As Nigeria Clocks 64: Narratives On Her Second Economic Independence (2)
Contrary to the claims made by the naysayers attempting to tarnish the country’s reputation through misinformation, there has not been a complete withdrawal of foreign firms from Nigeria. Instead, the healthcare companies mentioned have merely adapted their business models, relocating their manufacturing operations due to difficulties in accessing foreign exchange for raw material imports. The same applies to a couple of American firms that also shut down their manufacturing operations in Nigeria.
Nonetheless, what I found out is that they are still engaged in the Nigerian market and may resume manufacturing once the exchange rate stabilizes.
This stabilization is anticipated as foreign exchange receipts increase due to a rise in crude oil production, and as the demand for foreign currency—which has contributed to its scarcity—diminishes. Furthermore, starting in October, petrol marketers will no longer face the challenge of purchasing refined petrol with hard currency, as they have pledged to source products from Dangote Refinery and other local refineries, including the five modular refineries now authorized to produce and sell petrol under a willing buyer, willing seller arrangement.
Given that the headline inflation rate has decreased consistently over the past couple of months—from 33.40% in July to 32.15% in August—thanks to measures implemented by the economic management authorities, there is optimism that some manufacturing companies that previously exited may return.
This hope is reinforced by the fact that a nation with a population exceeding 200 million is too significant for any consumer goods manufacturer to overlook. The positive outlook is further supported by the current flow of petrol from Dangote Refinery, which is expected to alleviate pressure on the naira, allowing it to stabilize, as petroleum product imports account for up to 40% of Nigeria’s import bill, according to the Central Bank of Nigeria, CBN.
With local production and distribution, the excessive pressure on the naira is expected to diminish as the country achieves energy security and is no longer forced to rely on imported petroleum products. This shift is anticipated to contribute to further economic improvements, providing relief and growth that will help alleviate the hardships currently faced by many Nigerians.
Moreover, according to data from NNPC Ltd., Nigeria’s crude oil production—the nation’s main source of foreign exchange—has recently increased to approximately 1.7 million barrels per day. This is a rise from about 1.2 million barrels per day at the beginning of the current administration roughly seventeen months ago. As a result of this situation, foreign exchange inflows into the economy, which had previously been minimal, are anticipated to improve significantly.
Evidence of the longstanding relationship between the UK and Nigeria, rooted in their colonial past, which makes them seem co-joined in the hip, despite the ongoing reforms can be seen in the presence of numerous energy and consulting firms that continue to operate in the sector. In light of the above reality, notable UK-based oil and gas service companies, such as Schlumberger, Halliburton, and Baker Hughes, along with consulting firms like Accenture, McKinsey, and BCG, all maintain energy practices in Nigeria. In the real estate sector, UK firms like Knight Frank, Savills, and CBRE remain active players in the Nigerian market.
The media and advertising industries also feature a robust presence, with entities such as BBC World Service Nigeria, CNN International Nigeria, and UK-based advertising firms like WPP, Omnicom, and Publicis Groupe all operating in Nigeria and collaborating with local companies.
Given the substantial number of UK firms still operating in Nigeria, it raises questions about the outcry regarding foreign firms leaving the country, which seems to stem more from political fearmongering by those who lost in the 2023 presidential elections and their supporters on social media.
The complexities surrounding the pricing and distribution of petrol produced in Nigeria, following the commencement of operations at Dangote Refinery about a month ago, have shifted public sentiment from celebration to disappointment. Many Nigerians are grappling with the realization that refining crude oil locally does not necessarily lead to lower pump prices compared to imported petrol. Although pump prices may not decrease in the short term, the involvement of Nigerian indigenous investors in crude oil refining has its benefits.
In addition to the jobs created by Dangote and other privately owned refineries, the shutdown of several European refineries that previously exported refined petroleum products to Africa, including Nigeria, indicates a positive shift in local employment. This significant development, marked by the participation of indigenous investors in crude oil refining, is expected to alleviate pressure on the naira and strengthen its exchange rate as the demand for foreign exchange to import refined products declines. According to sources from the Central Bank of Nigeria (CBN), refined petroleum imports constituted about 40% of the nation’s import bill before the emergence of Dangote Refinery.
However, the ongoing crisis regarding the pricing and distribution of refined petroleum products in Nigeria has also highlighted the rentier nature of the country’s economy, a characteristic that traces back to the initial arrival of Europeans and their establishment of ties with Africa.
To provide historical context, it’s important to remember that Portuguese explorers were the first Europeans to establish contact with Africa, including Nigeria before others arrived. This occurred during the Age of Exploration in the 15th and 16th centuries when Portugal became the first nation to dock in the ancient Benin Kingdom. Their primary motives for engaging with West Africa were exploration and trade. Historical records indicate that Prince Henry the Navigator of Portugal (1394-1460) sponsored voyages to explore the western coast of Africa in search of trade opportunities.
As part of their exploration efforts, Portugal set up trade posts along the West African coast, including sites like Elmina in present-day Ghana (established in 1482) and Badagry in Nigeria, which became a point for the slave trade. Other European powers, including Spain, the Netherlands, Britain, and France, followed suit in their attempts to explore and colonize Africa.
Initially, these invaders sought friendship with African leaders rather than conflict to facilitate trade, which was their primary goal. They presented gifts to win the favor of local kings and, once they gained their trust, turned some into agents for supplying various goods, including cash crops, minerals, and enslaved people.
Interestingly, as some of these companies with roots in advanced economies withdraw from Nigeria, indigenous investors and firms like Dangote Industries, Globacom, Air Peace, and Innoson Motors are stepping in to fill the gap. Despite this positive development, some Nigerians mistakenly criticize their country and the current government for the departure of some foreign firms, which are essentially and more often than not instruments of imperialism. To be clear, while one is not averse to foreign investments in our economy because they are critical to the success of any economy as they serve as catalysts for expansion, local entrepreneurs need to be in control of some critical areas of the economy that are strategic to the security of the country.
But the misguided critiques often making false claims about exodus of foreign firms are motivated by news headlines influenced by Western bias, as Western media largely controls global information order and shapes public opinion. This narrative of the West controlling world information order is being challenged by platforms such as Nduka Obaigbena’s Arise TV, John Momoh’s Channels TV, the late Raymond Dokpesi’s Africa Independent Television (AIT), and James Ibori’s News Central Television (NC), which are expanding their influence via their growing footprints like in Africa and globally. They aspire to be in pole position like the BBC from the UK, which promotes a European perspective, while CNN presents a North American viewpoint.
While the aforementioned media outlets have long been representing their regions, Al Jazeera from the Arab world has been similarly asserting the influence of the Arab world on Africa in the past decade, and CCTV from China is beginning to establish a presence in Nigeria through partnerships with the Nigerian Television Authority (NTA) with which the Chinese hopes to also assert her influence over Nigeria.
Without the aforementioned indigenous media platforms, Nigeria, and Africa as a whole, would have continued to struggle to have a voice on the global stage, often regarded as marginalized and lacking a promising future. However, this scenario is set to improve as Nigeria actively seeks a permanent seat on the United Nations Security Council, a goal promoted during the recently concluded 79th United Nations General Assembly (UNGA) in New York.
For those who criticize President Bola Tinubu’s administration for alleged mismanagement of the economy and attribute the departure of a coupe of European and American companies to it, it’s important to reconsider this perspective. The exit of these firms may not be negative, especially if local investors are taking their place. This shift could be indicative of an emerging African renaissance.
This renaissance is reflected in the increased trade initiatives among African nations, particularly through the African Continental Free Trade Agreement (AfCFTA), which aims to enhance trade between countries on the continent. Based in Ghana, AfCFTA seeks to eliminate significant trade barriers, such as stringent immigration regulations that historically made it easier for citizens of European, American, Asian, and Arab nations to enter countries like South Africa, while Nigerians faced excessive scrutiny when applying for visas.
In light of this context, for the sake of emphasis, it is worth repeating that it is regrettable that some Nigerians are erroneously claiming that the recent departure of foreign firms signifies Nigeria’s economic decline. In reality, their exit represents a recalibration of our economy, driven by the reform policies of the current administration.
To understand this better, we can look at the historical context of European arrival in Africa and their transition from trade partners to colonial rulers, a dynamic that persisted until the United Nations passed a resolution in 1960 calling for the independence of European colonies. For instance, Nigeria, as a former British colony, is home to Crown Agents, the trading arm of the British monarchy.
While Crown Agents no longer engage in the slave trade—once a major source of wealth for the British monarchy—it is known that the monarchy possesses substantial real estate holdings in central London and throughout the UK, some of which were likely acquired using profits from the slave trade.
A significant portion of the British monarchy’s wealth is indeed linked to the proceeds from the slave trade, but other sources of wealth include the extraction of resources from colonized nations, such as gold, minerals, and oil and gas. This explains the estimated wealth of the British monarchy, which is around £40 billion (approximately USD 52 billion).
Given this context, it raises the question: what lessons have Nigerians learned from the foreign firms that have been operating here since the 1950s? In the pharmaceutical sector, for instance, indigenous companies like Emzor Pharmaceuticals are successfully competing with foreign firms, leading to the exit of some of these foreign competitors. Allow me to once again say that while this is a positive development, some misinformed Nigerians are mistakenly portraying it as evidence of a toxic business environment resulting from ongoing socioeconomic reforms in the country.
Let’s consider Guinness and Nigerian Breweries as examples. Their operations in Nigeria remain subsidiaries of European parent companies based in Scotland and the Netherlands, and no local investor is competing in this sector. Although there have been efforts by indigenous investors, such as the Ibrus in Delta State, who introduced the Skoll brand in the 1980s, this venture ultimately failed after a few years. Similarly, Jos Breweries produced the Trophy brand, along with a few others in the South West and South East, but they also did not survive, even with technical partnerships with European or other foreign brewers.
In contrast, South Africa boasts its indigenous beer brand, Lion Lager, which was first brewed in the 1920s. SABMiller, founded in South Africa in 1895, operates a brewery in Onitsha in partnership with Anambra State, though it is now owned by Belgium-based AB InBev.
The disappointing state of the beer brewing industry in Nigeria stands in stark contrast to the developments in crude oil and petrol refining that began in the late 1950s. For instance, Royal Dutch Shell Petroleum Company, co-owned by British and Dutch investors, has been operating in Nigeria since the late 1950s, shortly after crude oil was discovered in Oloibiri, Bayelsa State, in the Niger Delta region in 1959. Shell is now retreating by moving offshore after selling its onshore assets to local firms such as Midwest Oil and Gas, Transcorp Energy, and Next Oil, which are now engaged in exploration onshore.
In addition to indigenous oil and gas exploration companies that have been competing with foreign firms in oil extraction for roughly the past two decades—following the government’s decision to uncap the so-called marginal oil fields, which refers to wells too small for large foreign firms—there are also modular refineries that have been addressing the gap left by the failure of the four refineries established by the Federal Government of Nigeria (FGN) under NNPC Ltd, which had a combined capacity of 445,000 liters per day.
The prevalence of International Oil Companies (IOCs) in the oil and gas sector is largely due to the government’s apparent collaboration or compliance with foreign interests, which effectively sidelines local investors from the industry. This concerning situation, stemming from the Federal Government’s exclusive control over specific economic activities, also hinders subnational governments and private investors from participating. As a result, this dynamic has been harmful to both national interests and the economy.
The flawed structure primarily serves neo-colonial interests and their local allies, who have established a system that weakens indigenous Nigerian investors. Regrettably, some Nigerians involved in this setup are self-serving civil servants who prioritize personal gain through kickbacks over the nation’s welfare, which should be their primary concern. This behavior mirrors the term “useful idiots,” originally coined by former Soviet leader Joseph Stalin during the Cold War to describe Western proponents of communism. In the context of Nigeria today, it accurately describes those who may unintentionally support neo-colonial or imperial agendas.
Against this backdrop, the inauguration of the 650,000bpd Dangote Refinery as a domestic oil refining company is viewed as a form of second independence for Nigeria. It enables citizens to access refined petroleum products without the need for imports, a reliance that has lasted for the past three decades. The importance of this development is underscored by the scheduled start of crude oil supply to the Dangote Refinery from NNPC Ltd on October 1st, coinciding with Nigeria’s political independence from Britain in 1960.
Moreover, with Dangote Refinery providing an opportunity for energy independence, petroleum marketers have opted to procure their products exclusively from the refinery instead of relying on imports. This shift could help ease the pressure on the naira, considering that 40% of Nigeria’s import bill is devoted to petrol, oil, and gas. Consequently, the country may be on the brink of an economic revival.
In summary, on this momentous occasion marking Nigeria’s 64th independence from British political control, we also acknowledge a “Second Independence” from economic reliance through the development of indigenous refineries like Dangote Refinery, along with five modular refineries currently in operation and several more in various stages of establishment. This transition is further supported by local firms stepping in to occupy the space left by foreign companies resistant to ongoing reforms.
On the fervor of renaissance sweeping across Africa and Nigeria in particular, I have discussed in other interventions in this column how Alhaji Aliko Dangote is about to help Nigeria achieve energy independence and by extension economic renaissance in the way that the likes of Chief Mike Adenuga about 20 years ago pioneered the independence of Nigeria in the telecommunications sector with Globacom; Mr. Allen Onyema has accomplished filling the gap in the aviation sector with Air Peace and what Mr. Innocent Chukwuma is currently doing in the motor vehicles manufacturing sector with Innosson Vehicle Manufacturing, IVM.
Thus, as a country, Nigeria is exhibiting remarkable autonomy by having indigenous investors show a significant presence in the oil/gas, telecommunications, airlines, and automotive, landscapes of our country.
So, by and large, the nation at its 64th independence is weaning itself of too much dependence on foreign-made goods and services through the efforts of the aforementioned entrepreneurs and their brands.
As Nigeria’s past colonizer, the role of UK for instance should be the mentoring and nurturing of Nigeria’s political leaders and businesses.
Arising from the above fact, if Nigerian entrepreneurs are taking the driver’s seat of strategic businesses that will help guarantee the sovereignty of Nigeria through the entrepreneurial skills of Dangote, Adenuga, Onyema, and Chukwuma, among others, it is a welcome and worthy development which our political leaders should encourage as our beloved country clocks 64.
Magnus Onyibe, an entrepreneur, public policy analyst, author, democracy advocate, development strategist, alumnus of the Fletcher School of Law and Diplomacy, Tufts University, Massachusetts, USA, and a former Commissioner in the Delta State government, sent this piece from Lagos, Nigeria.
Magnus Onyibe, an entrepreneur, public policy analyst, author, democracy advocate, development strategist, alumnus of Fletcher School of Law and Diplomacy, Tufts University, Massachusetts, USA and a former Commissioner in Delta State government, sent this piece from Lagos, Nigeria.
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