Perhaps the uncomfortable truth is that some countries do get locked into import dependence by structural factors too deep-rooted and interconnected to overcome within any reasonable timeframe. Not because the people lack talent or effort, but because the compound weight of infrastructure deficits, institutional weaknesses, and unfavourable timing creates a gravitational pull toward dependence that policy interventions alone cannot escape.
Walk into any policy discussion on Nigerian manufacturing, and you’ll hear the same refrain: local producers need protection from imports. Poultry farmers want tariffs on frozen chicken. Fish processors demand import restrictions. Local refineries want tariffs on imported fuel. Textile manufacturers plead for border controls. The pattern repeats across nearly every sector of the economy.
The question isn’t whether these producers face genuine challenges. They clearly do. The deeper question is why it has become practically impossible to produce almost anything locally and sell it at a price competitive with imports. And perhaps more troubling: whether some countries simply get locked into import dependence by structural factors too deep-rooted to overcome.
The Cost Structure Nobody Can Escape
Nigerian producers operate under a cost burden that makes competition with imports nearly impossible ab-initio. Electricity alone tells much of the story. While producers in China or Vietnam draw cheap and reliable power from the grid, Nigerian producers run diesel generators that can account for 30 to 40 per cent of their production costs. This is not a trivial disadvantage. It is a fundamental cost overrun that exists before a single item is made.
Then there is infrastructure. Chaotic road networks turn every shipment into a logistics nightmare. Municipal water supply is either unreliable or totally non-existent. Port operations are not only frustratingly slow, they are also prohibitively expensive. Adequate infrastructure isn’t supposed to be a luxury that confers a competitive edge; it’s a basic requirement that functions smoothly elsewhere but remains a chronic obstacle here. Consider the poultry and fishery sectors, relatively straightforward industries where Nigeria should have natural advantages: massive local demand, available raw materials, and lower labour costs. Yet even here, local producers struggle against imports. If you can’t compete in these sectors, what does that say about the fundamentals?
The Scale Problem
A Chinese poultry processor might handle millions of birds through highly automated systems. A Nigerian counterpart operates at a far smaller scale, with more manual processes and less specialised equipment. The per-unit cost difference becomes insurmountable, regardless of how efficiently the Nigerian producer operates within their constraints. This has nothing whatsoever to do with work ethic or capability. It’s simple mathematics. Importers also benefit from global competition — they can source from whoever offers the best price worldwide at any given moment. A local producer is locked into their specific cost structure and location.
When tariffs, forex allocation rules, or trade regulations shift unpredictably, producers can’t plan long-term investments. A protective tariff implemented today might disappear in two years, making a factory built on that assumption unviable. The sweeping policy reversal that recently opened the agriculture sector to imports is a case in point. When rules keep changing, rational capital allocation becomes incredibly difficult, if not impossible.
The Currency and Credit Squeeze
Nigerian producers often pay interest rates of 20 to 30 per cent or higher for equipment financing and working capital. Compare this to manufacturers in countries with single-digit rates. This affects every investment decision, from building a factory to maintaining inventory. Currency depreciation creates another impossible dynamic. Naira weakness can make exports appear competitive in local currency terms, while simultaneously making dollar-denominated inputs for local production more expensive. Even “local” production typically depends on imported components — poultry feed ingredients, spare parts, and packaging materials. So local producers face import costs anyway, but without the scale advantages of pure importers.
Policy Uncertainty as a Structural Factor
When tariffs, forex allocation rules, or trade regulations shift unpredictably, producers can’t plan long-term investments. A protective tariff implemented today might disappear in two years, making a factory built on that assumption unviable. The sweeping policy reversal that recently opened the agriculture sector to imports is a case in point. When rules keep changing, rational capital allocation becomes incredibly difficult, if not impossible.
The Self-Reinforcing Trap
These factors don’t exist in isolation. They form a self-reinforcing cycle that’s difficult to break. Poor infrastructure and corrupt institutions raise production costs, which reduces competitiveness, diminishes industrial activity and tax revenue, limits funds for infrastructure investment, and keeps infrastructure poor. The same cycle applies to skills development, institutional capacity, and credit markets. What makes this particularly unforgiving is that you can’t fix these problems one at a time. You can’t just “fix electricity” when the power sector itself depends on forex for commodities and capital goods import, functional regulatory institutions, creditworthy distribution companies, and customers who can pay their bills. Each piece requires the others to work.
There’s also a brutal timing problem. Even if Nigeria started fixing everything today, manufacturers would need to survive the 10 to 15 years it takes for infrastructure to improve, institutions to stabilise, and economies of scale to develop. But they’re competing against imports right now, from countries that already possess all those advantages.
Are Some Countries Simply Locked Out?
The countries that successfully industrialised — South Korea, Taiwan, Singapore — did so under very specific historical circumstances. They had authoritarian governments that could direct investment and sustain losses for years. They received massive external aid, often geopolitically motivated. They had export markets willing to absorb their products, while they learnt. And perhaps, most importantly, they industrialised before global supply chains became so efficient, that established producers could undercut any newcomer instantly.
…the question isn’t why Nigerian producers keep demanding protection. It’s whether protection without addressing the fundamentals is anything more than a political gesture — expensive for consumers, temporary for producers, and ultimately futile for the goal of building a competitive local industry.
That last point deserves emphasis. Is it actually harder to industrialise now than it was 50 years ago? When an Indian fish farmer/processor with modern equipment, access to cheap and reliable electricity, efficient ports, and single digit interest rate can deliver Tilapia fish to Lagos cheaper than his Lagos counterpart can make them, what’s the path forward?
The Tariff Illusion
This is why protective tariffs become politically irresistible yet economically insufficient. They’re necessary precisely because the underlying cost factors haven’t been addressed; they don’t fix the competitiveness problem. They just shift costs to consumers, create avenues for rent extraction and invariably reduce pressure for harder structural reforms. The tragedy is that everyone understands this, yet the structural factors remain largely unchanged year after year. Infrastructure stays poor, ports remain inefficient, credit stays expensive. Access to state support remains politicised. Policies stay unpredictable. And the calls for protection grow louder while imports continue to dominate.
Perhaps the uncomfortable truth is that some countries do get locked into import dependence by structural factors too deep-rooted and interconnected to overcome within any reasonable timeframe. Not because the people lack talent or effort, but because the compound weight of infrastructure deficits, institutional weaknesses, and unfavourable timing creates a gravitational pull toward dependence that policy interventions alone cannot escape.
If that’s the case, the question isn’t why Nigerian producers keep demanding protection. It’s whether protection without addressing the fundamentals is anything more than a political gesture — expensive for consumers, temporary for producers, and ultimately futile for the goal of building a competitive local industry.
Olumide Awoyemi is founder/CEO of Symmex, an industrial-technological solutions provider and developer of Huraflow.
