it with our hard-earned Forex.
Currently, our major export and Forex earner is crude oil. Sadly, we barely produce about 1m barrels daily and this is not enough to meet our importation bills. As a result, we must produce some of the things we need locally in order to conserve Forex for something more productive.
Using the available Forex to import items like rice, chicken, turkey, vegetable oil, canned drinks, bagged cement, plastics, footwear, etc is wasteful spending that will add nothing to the economy because we can produce all these things locally.
It will lead to dumping and massive job loss. The policy if implemented will erode the huge gains we’ve made in rice production, cement production, fruit juice production, poultry farming etc.
We will only succeed in importing unemployment and higher inflation rates. And yes, these items will not be any cheaper because of the high taxes that will be imposed on them.
Again, the effect on the Naira would be catastrophic. With current restrictions, CBN is struggling to defend the Naira. As of today, $1 now exchange for about N700. With unrestricted Importation of everything, we might start exchanging $1 to about N5,000 in less than a year of the implementation of the policy.
What we need to do to revive the economy is to do everything possible to stop the importation of refined fuel. Get Dangote refinery to start producing and reviving our refinery and get them working at full capacity. In addition, encourage more modular refineries to come on board.
To this, we must stop importing refined petroleum products as a first step to reviving the economy once we achieve self-sufficiency in petroleum products refining, we can channel our Forex savings to build the much-needed infrastructures. Power, roads, rails, bridges, dams, etc. Without these critical infrastructures, we cannot develop our local manufacturing sectors and without local manufacturing, we won’t get out of the current economic crisis.
