From Your Wallet to the Community: How ‘Buying Naija’ helps you.

It is no secret that the Nigerian economy conducts an import-heavy system that allows the nation to remain vulnerable to foreign political and economic powers. According to the National Bureau of Statistics, the country’s largest imports as at quarter 1 of 2024 were Motor Spirit Ordinary, Gas Oil, Drum wheat and Cane sugar for sugar refinery. In addition, the nation’s top trading partner on the import side was China followed by India; two countries that have been able to grow their economy through massive production and exportation activity. Looking at these two countries, it is easy to see the benefits of encouraging an export-led economy: from increased global competitiveness to greater currency control and better diversification of income.

Another characteristic that these two countries share is that their citizens prefer to purchase domestically produced goods. In a survey conducted by the Global Times Research Center in 2021, the conclusions showed that Chinese people generally prefer to buy local brands over foreign one’s; in fact, 75% of respondents agreed that national products could fully or partially replace western products. ?In another survey conducted in India, it was revealed that 58% of Indians have reduced their purchase of ‘Made in China’ products choosing to opt for Indian alternatives. Hence, today’s article intends discuss reasons why the phrase “Made in Nigeria” should be your new favorite shopping mantra.

1.?Growing the Nigerian Economy

If I may ask, what is your favorite car brand? Is it Mercedes, Toyota, Bentley, or Porsche? How about Innoson Vehicles or perhaps, Nord? Studies show that purchasing domestic products help to boost the economy. It does this by providing more job opportunities, as well, as creating room for technological advancement and innovation. Breaking it down, an increase in the employed populace would lead to a rise in consumer market and economic activity. This increased activity within various sectors would lead to improvements in those industries allowing the domestically made items to become globally competitive in the world market. With time, the greater international market activity could lead to an appreciation of Nigeria’s currency, the Naira. An appreciation of the Naira means that there is an increased demand globally for Nigerian products allowing Nigerian companies to grow even further; thus, perpetuating a chain reaction of high growth.

2.?Strong and Sustainable Trade Balances

According to the National Bureau of Statistics, the merchandise trade balance for Q1 of 2024 stood positive at ?6,524.13 billion. A positive trade balance means that the country engages in more exports than imports. This is seemingly good news as it shows an improvement from ?927.16 billion in Q1 of 2023. However, it is important to note that 85.93% of our exports come from the trade of 1 resource - petroleum oil.

Nigeria’s focus on crude oil as the primary source of export income is a good example of what is often referred to as the Dutch disease; further explained in the next point. Because majority of the country’s export income originates from 1 industry, it is safe to say that the current trade surplus is a weak indicator of economic strength in Nigeria. It is not enough to have a trade surplus; we must ask ourselves, “is this surplus strong and sustainable?” In order to encourage a stronger economic trade balance, Nigerians must make a conscious effort to support other sectors of industry in Nigeria; this creates room for improvement and global competitiveness.

3.?Improved Diversification of Income

As discussed previously, one of Nigeria’s primary exports include petroleum oil, however, other common exports include electrical energy (operational heading), Soya bean flour and Urea. Out of these items, electrical energy takes the largest share; accounting for a 4.69% of the country’s total exports. Soya bean four and Urea each take a share of 0.74% and 2.35% respectively. Encouraging the growth of other export industries could help in the fight against Dutch Disease. This refers to a situation where the production and discovery of a valuable natural resource may lead to the deterioration of the nation’s broader economy. It is undoubtedly risky for a nation to be over-reliant on 1 sector of the economy; this is because there exists a high risk of contamination such that a crisis in the over-reliant sector could lead to a breakdown of systems in other domestic industries. This is where ‘buying naija’ comes in; supporting the production of domestically produced goods, allows growing industries to expand thus proliferating the chain reaction of high growth that was discussed in the first point.

?Conclusion

Although Nigeria was in a trade surplus in Q1 of 2024; this is a bitter-sweet realization as there remains plenty room for improvement through the diversification of export goods. Nigerians can contribute to the diversification of exports by making an intentional effort to patronize domestic producers. This is not to say that foreign or imported goods are inherently bad, rather, the article serves to highlight the importance of finding a strong and sustainable balance of trade. Nigeria must work on developing both its absolute and comparative advantages in other areas of production outside of petroleum trade; and the citizens must play their part by patronizing more domestically produced goods whenever possible.

Sources

• FTS_Q1_2024.pdf (nigerianstat.gov.ng)
• 58% of Indians cut ‘Made in China’ purchases across products in 2022 - The Tribune (tribuneindia.com)
• Chinese consumers start to embrace domestic brands: survey - Global Times