and investors to shift base to China - especially those operating in labour intensive industries and sourcing for cheap labour - which helped China develop its desired links with the world market . The country capitalized on its strengths in formulating its trade reform policy and China has , since 2009 , been the world ’ s largest exporter of goods and services .
South Africa
South Africa commenced its import substitution strategy as far back as the 1920s with the implementation of strict import quotas . Though this encouraged industrialization and bolstered exportation of basic commodities , by 1970s , there was a need to diversify the country ’ s export base to ensure more sustainable development . This led to the implementation of flexible exchange rates , complex tariff structure to protect local industries ( particularly mining , transportation , and power ), and implementation of structural adjustment programmes for selected sectors . Additional reforms were later adopted on the back of the regional and bilateral trade agreements South Africa had signed with many countries . All these enabled the country transition from a major producer of consumer goods to that of capital goods , including power generation , mining and energy .
The way Forward …
International experience has shown that :
• Import substitution strategies cannot be pursed in isolation .
• Specific sectorial policies aimed at promoting industry growth should be enacted and implemented by the government .
• To achieve economic independence , it is necessary to protect domestic producers .
• Locally produced products must be consumed locally first and then exported .
• Companies have a role to play by investing in backward integration .
• IS strategies should be supported by export promotion and enabling environment to encourage foreign investments and capital development .
Whilst the government introduced tax incentives , intervention funding , and attractive fixed income yields to boost foreign inflows and stimulate local production , the right policy mix and basic infrastructure that would enable industrial growth such as good roads , rails , and stable power
Source : World Bank Data
source are still lacking . Furthermore , the technical know-how needed for major construction and industrial projects is still at discouraging levels due to low spend on Research & Development ( R & D ) and the necessary technical institutes . How then can these implemented IS strategies gain traction beyond what we have today ?
1 . The role of government in the IS journey is very crucial as they need to provide the right economic blueprint for development to thrive . The Nigerian government launched the Economic Recovery and Growth Plan ( ERGP ) in April 2017 with the aim of achieving structural economic transformation and sustained inclusive growth . The plan will cover sectorial strategies for infrastructure and industrial development , revamping of local refineries , and forging better partnerships between private and public sector . All these definitely sound like what the Nigerian economy requires , which is why there is a need for proper and quick implementation of the ERPG to set Nigeria on the path to finally achieving sustainable growth .
2 . Another crucial task for the
The Corvus | August 2018
Nigerian government is the complete passage and implementation of the revised Petroleum Industry Bill ( PIB ). From the Brazilian case study earlier discussed , the growth in the oil and gas sector began when the Petroleum law was passed to establish a legal and regulatory framework for the
industry . With the successful passage of the Petroleum Industry Governance Bill ( PIGB ) in 2017 , the National Assembly must fast track the passage of the other three ( 3 ) components of the revised PIB namely Petroleum Industry Administrative Bill ( PIAB ), Petroleum Industry Fiscal Bill ( PIFB ) and the Petroleum Host Communities Bill ( PHCB ). The implementation of the revised PIB will likewise encourage investment and drive growth in the country ’ s petroleum industry , which will in turn generate revenue for the development and diversification of the economy based on the ERGP blueprint .
3 . In addition to the aforementioned , another setback to successful import substitution in Nigeria is the shortage of local demand , both at the individual and corporate levels .
Firstly , when Nigerians spend huge amounts on imported goods and services , it is to the detriment of local companies . It has been advocated for years that Nigerians should buy Nigerian made products . The reason for this is less about patriotism and
13 Beyond the Rhetoric of Import Substitution
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