SIMON KOLAWOLE: Look Very Well before You Leap

Simon Kolawole Live!: By Simon Kolawole, Email: simon.kolawole@thisdaylive.com

Can you believe it? Some readers actually thought I was taking exaggeration to a new dimension when I painted the scenario in the event of a debilitating crash in crude oil prices. But they didn’t need to look too far ­– it has happened before, and nothing says it can’t happen again. If you recall, the government of President Shehu Shagari ran into a serious fiscal crisis in 1982-83 following a dip in oil prices. Our foreign reserves were thrown at solving the problem, all no to avail. Civil servants were owed salaries for months. Projects were abandoned. Retrenchment began to take a prominent position in our vocabulary. Importation was stifled. Prices of food and essential commodities went haywire.

In my village, in the old Kwara State then, we had a song for the “austerity measures” adopted by Shagari. It went thus: “Kilo mu gari won? Shagari lo mu gari won...” (roughly translating to: “Why is food unaffordable? It is because of Shagari’s poor management...”) Nigerians thought Shagari was the problem, and when Major General Muhammadu Buhari overthrew him on the last day of 1983, we trooped to the streets in celebration. But the economy did not get better. General Ibrahim Babangida eventually threw out Buhari – but the problem remained. Alas, the issue was not just the man in power but a fundamentally defective economic structure that has not been rectified till this day.

When an economy is built on a commodity whose fortunes are as unpredictable as crude oil, the country can always be tossed to and fro by every wind of economic doctrine. The era our economy was real was when agriculture was the mainstay. Unfortunately, it takes a lot of thinking and effort to develop agriculture as a base for industry and development, compared to the easy flow of petrodollars that came with the oil boom. President Goodluck Jonathan has spoken a lot about the need to focus our energies on agriculture. Ministers are reciting this like nursery rhyme. Governors have been quoting it like a proverb. At the level of talking, we have done extremely well.

But turning talk to action is where the pitfalls lie. In our attempt to develop agriculture, encourage local investment, reduce dependence on food imports and ultimately become a net exporter, we must proceed with caution. There is a tendency to go overboard with some policies which, on the surface, look very attractive, but a closer look only reveals that we might end up shooting ourselves in the foot. I will discuss two of such policies today. The first is export expansion grant, otherwise known as EEG, which granted concessions to companies engaged in agriculture for export. It was designed to diversify the source of forex inflow into the economy, and it seems to have been working.  When EEG was introduced by the Obasanjo government in 2003, our yearly non-oil exports amounted to merely $600 million. Today, it is in excess of $2 billion.

This is not an extraordinary figure but, at least, employment has grown in agriculture over the same period; forex earnings have more than tripled; and value has been added to local raw materials. Now that government wants to review the EEG in a way that may end up hurting the very purpose for which it was created, it must do it with caution. No, I am not against reviewing policies from time to time. But if we introduce drastic, tough pre-conditions, we may end up reversing the positive trend that we have seen in non-oil exports in 10 years. Any review must take into consideration the opinions of the critical stakeholders. I don’t want to wake up sometime in 2015 and be told that non-oil exports have tumbled because of a bad policy review.

There is also a policy on frozen fish that was recently announced. According to the Federal Government, frozen fish imports will be banned in the next four years. This will be achieved through a yearly reduction of imports by 25 per cent. This, it is said, is to encourage local production of fish. Fantastic idea, ordinarily. Today we are self-sufficient in cement through phased import bans and I am very proud of this development. In fact, if the new policy on fish importation is implemented, we may conserve the estimated $600 million that we spend on it every year, according to the Minister of Agriculture and Rural Development, Dr Akinwumi  Adesina. That sounds good to me.

However, fish is technically complicated. We can replicate imported cement, unlike imported fish. While frozen fish are caught in the high seas in Asia, Europe and America, from where we import, our dominant domestic product is catfish, which is a little bit expensive for the poor. The varieties of imported frozen fish, which are the staple of poor Nigerians, are not produced locally, at least not yet in commercial quantity. These are herring (shawa), sardine, horse mackerel (kote), sardinella (agbodu), and whiting (panla or Okporoko). Our underdeveloped trawling industry is seriously encumbered with security and pollution issues. I am yet to see a roadmap to address these issues. Even though we may have potential in salt-water fish, only the catfish has become accustomed to breeding and farming in Nigeria. Others have not been successful. They are either too expensive to breed or do not adapt to our local conditions.

Since the rationale for import bans is import-substitution, what then is the sense in banning what you cannot produce locally? There are various implications. Nigerians cannot be forced to switch to catfish overnight. Also, frozen fish will still find its way into our market through Benin Republic, only that it will become more expensive, logically. There could be some social disorder if the major source of healthy animal protein is cut off from millions of poor homes. What is the likely economic and nutritional impact on the masses? How long will this impact last? Can we actually eliminate some species of fish from our market and our diet? What alternatives can we develop and how long will it take to develop them? Has the government properly thought through this policy?

Get me right: I am not saying that we should continue to import frozen fish forever. Far, far from it! However, government must do proper impact assessment before rolling out a policy that could affect the lives of over 100 million Nigerians.  A well-intentioned policy that is poorly conceived and poorly timed will have a devastating effect on the people. I don’t think any government would like that. Luckily, the drawing board is still there for our policymakers. They must do their home work properly.