At Stears, we believe that trade is instrumental to the growth of economies—particularly the Nigerian economy. The truth is Nigeria does not have the market to stimulate growth. The entire African consumer class comprises 300 million people, compared to Asia, which has 2.2 billion people. In Nigeria, the picture is grimmer. Ninety-five (95) million people—almost half of the entire population—live below the poverty line, and those above the line are very vulnerable to external shocks. This means only a few people belong to the Nigerian consumer class, which is insufficient to generate growth.
With over 70% of the foreign exchange revenue reliant on crude oil sales, Nigeria's export performance is typically determined by crude oil prices. However, this might change soon as the manufactured goods exports to West Africa have surged in recent years.
Forex expenses on imports are primarily split between fuel and machinery. However, when there's a crunch, the government (and the CBN) have adopted protectionist trade policies.
These policies have stifled trade but failed to achieve the goals for which they were set. For a country with a small and fragile consumer class, trade is critical for growth, but to take advantage of such growth, we must take the trade liberalising route.
This is why trade is critical. It’s impossible to talk about China’s growth—and its ability to raise over 800 million people out of poverty—without talking about trade. For China and many other emerging economies, the idea is that the local economy does not have the consumption capacity to grow the economy.
Before liberalising trade in the 1980s, China’s employment was heavily skewed towards unproductive sectors like subsistence agriculture—about 60% of China's labour force was employed in the primary sector with low disposable income. But China eventually opened its borders to more prosperous countries which, increased employment and income for the Chinese.
By comparison, Nigeria has taken a different route. As the current administration rounds up,