By Olu Fasan
THE media have recently been reporting a huge surge in demand for locally produced rice. Nigerians are turning in droves to local rice. That’s a great news. It suggests that Nigerians are finally boycotting foreign foods in favour of those produced at home. Except that it’s not such a great news, after all. Why? Well, because Nigerians are in no position to make any voluntary choice. Instead of intentionality and voluntariness, there is coercion. The recent border closures have forced Nigerians to turn to local rice. As one rice farmer puts it, “the border closure has compelled Nigerians who generally have a high preference for foreign varieties to shift to local brands”.
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Thanks to the border closures, Nigerians are now buying the local varieties of rice, willy-nilly, regardless of their quality and prices. Indeed, according to one newspaper, a very low-quality brand, “with stones mixed with rice grains”, which was previously not in the market, is now being sold – and for between N14,000 and N15,000 a bag! Before the border closures, Nigerians could buy low-cost and high-quality Thai rice, but now they are forced to buy and consume rice mixed with stones! Put bluntly, the government is force-feeding Nigerians with poor-quality local foods, which defies the Food and Agriculture Organisation’s definition of food security: “adequate access to food in both quality and quantity”.
The declared goal of the border closures is to curb smuggling, but the social costs in terms of the impact on the quality of life of ordinary Nigerians are a price not worth paying. It is utterly wrong to pauperise ordinary Nigerians and penalise legitimate businesses in order to curb smuggling, which is the product of institutional and policy failures. The Financial Times recently said that “prices of food staples have risen steeply” since the border closures. Food costs account for about 60 per cent of the average household’s spending in Nigeria, and more than half of the population live in poverty. Yet, the border closures have doubled the price of rice, the most important stable. It’s indefensible!
Of course, the government’s aim is to achieve self-sufficiency in food production. And its policy tool, apart from pumping money into farming, is to ban food imports and force Nigerians to buy local foods. President Muhammadu Buhari has repeatedly said that “Nigerians must eat what they grow and grow what they eat”. And the Central Bank governor, Godwin Emefiele, who propels the import-substitution agenda, would use any blunt instrument, including forex ban, to force Nigerians to buy local foods, particularly rice. Indeed, he was so miffed by Nigerians’ attitude to local rice that he once asked: “Why should we import rice when we know that across the rice belt of this country, hundreds of thousands of metric tonnes of paddy rice are piling up and cannot be sold?”
Well, even an A-level economics student should know the answer to that question. Nigeria focuses on production and not productivity. A farmer can produce hundreds of thousands of metric tonnes of rice, but can he produce them productively and efficiently? Can he produce them to the right quality and sell them at affordable prices? Humans are homo economicus who want to maximise utility as consumers. Faced with a choice between a low-priced, high-quality foreign rice and a high-priced, low-quality local rice, any rational human being would prefer the former. And it’s such differentials in price and quality that largely encourage smuggling.
In a recent paper titled “The ineffectiveness of ‘Buy British’ campaigns”, the authors, David Clayton and David Higgins, argue that “consumers generally prefer domestic to foreign products”. However, they added: “But when price, quality and product-country images are taken into account, the country of origin effect is weakened considerably”. In other words, generally speaking, Nigerians would voluntarily buy local products if the prices and quality are right! But if they are not, well, as homo economicus, Nigerians would generally not buy locally-made products unless, as now, they are coerced into doing so!
The lesson is thus clear. Nigeria may close its land borders today and succeed in curbing smuggling, as the current border closures seem to have done, but if it opens the borders tomorrow without addressing the underlying institutional and policy problems, smuggling would resume. But how long would Nigeria close its land borders without doing irreversible damage to its vast informal sector, which at 65 per cent is, according to the Financial Times, the largest in sub-Saharan Africa? What about legitimate businesses, including the export sector, that are affected by the border closures? And what about the social and human costs in terms of the impacts on ordinary Nigeria?
There are, of course, those who see this issue purely through the prism of patriotism. To them, “buying naija” is a patriotic thing to do! Indeed, President Buhari once said that “manufacturers who use local materials” are “patriotic Nigerians who believe in Nigeria”. Which suggests that those who use imported raw materials, despite the quality and prices, are not patriotic. But I take liberal-democratic and liberal-economic perspectives.
I mean, only in authoritarian, communist countries like North Korea are citizens forced to eat and wear only what the State allows. That shouldn’t happen in a liberal democracy. Secondly, only in free market economy, where preferences are transmitted through individual choices, rather than in a command economy, where the state alone allocates resources, can industries adapt, innovate and become both efficient.
Truth is, closing land borders to force Nigerians to buy local food products won’t enhance general welfare or promote economic efficiency. What’s more, it’s tantamount to force-feeding Nigerians with state-sanctioned foods. Sadly, that paints Nigeria as an authoritarian, communist state, not a liberal democracy and market economy! Yet its future lies in being the latter, not the former!