The victory of the ruling APC and President Muhammadu Buhari at the February elections, means a continuity of the policies of economic patriotism and protectionism. A key plank of this strategy is its reliance on the economic philosophy of infant industry protection. The unintended consequences of this philosophy (which has been successful in some countries) but now outmoded is that it breeds crony capitalism and consumer exploitation.
In a mercantilist world, protectionism reduces total trade whilst globalization increases the level of world output (GDP). In a mostly corrupt and inefficient country, the result of protectionism is usually more bribes for custom officers and greater profit (rent) for smugglers.
There has been a lot of talk in recent times about backward integration in the tomato value chain. However, its prospects are likely to be constrained by difficulties in transportation and storage of fresh tomatoes. The new initiatives of swapping road construction for tax waivers by manufacturing companies e.g. Dangote, Unilever, Flour Mills etc. will go a long way in the debottlenecking of highways starting in Apapa.
In this edition of the FDC Bi-Monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and the economy at large.
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