Recently, the national president of the Poultry Association of Nigeria (PAN), Ezekiel Ibrahim, announced that the poultry industry might be forced to shut down by January 2021 due to the astronomical rise in the price of poultry feed caused by the rise in the price of maize and soya beans which are major ingredients in poultry feed.
This increase is a result of the ban on importation by the Nigerian government in a bid to boost local production and increase jobs that were lost as a result of the pandemic. This has however led to the decline of the poultry industry. In trying to boost the maize production industry, the government is ironically killing another industry.
The poultry industry is worth an estimated N1.6 trillion ($4 billion) and contributes about 25% to the agricultural sector. According to the president of PAN, roughly 20 million Nigerians are directly and indirectly employed in it. In July 2020, the Central Bank of Nigeria announced that all maize farmers should discontinue the processing of Form M, a mandatory document used in the importation of materials, for the importation of maize to boost local production of the crop.
The high cost and scarcity of poultry feed that followed led the government to relax its ban in another announcement that 262,000 tons of maize would be allowed to be imported. However, this was barely enough to address the crisis. Price of maize has since risen by over 80%, that of poultry feed by about 100% forcing many businesses to face an imminent shut down as feed covers over half of the cost of running a poultry farm. In the last seven months, about 2 million people in this industry have lost their jobs due to the scarcity of maize and soya beans. Five million more jobs are on the line.
This is a typical demonstration of what Frédéric Bastiat, a renowned economist, calls ‘the seen and the unseen’. In the section Restriction, of one of his most famous works The Seen and the Unseen, Bastiat explains that if the government bans importation of certain items in order to force citizens to patronize local businesses, other local businesses lose out because the funds citizens would have spent on them would rather go to supplement the increase in the price of these items.
In this case, what is seen is that maize farmers gain, however, what is unseen is that poultry farmers have to spend more on feed and some other industry is losing business because their products or services can no longer be afforded and that poultry farmers find it difficult to afford feed and may have to shut down. While the situation of poultry and maize industries is evident today because of their largeness, many other smaller industries have been grossly affected by protectionism too.
Prices of food items have been skyrocketing since the government closed the borders. Inflation rate is at 14.23%, the highest since March 2018 and Nigeria has been plunged into another recession barely three years after recovering from one. Despite all these, the list of items banned from importation keeps increasing without consideration of the country’s ability to fill in the gap. This is at the cost of not only the citizens who have to face scarcity of these items and increased prices but also other local industries which depend on these items for their survival.
There is no doubt that Nigeria needs to improve its local production. However, the government’s approach to this — shutting the borders and banning the importation of various items without consideration shows a poorly thought-out plan which is evident in the results they have produced. It’s high time the approach of protectionism was reconsidered. The Nigerian government should be more innovative and should create new markets if it is ever going to go beyond self-sufficiency to create a large export base.
Ogechukwu Egwuatu is a writing fellow at African Liberty, studying French and German at University of Nigeria, Nsukka.