Kalu Idika Kalu: Nigeria Must Sustain Competitive Advantages For Manufacturers

Nigeria’s former Minister of Finance, Kalu Idika Kalu, has said that Nigeria must ensure that it takes advantage of the tremendous advantages to sustain competitive advantages in a dynamic setting for manufacturers in Nigeria.

The former minister and politician said this in an interview on Saturday while discussing his new book titled “Nigeria: Tariff and Non-Tariff Policies and Impact on Industrial Development”, where he also mentioned that if the country does not protect its industries, it will discourage production.

Discussing his book, Kalu said, “Nigeria has gone through a whole regime of changes in our tariffs, in our taxes, in our non-tariff measures, uses of quotas. Indeed, domestic financial indicators also feature this- the rate of interest, you can be protecting, but you are giving your people maybe protection from competitive cost by making affordable all types of other issues- fertilizers, foreign exchange, cost of funds and so on and so forth.”

“There are ways you can do this, and if you don’t take care, you will end up discouraging production. You end up intervening with the market structure such that the producer is facing a totally different protective regime from the one that is normally presented by those your nominal tariffs. So, this is what the trade, the professional groups, the manufacturers and so on, they will have a whole lot of things to say about this at any given point in time.

“So, right now, Nigeria has tremendous advantages, but we have to make sure that we line up those advantages in a way to sustain competitive advantage in a dynamic setting, and the way to do that is to continuously, in a dynamic sense, look at your structure of you production, look at your entire production matrix.”

Sharing more context on what the book contains, he said, “Every nation tries to protect its industries. In other words, you give them a protection that gives them room to grow so that they are not dwarfed by competition from more technically advanced countries where the costs of production are going down and where the economies of scale are not being reached as quickly as you might wonder.

“The whole point of this book is to throw more light. When there are trade negotiations, usually, what we hear about is the nominal tariffs, the ones we see in our tariff books and so on and so forth. But what this study has tried to is to look behind those nominal tariffs to other non-tariff issues that will impact on the nominal tariffs so that by the time you now sort of absorb all those non-tariff issues, you are able to gauge appropriately what we now call effective protection.”

Kalu then gave his opinion on what the country can do to work with the study conducted in the book as he said, “This study was based on a study that was done in the mid-sixties. What it requires is that overtime, we update our industrial structure, our production matrix and we keep adjusting these things in a way that will suggest that we are very alive to the kind of protective coverage we are giving to our farmers, to our small manufacturers, to our emerging industrialists, and of course, the welfare of the consumers. That is also very paramount. You don’t do this without recourse to how all this impacts on consumers.”

Ozioma Samuel-Ugwuezi