Background
The previous edition of this write-up analysed realistic economic lessons to learn from both the COVID_19 and the steep fall in global oil prices experience, which cautions on the need to use what we have to produce even more than what we need, going forward.
This edition suggests additional lessons to learn from India as a country that made remarkable progress only after addressing her own long-neglected economic mistakes.
The Indian experience
Long before the advent of Corona virus, India had been a typical example of a country that made the costly mistake of not placing her priorities right in good time. However, India has been reawakened and has in the past ten years begun to turn her economic fortunes around; moving along a speedy growth and recovery trajectory. On the whole, it took India 20 years (1991-2011) of inconsistent economic reforms before she was able to reverse her persistent negative tariff structures, simply by reconciling trade policy with industrial policy. The duty structures had been such that higher duties were placed on intermediate goods (raw materials and spare parts), than on finished goods. In other words, the situation whereby priority was accorded foreign goods at the expense of the local industry was reversed.
In particular, the local electronic and allied industrial (manufacturing) sector was the most adversely affected by the initial inverse import duty policy that favoured imports the more. The local food industry suffered similar misfortune, which made it difficult for the country to feed the growing large population. It was only after the perfection of the economic reforms that the electronic and food industries began to struggle to come up.
However, the automobile industry did not follow the same steps as the electronic and food industries; rather the sector started very early to experiment the use of her local raw materials to produce her local automobiles, lowering duties on raw materials and imposing higher duties on finished imported cars. Thus, the local automobile industry thrived on an earlier solid developmental foundation.
In general, the economic reform in India did well to allow labour-intensive industries to begin to utilize available local materials to produce the needed goods and create jobs. The list of basic-needs and labour intensive manufacturing sectors in India that benefited from the reforms includes: food processing, leather and footwear, wood and furniture, textiles and apparels (garments). In particular, the textile and apparel sector, not quite long ago, benefitted from elaborate incentives from the Government of India, probably with the objective of utilizing local cotton.
Lessons to learn
What does this Indian developmental experience mean for Nigeria? First, it means that in the process of planning for development, no aspect of the local basic needs (food, leather and footwear, wood and furniture, textiles and apparel and garments) industry must be relegated to the background because basic needs are what matters most in life. In other words, for any development plan to be meaningful it must be inward looking; practically dependent on local human and material materials. Again, it must be carefully designed to create massive employment for the youth. Furthermore, even though automobiles appear to be luxury in nature, attention must also be paid to local production of automobiles because they aid transportation and commerce. Transportation on the other hand relies so much on good roads, rails, airports, and water ways, all of which need to be constructed using local raw materials and local skilled labour.
The significant lessons to learn from the Indian reform experience critically underline the effective role of government policies and incentives, not only in terms of promulgation but more so in terms of implementation. Incentives must include the provision of basic infrastructures (improvement of transportation routes, security, and the state of public power supply, portable water, hospitals, schools, etc.). The critical importance of power supply in Nigeria cannot be overemphasized. ‘Fix power’ and most of the country’s economic problems would be fixed. Bringing about trade and industrial policy harmony is equally necessary because it will ensure that the correct import-duty structure that will propel the development of the local industry is appropriately in place. Accordingly, it is usually beneficial to liberalize import duties for raw materials and tighten duties on finished goods, especially those that could be produced within the country. Peculiar to our country, such laudable incentives as subsidized seedling and fertilizer provision for farmers, the anchor borrowers’ program and sector-specific intervention fund schemes of the Central Bank should be intensified; side by side with the outright import-prohibition or restriction of conspicuous and harmful commodities disincentives. So long government plays her part, the private sector will surely respond. The effect will be such that investor confidence will return. Monies that have been looted and stashed away in foreign banks, for instance, will begin to find their way back into our country; and we will no longer be begging foreigners to bring their own money and come and invest in our country. All in all, our society will be better for it.
Conclusion
Drawing up a clear developmental agenda that takes the above recommendations into consideration and meticulously implementing the plan, with all patriotic hands on deck, is a sure approach to setting our priorities right.
The author may be reached for further conversation via his email: chukwudiodili902@yahoo.com
