Nigeria’s Economic Competitiveness Challenge

The drastic measures needed to defend the Naira following a prolonged period of low oil prices have once again highlighted Nigeria’s poor economic competitiveness. Despite its enormous potential, Nigeria struggles to produce anything worth exporting beyond crude oil and gas. As a result, “Africa’s largest economy” remains deeply vulnerable to external shocks.
Although the CBN is doing its best to respond to the situation, the measures it has introduced cannot and should not be framed as a solution to Nigeria’s economic vulnerability.
It is our lack of economic competitiveness, rather than an “addiction to imports” that best explains why import restrictions are needed to “protect our economy” at this time. A more competitive economy would need no such protection. Its production base would view a weak local currency and low oil prices as favorable conditions – leveraging the relatively lower input costs to increase the competitiveness of its products in markets at home and abroad.
It is little surprise that the World Economic Forum ranked Nigeria 127th out of the 144 countries covered by its Global Competitiveness Report for 2014-2015. A breakdown of the assessment of Nigeria by the same report ranked Nigeria 140 out of 144 in the basic requirements for national competitiveness. One of those basic requirements was primary education and health where Nigeria, perhaps most alarmingly, was ranked 143 out of 144 countries (only better than Chad).
It follows that an improvement in our national competitiveness will not arise from simply restricting what the local market can or cannot consume. An improvement will only result from a set of institutions, policies, and factors deliberately combined with the intent to increase the level of our productivity. It is this increased productivity that will lead to prosperity.
We note that Nigeria has made several attempts in the past to improve its economic competitiveness. These efforts have failed because government focused primarily on attracting foreign investment. A more effective approach would have focused on developing local capacity to produce what domestic and export markets are willing to consume. This is the approach we propose.
The election of President Buhari presents an opportunity for Nigeria to reposition itself on a path towards true prosperity. Taking advantage of this opportunity requires the President not only to articulate a bold vision that captures our competitiveness aspirations, but to also show leadership in galvanizing relevant stakeholders around a programme designed to bring the vision to reality.
Such a programme, to succeed, must recognize how gaps in areas like basic education and infrastructure negatively impact on our collective productivity and define strategies to address these gaps.
Without such a holistic approach, any attempts to fix the economy will be papering over the cracks and postponing the evil day.

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