Opinion
Lessons From Japan
As part of President Buhari’s administration’s strategies to revive the country’s ailing economy, the Central Bank of Nigeria (CBN), three years ago, restricted access to foreign exchange at the official window for importers of some designated items.
Importers of such named items are by this development to source foreign exchange from the parallel market where the price of forex is significantly higher than the official rate. Although in May, 2017, the CBN lifted the restriction on importers whose cumulative transactions are $20,000 and below per quarter.
Apart from taking this measure, the country’s financial umpire went on to outrightly ban the importation of certain goods into the country, most of which are consumer or intermediate products.
The Central Bank Governor, Godwin Emefiele, took this step because he strongly believes that this protectionist bid would help to “resuscitate local manufacturing” and “change the structure of the economy”.
This, former President Olusegun Obasanjo, also once acknowledged during his tenure, when he vowed; ”We are certainly going to ban more products, the idea is to protect our local industries and boost our manufacturing capability substantially”.
Even though some econmic analysts consider the import ban strategy a good initiative by the CBN, positing that it will inspire local production and automatically impact on the nation’s Gross Domestic Product (GDP), the like of Razeen Sally, professor of International Political Economy at the National University of Singapore, views it rather inherently arbitrary, discriminatory and opaque.
Professor Sally’s grouse stems from the fact that powerful individuals and interest groups often bypass Ministry of Trade’s officials and even the minister to secure waivers directly from sitting presidents, as he claimed.
If Professor Sally’s argument be true, one wonders why any government would dare to destroy a policy it has put in place to correct a system’s anomalies. Could it be said that policy-making in Nigeria is based on administrative fiat and ministerial discretion?
The import ban approach may not be peculiar to Nigeria. However, the attitude of the government towards its implementation determines the level of result to be expected. After all, Japan’s great and unbelievable fast technological and industrial breakthrough started when it banned the importation of articles into the country.
I think it is time Nigerian government articulated its economic policies with the understanding that the role of government in the 21st century must evolve from that of being an omnibus provider of citizens’ needs into a force for eliminating the bottlenecks that hitherto impeded innovation and market -based solutions.
Today, the entire world talks about Japan. This is so because the Japanese government played a vital role by creating an enabling economic environment which was evident in complementing the development of superior production and enterprise systems by Japanese industry.
It is, therefore, no gain saying the fact that the best and most fuel-economical cars, engines and power generators are from Japan. The Hondas, Suzukis, Kawazakis, Mazdas, and Toyotas are Japanese. Incredibly, the Americans now import Japanese cars.
In one of his pieces: “Sweating Before Soaring”, Dr. Chris E Kwakpovwe, a publisher and writer, explained that the Japanese decision to ban importation of goods into the country subjected the citizens into economic suffering.They all resorted to the use of crude automobile and probably became a laughing stock before other countries.
Like every other growing economy, Japan’s bid to reposition itself in the global economic map, was not without challenges. Policymakers, no doubt, may have had to contend with issues on low growth, deflation, unemployment, and a debilitating amount of non performing debt.
When leaders outline lofty visions, it is for patriotic citizens and their corporate entities to key in. The determination of the present administration of President Muhammadu Buhari to change Nigeria from an import dependent country to a producing nation can only be feasible if we all pledge to be on the same page.
The bourgeoisie and the talakawas bear the brunt of every transformation endeavour and are expected to believe in its workability irrespective of the reactional realities. It is on this premise that Thomas Woodrow Wilson, the 28th president of the United States of America, declared “ I would rather fail in a cause that will ultimately succeed”.
Ninety per cent of failures today result from people refusing to endure pressure and giving up so soon. But those who understand the gains of transformation, would always undermine the pains.
What Japan’s experience demonstrated with great clarity is that problems arising from efforts geared at fixing cracked or dilapidated system should rather propel us to greatness instead of deterring us.
Again, indecision and inaction must not characterize the government’s response. Thus, a vibrant, responsive and proactive government is all that is needed in any transformative agenda.
Sylvia ThankGod-Amadi
From all indications, Nigeria possesses enough human and material resources to become a true economic powerhouse in Africa. According to the National Population Commission (NPC, 2023), the country’s population has grown steadily within the last decade, presently standing at about 220 million people—mostly young, vibrant, and innovative. Nigeria also remains the sixth-largest oil producer in the world, with enormous reserves of gas, fertile agricultural land, and human capital.
Yet, despite this enormous potential, the country continues to grapple with underdevelopment, poverty, unemployment, and insecurity. Recent data from the National Bureau of Statistics (NBS, 2023) show that about 129 million Nigerians currently live below the poverty line. Most families can no longer afford basic necessities, even as the government continues to project a rosy economic picture.
The Subsidy Question
The removal of fuel subsidy in 2023 by President Bola Ahmed Tinubu has been one of the most controversial policy decisions in Nigeria’s recent history. According to the president, subsidy removal was designed to reduce fiscal burden, unify the foreign exchange rate, attract investment, curb inflation, and discourage excessive government borrowing.
While these objectives are theoretically sound, the reality for ordinary Nigerians has been severe hardship. Fuel prices more than tripled, transportation costs surged, and food inflation—already high—rose above 30% (NBS, 2023). The World Bank (2023) estimates that an additional 7.1 million Nigerians were pushed into poverty after subsidy removal.
A Critical Economic View
As an economist, I argue that the problem was not subsidy removal itself—which was inevitable—but the timing, sequencing, and structural gaps in Nigeria’s implementation.
- Structural Miscalculation
Nigeria’s four state-owned refineries remain nonfunctional. By removing subsidies without local refining capacity, the government exposed the economy to import-price pass-through effects—where global oil price shocks translate directly into domestic inflation. This was not just a timing issue but a fundamental policy miscalculation.
- Neglect of Social Safety Nets
Countries like Indonesia (2005) and Ghana (2005) removed subsidies successfully only after introducing cash transfers, transport vouchers, and food subsidies for the poor (World Bank, 2005). Nigeria, however, implemented removal abruptly, shifting the fiscal burden directly onto households without protection.
- Failure to Secure Food and Energy Alternatives
Fuel subsidy removal amplified existing weaknesses in agriculture and energy. Instead of sequencing reforms, government left Nigerians without refinery capacity, renewable energy alternatives, or mechanized agricultural productivity—all of which could have cushioned the shock.
Political and Public Concerns
Prominent leaders have echoed these concerns. Mr. Peter Obi, the Labour Party’s 2023 presidential candidate, described the subsidy removal as “good but wrongly timed.” Atiku Abubakar of the People’s Democratic Party also faulted the government’s hasty approach. Human rights activists like Obodoekwe Stive stressed that refineries should have been made functional first, to reduce the suffering of citizens.
This is not just political rhetoric—it reflects a widespread economic reality. When inflation climbs above 30%, when purchasing power collapses, and when households cannot meet basic needs, the promise of reform becomes overshadowed by social pain.
Broader Implications
The consequences of this policy are multidimensional:
- Inflationary Pressures – Food inflation above 30% has made nutrition unaffordable for many households.
- Rising Poverty – 7.1 million Nigerians have been newly pushed into poverty (World Bank, 2023).
- Middle-Class Erosion – Rising transport, rent, and healthcare costs are squeezing household incomes.
- Debt Concerns – Despite promises, government borrowing has continued, raising sustainability questions.
- Public Distrust – When government promises savings but citizens feel only pain, trust in leadership erodes.
In effect, subsidy removal without structural readiness has widened inequality and eroded social stability.
Missed Opportunities
Nigeria’s leaders had the chance to approach subsidy removal differently:
- Refinery Rehabilitation – Ensuring local refining to reduce exposure to global oil price shocks.
- Renewable Energy Investment – Diversifying energy through solar, hydro, and wind to reduce reliance on imported petroleum.
- Agricultural Productivity – Mechanization, irrigation, and smallholder financing could have boosted food supply and stabilized prices.
- Social Safety Nets – Conditional cash transfers, food vouchers, and transport subsidies could have protected the most vulnerable.
Instead, reform came abruptly, leaving citizens to absorb all the pain while waiting for theoretical long-term benefits.
Conclusion: Reform With a Human Face
Fuel subsidy removal was inevitable, but Nigeria’s approach has worsened hardship for millions. True reform must go beyond fiscal savings to protect citizens.
Economic policy is not judged only by its efficiency but by its humanity. A well-sequenced reform could have balanced fiscal responsibility with equity, ensuring that ordinary Nigerians were not crushed under the weight of sudden change.
Nigeria has the resources, population, and resilience to lead Africa’s economy. But leadership requires foresight. It requires policies that are inclusive, humane, and strategically sequenced.
Reform without equity is displacement of poverty, not development. If Nigeria truly seeks progress, its policies must wear a human face.
References
- National Bureau of Statistics (NBS). (2023). Poverty and Inequality Report. Abuja.
- National Population Commission (NPC). (2023). Population Estimates. Abuja.
- World Bank. (2023). Nigeria Development Update. Washington, DC.
- World Bank. (2005). Fuel Subsidy Reforms: Lessons from Indonesia and Ghana. Washington, DC.
- OPEC. (2023). Annual Statistical Bulletin. Vienna.
By: Amarachi Amaugo