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Mike Okonkwo National Essay Contest: The winning entry

By Nwigwe Alexandra

A NATION cannot be defined by what it buys and borrows from other countries. It should be defined by how it benefits its own people. It should be defined by its impact on the countries and world around them. Instead, Nigeria is being defined by the world’s impact on it. This impact comes in the form of imports. Today, Nigeria is in a state of trade deficit.

A trade deficit is when imports exceed exports. Imports are purchases of goods and services from other nations. Without imports, a country would be limited to the goods and services within its own borders. Imports are necessary and important part of every nation’s economy. That being said, too much of anything is not a good thing.

From left: Mrs. Biyi Tunji-Olugbodi, Head, Publicity, 20th  Anniversary Planning Committee, Mr. Adegboyega Fadare, Head of School; Mrs. Abisola Longe, Chairperson, Anniversary Planning Committee; Mrs. Folake Osisanya, Director of School; Dr. Arinola Fetuga, Chairperson, PTA and Mrs. Ade Fakoya, Deputy Head of School, all of Sunnydale School at the Press Conference to unfold activities for the school’s 20th  Anniversary.

The same goes for imports. An abundance of imports results in a negative balance of trade which causes unemployment, lowers GDP growth, and so much more. To prevent Nigeria from falling deeper into this predicament, Nigeria’s main focus should be on producing its own goods and services.

Negative balance of trade

An increase in the making and buying of locally made products would lower trade deficit and in turn, have a positive effect on Nigeria’s balance of trade. This would reduce the need for imports because more products would be nationally sourced. There would be less money leaving the country, due to imports, than before. Not only that, but Nigeria’s net export would increase, possibly exponentially if some of these local products found niche markets.

This idea is one that has taken place in many other countries. In East Africa, the country, Rwanda, started the  Made-in-Rwanda crusade with a goal to promote locally made goods and services that usually face competition with foreign imports {Expo Group). That same situation is happening in Nigeria, where people turn down local brands in favour of exotic brands from overseas.

The Made-in-Rwanda crusade seeks to boost local investment and inward investment to diminish trade deficit. Outside of Africa, the same thing is happening. In the 2000s, New Zealand saw a record trade deficit of $5.8 billion. In response, the Buy Kiwi Made campaign was started.

To counteract this trade deficit, the campaign brought to light the employment, economic, environmental, and social benefits of buying locally produced goods and services (MP). Countries like the Netherlands skip the media campaigns and instead go in the direction of smaller prevention efforts. In the Netherlands, foreign imports are heavily taxed. For example, English newspapers were over-taxed so people would, instead, spend money on newspapers published in the Dutch language. Most recently, America’s new President, Donald Trump has launched a Buy American, Hire American campaign to encourage US citizens to buy local.

It seems that no matter how developed a country is, there is no disadvantage to encouraging people to support local businesses. Policies like these reduce the interest in these exotic brands until people have no choice but to support their locally produced items.

All of these are examples of countries that have recognised that the lack of domestically sourced items is partially responsible for the large trade deficits they are suffering from today. To correct this issue, we need to encourage the production of local items, promote the buying of said local items, and reduce the popularity of the surplus of foreign brands available in Nigeria today.

An increase in Nigerian-made products would result in an increase in employment which would benefit the economy in more ways than one. If the Made-in-Nigeria campaign is successful, the demand for locally made items would surge. This would mean the supply of those items would also need to increase, resulting in many more employment opportunities. Job creation increases financial security and promotes higher living standards.

Not only that, but more employment means decreased rate of crime and improved income distribution which would reduce wage gaps and financial inequality. It also results in increased spending and stimulates economic activity. Since this money would be spent on domestically sourced items, it would stay in the nation allowing it to be re-invested into poor communities or to be used to assist with different social wellbeing projects.

Also, many countries with high employment are those with trade surplus. Trade surplus is the opposite of trade deficit and occurs when the number of exports exceeds the number of imports, also known as a positive balance of trade. Two lists, one showing ten countries with the lowest unemployment rate (Adamson) and the other showing twenty countries with the highest trade surplus in 2015 (Statista), have five countries in common. Those countries are Switzerland, China, Germany, Russia, and South Korea.

 

 


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.