Clearly, Feyi’s F.O.OD analysis shows how Nigeria has become a system where wealth is built not by creating value, but by exploiting regulatory shields.
…and until innovation and problem-solving become as rewarding as rent-seeking, Nigeria’s economy will keep enriching a few at the expense of the many.
Right on the money as usual. I hope this is read widely as one thing that worries me is that even among supposedly well educated Nigerians there is a refusal to open their eyes and actually take in what is happening to their country.
👏🏿I continually applaud your ability to succinctly summarise my thoughts on economic issue. I often just send out your articles to explain my positions in an economic debate.
You have just explained how, what should have been a consumer surplus in a productive and innovative economy, is transferred to the Nigerian 'risk-taker' who converts these surplus to the 'producers'.
Well, like a friend will often say to me, afterall we are 'self-sufficient' in production of certain goods (eg Cement) and its trade off with affordability is worth it with the hope that one day, the Nigerian worker will be productive enough to afford them and live a well meaning life.
It should be said though, that it still takes guts and an immense sense of purpose, by these 'entrepreneurs' to still take advantage of this pathway, it is just that the needed innovations that should have followed like that of the Cheobols of South Korea (Samsung, Hyundai, Kíá etc) are missing and therein lies that tragedy.... All that economic and political power with unbridled market access and yet no contribution to the innovation pool of the Nigeria. 😩
A truly great piece. Thinking about it, I think this mindset has crept into subconscious when designing a solution to a problem. A case on unintended consequence created by the influence of what our society has become.
For sure. When govt gives favours through policies like these, it needs to be tied to very clear and specific outcomes. For example they can be given protection on the condition that Nigerian prices of the banned goods track international ones at a specific level. And the threat of removing protections has to be real and credible if there is no innovation of real problem solving
Funny enough , I just saw an article today indicating how much his wealth increased based on the increase in the share price of his company , this write up now makes me wanna go back and study the report more
Honestly, this is an insightful piece. I think in order to justify stagnation and mediocrity, Nigeria tends to create policies and systems that are presented as beneficial, but in reality, only serve to shield the government, the economy, and the people from real innovation and development.
It reminds me of your piece on Otedola’s book — where ‘connections’ shaped policies that served his interests alone, while leaving everyone else behind.
Investing in R&D is out of the question, they’d rather pour money into propaganda and image laundry that portrays them as masterful visionaries rather than the state capturing bottom feeders they actually are. They have the entire country in a death choke. I see no way out.
Really a 'broken incentive system'. The irony of this obvious psychological hack is that it plays on our survival instincts, which commands priority of attention than the patience it demands to develop our own products. Doesn't it make sense, (one would impatiently argue), to just buy well processed foreign rice than risk chewing sand in a local version? Unfortunately, this local version is confusingly called: 'Nigerian foreign'.
“……the F.O.O.D. framework - because if you follow the framework, you are guaranteed to eat well…. “ I chuckled at the intended pun and then was sobered by the inherent and subtle irony of the statement. Your writings make me more clever and a little more melancholy. Thank you!
The real final stage that I believe is omitted from this excellent piece is that when these entrepreneurs become massively wealthy from these restrictive policies, they become kingmakers in subsequent election cycles. Abdul Samad Rabiu of BOU Foods mentioned in this article financially backed Tinubu's campaign.
Notorious smuggler IBD Dende who massively profited from the import bans of the Buhari era was in a lot of public appearances alongside Tinubu during his campaigns.
The damage these people do extends beyond just profiting from making the country poorer. They act on the vested interest of ensuring subsequent rulers don't reverse these policies by choosing to put their full weight behind candidates who give them guarantees they will not touch or disrupt their business model.
In addition, it needs to be said that in at least 99% of cases, import substitutions are a completely terrible idea. Unless your country is in a clear trade war (or perhaps an actual war), there is simply no good reason for them.
The benefit gained from having your sugar, cement, and other raw materials and foods manufactured by people who happen to look like you pales in comparison to the risk of ending up in a reality like ours where these enlightened entrepreneurs who drop innovation in favour of policy manipulation end up making the country nearly irreversibly poorer.
The highest priority should be to make high-quality goods as cheap as possible, and the only way to do that is by free competition between local manufacturers and importers. There are a lot of innovative products or business structures that the country completely misses out on having simply because the raw materials that would drive these innovations are made unnaturally expensive by the government choosing to pass import bans to protect some local players.
Belgium, a dominant chocolate manufacturer and exporter, primarily imports its cocoa. Imagine if they had chosen instead to become a country that protects local cocoa farmers.
I saw the author (of this magnificent piece btw) in another comment arguing that import substitutions can work with particularly crafty policies like forcing local manufacturers to tie their prices to a percentage below that of the tariffed-imports. I disagree with this sentiment and I think it stems from a naive understanding of how cronyism like this works.
The local manufacturers who benefit from your intelligently-crafted import-substitution policy will simply back political candidates in subsequent elections who will switch it to dumber policies that allow them to profit more.
Kind of like how Teachers' Unions across the United States consistently put their full weight behind candidates who are guaranteed to pass policies that effectively funnel more money and power their way.
You simply must never give these people an inch. The benefit of having local industrial champions simply does not outweigh the damage such policies can wreak on your economy for generations.
Great article. Your work forced me to do some reflection. I have put up a bit of a differing, cautiously optimistic perspective. I put my article here: https://medium.com/@ayodeji.idowuu/7be675fe0ee6
Great article. The textbook result of protectionism as expected. But I also wonder if there is a more systemic problem with food and yams and where the global food industry is focused. Doesn’t take away from the premise that it is more than a bit odd that the largest company in the country is a food company that does nothing with or for the most grown crop. Wrote something about this a while ago https://medium.com/@nonso2/random-thoughts-on-food-imports-fdd3877f2295
Clearly, Feyi’s F.O.OD analysis shows how Nigeria has become a system where wealth is built not by creating value, but by exploiting regulatory shields.
…and until innovation and problem-solving become as rewarding as rent-seeking, Nigeria’s economy will keep enriching a few at the expense of the many.
Imagine,
Right on the money as usual. I hope this is read widely as one thing that worries me is that even among supposedly well educated Nigerians there is a refusal to open their eyes and actually take in what is happening to their country.
I relish every post of yours here. Let me share to friends of mine who are like minded.
Thanks for reading!
Thank you for your post, very illuminating!
Thanks for reading!
👏🏿I continually applaud your ability to succinctly summarise my thoughts on economic issue. I often just send out your articles to explain my positions in an economic debate.
You have just explained how, what should have been a consumer surplus in a productive and innovative economy, is transferred to the Nigerian 'risk-taker' who converts these surplus to the 'producers'.
Well, like a friend will often say to me, afterall we are 'self-sufficient' in production of certain goods (eg Cement) and its trade off with affordability is worth it with the hope that one day, the Nigerian worker will be productive enough to afford them and live a well meaning life.
It should be said though, that it still takes guts and an immense sense of purpose, by these 'entrepreneurs' to still take advantage of this pathway, it is just that the needed innovations that should have followed like that of the Cheobols of South Korea (Samsung, Hyundai, Kíá etc) are missing and therein lies that tragedy.... All that economic and political power with unbridled market access and yet no contribution to the innovation pool of the Nigeria. 😩
A truly great piece. Thinking about it, I think this mindset has crept into subconscious when designing a solution to a problem. A case on unintended consequence created by the influence of what our society has become.
Solid piece👌🏽
"Nowhere in BUA Foods Plc’s 2004 annual report..." - sure you meant 2024.
Ah yes, thank you. Will amend
Hi Feyi. Brilliant work as usual
Theoretically speaking, is there a problem that can be solved through policy?
For sure. When govt gives favours through policies like these, it needs to be tied to very clear and specific outcomes. For example they can be given protection on the condition that Nigerian prices of the banned goods track international ones at a specific level. And the threat of removing protections has to be real and credible if there is no innovation of real problem solving
Funny enough , I just saw an article today indicating how much his wealth increased based on the increase in the share price of his company , this write up now makes me wanna go back and study the report more
Thanks Feyi
Honestly, this is an insightful piece. I think in order to justify stagnation and mediocrity, Nigeria tends to create policies and systems that are presented as beneficial, but in reality, only serve to shield the government, the economy, and the people from real innovation and development.
It reminds me of your piece on Otedola’s book — where ‘connections’ shaped policies that served his interests alone, while leaving everyone else behind.
Investing in R&D is out of the question, they’d rather pour money into propaganda and image laundry that portrays them as masterful visionaries rather than the state capturing bottom feeders they actually are. They have the entire country in a death choke. I see no way out.
Really a 'broken incentive system'. The irony of this obvious psychological hack is that it plays on our survival instincts, which commands priority of attention than the patience it demands to develop our own products. Doesn't it make sense, (one would impatiently argue), to just buy well processed foreign rice than risk chewing sand in a local version? Unfortunately, this local version is confusingly called: 'Nigerian foreign'.
Thank you, your comment got it in one
“……the F.O.O.D. framework - because if you follow the framework, you are guaranteed to eat well…. “ I chuckled at the intended pun and then was sobered by the inherent and subtle irony of the statement. Your writings make me more clever and a little more melancholy. Thank you!
The real final stage that I believe is omitted from this excellent piece is that when these entrepreneurs become massively wealthy from these restrictive policies, they become kingmakers in subsequent election cycles. Abdul Samad Rabiu of BOU Foods mentioned in this article financially backed Tinubu's campaign.
Notorious smuggler IBD Dende who massively profited from the import bans of the Buhari era was in a lot of public appearances alongside Tinubu during his campaigns.
The damage these people do extends beyond just profiting from making the country poorer. They act on the vested interest of ensuring subsequent rulers don't reverse these policies by choosing to put their full weight behind candidates who give them guarantees they will not touch or disrupt their business model.
In addition, it needs to be said that in at least 99% of cases, import substitutions are a completely terrible idea. Unless your country is in a clear trade war (or perhaps an actual war), there is simply no good reason for them.
The benefit gained from having your sugar, cement, and other raw materials and foods manufactured by people who happen to look like you pales in comparison to the risk of ending up in a reality like ours where these enlightened entrepreneurs who drop innovation in favour of policy manipulation end up making the country nearly irreversibly poorer.
The highest priority should be to make high-quality goods as cheap as possible, and the only way to do that is by free competition between local manufacturers and importers. There are a lot of innovative products or business structures that the country completely misses out on having simply because the raw materials that would drive these innovations are made unnaturally expensive by the government choosing to pass import bans to protect some local players.
Belgium, a dominant chocolate manufacturer and exporter, primarily imports its cocoa. Imagine if they had chosen instead to become a country that protects local cocoa farmers.
I saw the author (of this magnificent piece btw) in another comment arguing that import substitutions can work with particularly crafty policies like forcing local manufacturers to tie their prices to a percentage below that of the tariffed-imports. I disagree with this sentiment and I think it stems from a naive understanding of how cronyism like this works.
The local manufacturers who benefit from your intelligently-crafted import-substitution policy will simply back political candidates in subsequent elections who will switch it to dumber policies that allow them to profit more.
Kind of like how Teachers' Unions across the United States consistently put their full weight behind candidates who are guaranteed to pass policies that effectively funnel more money and power their way.
You simply must never give these people an inch. The benefit of having local industrial champions simply does not outweigh the damage such policies can wreak on your economy for generations.
Damn I hope someone reads all this.
Great article. Your work forced me to do some reflection. I have put up a bit of a differing, cautiously optimistic perspective. I put my article here: https://medium.com/@ayodeji.idowuu/7be675fe0ee6
Great article. The textbook result of protectionism as expected. But I also wonder if there is a more systemic problem with food and yams and where the global food industry is focused. Doesn’t take away from the premise that it is more than a bit odd that the largest company in the country is a food company that does nothing with or for the most grown crop. Wrote something about this a while ago https://medium.com/@nonso2/random-thoughts-on-food-imports-fdd3877f2295