Before Protecting, Nigeria Must Produce To Prosper
By Abidemi Adebamiwa
Nigeria’s economic policies often feel like trying to fix a leaking roof by locking the doors. With inflation skyrocketing, the naira losing value, and everyday goods becoming unaffordable, the government’s attempts to impose high tariffs and restrict imports are placing an even heavier burden on citizens. While these measures are often justified as efforts to protect the economy and local industries, they raise a critical paradox: how can a country discourage imports when it does not produce the goods its people need? This disconnect leaves businesses and households paying higher prices or facing shortages, turning policies meant to protect into barriers that stifle growth and deepen hardship.
Tariffs can be a powerful economic tool when used correctly. For instance, countries like the United States impose high tariffs on certain imported goods to protect thriving domestic industries. When the U.S. government places tariffs on imported cars or steel, it ensures that its domestic producers remain competitive and retain market share. These measures work because the country has strong, established industries to protect. Nigeria, however, finds itself in a very different position. Lacking a robust production base in key sectors, imposing high tariffs on products that the country does not produce—such as cassava starch, leather goods, and pharmaceuticals—only makes these essential goods more expensive for its citizens.
This dilemma is best illustrated through an analogy. Imagine a father who forbids his family from buying food, clothing, or supplies from outside, locking them in their home despite having no resources inside. The pantry is empty, the garden is barren, and there is no plan to change that. While the family members have the means to go out and purchase what they need, they are forced to make do with nothing. This mirrors Nigeria’s approach to tariffs: restricting imports without first investing in domestic capacity punishes citizens for seeking what the country cannot provide.
Take the cassava industry as an example. Nigeria is the world’s largest producer of cassava, yet it continues to import cassava starch and ethanol due to insufficient processing facilities. A 10% tariff on imported cassava starch, compounded by additional levies and VAT, has made it even more expensive. While the intent is to protect local producers, the absence of adequate infrastructure means businesses and consumers bear the cost without benefiting from domestic alternatives. The solution lies not in raising barriers but in building local processing plants capable of meeting demand.
This pattern extends to other industries, such as leather production. Sokoto produces some of the highest-quality leather in Africa, but most of it is exported as raw hides. Finished leather goods like shoes and bags are then imported back into Nigeria, subject to a 20% tariff. Countries like Italy impose similar tariffs but do so to protect thriving industries. Nigeria, however, lacks the infrastructure, workforce, and investment to produce high-quality leather goods domestically. Instead of fostering growth, these tariffs raise costs for consumers and discourage competitiveness.
Nigeria’s chronic power crisis amplifies its economic struggles. As highlighted in Ending Nigeria’s Generator Nightmare: A Brighter Future Awaits by Sun Connect News, over 60 million Nigerians depend on generators to power their homes and businesses, spending billions each year on diesel and petrol. This heavy reliance isn’t just draining resources—it’s actively driving investors away. Many potential investors, upon realizing the astronomical costs of self-powering their operations, choose to take their business elsewhere. Solving this power problem is far more critical than imposing tariffs; it’s the cornerstone for building an economy where industries can flourish, and innovation can thrive.
Here’s where Okun’s Law comes into play. Okun’s Law states that economic growth and unemployment are inversely related. When GDP grows, unemployment decreases, and when GDP slows, joblessness rises. Nigeria’s sluggish GDP growth, compounded by its power crisis and high production costs, has significantly impacted unemployment. Addressing the power issue isn’t just about making life easier; it’s about boosting productivity, enabling businesses to expand, and reducing unemployment. Every boost in GDP growth represents the potential to create jobs and lift millions out of poverty—a direct validation of Okun’s Law.
Nigeria’s generator dependence is tied to a deeper problem: the vested interests benefiting from an unreliable power grid. Businesses profiting from generator and fuel sales make billions annually, creating little incentive to fix the grid. To break this cycle, the government must prioritize reliable electricity. Investing in modernizing the grid, using technologies like drones and sensors to prevent vandalism, and creating a robust legal framework to deter sabotage are essential steps. A stable power supply would reduce costs for businesses, attract investors, and lay the groundwork for industrial expansion.
To build a competitive and innovation-driven economy, Nigeria must shift its focus from protectionism to empowerment. Instead of raising tariffs to protect industries that do not yet exist, the government should incentivize investment in key sectors. For instance, renewable energy offers a transformative opportunity. By encouraging businesses to transition from selling diesel generators to promoting solar panels and batteries, Nigeria can align private sector interests with national goals. Brazil successfully implemented this model, proving that it is possible to turn problems into solutions with the right policies.
Similarly, Ghana’s concept of “generator-free zones” in areas with stable electricity could be adapted to Nigeria. Starting with major cities like Lagos and Abuja, the government could create incentives for businesses and households to adopt renewable energy solutions. Public campaigns highlighting the benefits of solar power—quieter, cleaner, and cheaper in the long run—would help drive the transition. These measures, combined with targeted investments in renewable energy infrastructure, could unlock billions in tax revenue, create thousands of jobs, and boost productivity across the economy.
Tariffs have their place in economic policy, but they must be backed by a strong foundation of local production and innovation. Nigeria’s current strategy, which imposes high costs on consumers without offering alternatives, only deepens economic hardship. By investing in infrastructure, enabling local industries, and fostering innovation, Nigeria can transition from a consumption-based economy to one built on production and self-reliance. This is not about closing borders or punishing citizens—it is about creating an environment where businesses can thrive, and Nigerians have access to affordable goods and services.
A new approach to economic growth is not only possible but essential. Reliable power, reduced reliance on imports, and an environment that encourages innovation are the keys to unlocking Nigeria’s potential. By focusing on these priorities, the country can move beyond patchwork solutions like tariffs and build a sustainable, prosperous future. The choice is clear: Nigeria must first produce before it protects.
