Throughout the week, the Nigeria social media space was agog over the issue of rising cost of products, especially following the current administration’s border closure policy. Using a table purportedly compiled by one @edoyakulo, which showed past and current prices of 15 food items ranging from vegetables and fish to gari and beans, among other things, Nigerians continued to lament rising cost of food and other essential items.

As the data showed, unit cost of sampled products increased from 60 percent to 456 percent since the border closure came into effect. A bag of rice, for instance, rose from 15,000 naira to 30,000 naira while a measure of beans rose from 180 naira to 1,000 naira – a whooping 456 percent. Consequently, Nigerians demanded that the border closure policy be reversed.

A good number of Nigerians reacting to this exponential increase in product prices argued that Nigeria should open its borders to allow for unhindered importation of items. In general, they expressed the belief that Nigeria was better-off pre-border closure era than now when the borders were shut.

Prior to this week, a certain Nigerian, Mr. Sunday Adeyemo, (aka Sunday Igboho) had demanded that all borders linking other countries to Yorubaland be opened to allow a free flow of products into Yorubaland and the country at large. Many, including this writer, discountenanced Sunday Igboho’s comment, blaming his remarks on ignorance of the most basic principles of economics. With a great number of Nigerian graduates and students now peddling similar arguments, one cannot but ask whether Nigerians truly understand the real reason for the country’s current economic woes.

Other questions that agitated my mind since the beginning of the week included, but not limited to whether Nigeria is truly better off with unbridled importation; what the astronomical rise in prices of items say about Nigeria’s economic development;  whether Nigeria can be economically stable opening its borders to importation of just about everything; and what the impact of importation on national growth, most especially national economic stability over the long term would be.

I also mused on what the determinants of prices are and what solutions are available to curb incessant price hikes. Given Nigeria’s vast land area and teeming youth population, could this hike in price of food items be justifiable? To what extent is the call for a return to importation as a panacea to price hike symptomatic of a lack of entrepreneurial education and cluelessness, especially among Nigerian youths?

Given some Nigerians’ penchant for taking issues out of context and assigning unintended meanings, it is important to provide some further explanations on a few of the key issues raised here.

Determinants of prices could be internal or external factors. Irrespective of whether one lives in Nigeria or the planet Pluto, unit price of any article of trade is a function of internal factors such as organizational indices, market mix, product mix and cost of (producing) the product. On the external side, factors such as demand, competition, supply, and utility inform unit price.

Let us work with what we already know, rice. The cost of a bag of rice jumped from N15, 000 naira to N30, 000 naira following the border closure. This is outrageous and has serious societal implications especially with regard to poverty level, food and nutrition as well as  national security, etc. Notwithstanding all of those, the point has to be made that N15, 000 per unit cost is far too exorbitant for a bag of rice.

Africa, it must also be said, has comparative advantage in agriculture, but unfortunately, lackluster approach to planning, rudimentary tools, land tenure system, lack of mechanization, are some of the problems necessitating such astronomical rise in unit cost of a bag of rice. To the myopic and, if you like, economically untrained, the only reason why the price of a bag of rice rose to 30,000 naira was the border closure, and which, for that same singular and odd reason, must be reversed.

Why did the government close Nigeria’s borders to food items? Was it because of a lack of understanding, as many have suggested? Is border closure a bad policy? Why did government embark on border closure, especially under the economic circumstances prevalent in the country as of when the Buhari-led government chose to go that route?

Border closure, in purely economic terms, aims at boosting local production to, among other things, ensure long-term economic stability, development of local capabilities, provision of jobs, etc. It also aims at stemming foreign exchange upward swing.

As the trio of Dr. Chukwuma Soludo, Dr. Lamido Sanusi, and Dr. Okonjo Iweala noted towards the end of President Ebele Jonathan’s 6-year rule, Nigeria’s economy had been in total shambles. They canvassed a change of direction. However, that was not the only time in Nigeria’s history that such warnings had been issued. Shortly after independence, warnings such as that were issued, first before the oil price crash of the late 1960s and early 1970s, and secondly, in the early 1980s and late 1990s. The concern at those different time periods was Nigeria’s over dependence on rent from crude oil.

What made the last warning different from the previous ones was the fact that the last one was made at the height of an upward swing in oil prices. The rapacity that characterized President Jonathan’s reign was made the more palpable by the government’s absolute indifference to infrastructural development and economic prudence.

So, as of May 29, 2015, it was not a question of whether Buhari would preside over a dilapidated economy, but how the new government would steer the country away from economic collapse. Crude oil price fell from 156.00 USD to a paltry 05.00 USD per barrel. Nigeria’s economic managers weathered the storm and the nation survived. Nigerians suffered, as unit cost of everything went through the roof, exchange rates soared, salaries went unpaid, etc. Social vices rose at an astronomical rate as poverty drove many into crime and criminality.

In the midst of all these, Nigeria closed its borders to imported food, urging citizens to return to the land and plant whatever they must eat. Consequently, we saw a heartwarming rise in local production of rice, wheat, livestock, etc. If not for the swine flu that crept into Nigeria (from South Africa and Asia) at the same time that Covid-19 struck, pork production in Nigeria would have been today at its nadir.

Border closure not only stimulated local production, it also created jobs, as new entrepreneurs, who benefited from government loans, capitalized on the border closure to increase their holdings. For many Nigerians, the impact of these new entrepreneurs was hardly noticeable, as the price of a bag of rice which goes for a whooping 30,000 naira, makes them oblivious of other collateral benefits of the border closure. The astronomical rise in product prices has led many to challenge the economic sense behind the border closure, referencing only its short term pains.

As any economist would confirm, there is nothing wrong with border closure in the ongoing products’ price increase in Nigeria. Rather than attack the border closure policy, armchair critics should try to understand the basic principles underlying economic growth.

Using rice production as an example, underlying the astronomical rise in price of rice is the simple factor of demand and supply. Nigerians’ demand for rice remains constant in the face of its dwindling supply. Nigeria can increase supply of rice in two keyways: through increasing domestic production and/or through importation. If Nigeria aims to avoiding dependence on importation and its attendant foreign exchange problems, then, increasing domestic production of rice is the only sensible step, not minding its immediate impact such as price upward trajectory. Should Nigeria return to its earlier importation regime, domestic production of rice will sink again, all new jobs created – no matter how few, would disappear, foreign exchange upward swing would return, youth unemployment would rise, and all gains so far recorded would be lost.

So, if a long-term economic sustainability of Nigeria is a national objective of not just the country’s economic managers, who saw the country out of a near economic collapse in 2015/2016, but a truly pan-Nigerian objective, then, advocating a return to importation by Nigerian youths is a clear admission of ignorance.

One finds him or herself at a crossroads here: given Nigerian youths’ education level, one cannot but find it strange that rather than realizing the enormous job opportunities provided by border closure and seizing these opportunities, some Nigerian youths are advocating for the very thing that pauperized them in the first place. Is this a clear indication that our education has failed to provide us with the critical knowledge that will drive national development, or we are mainly blessed with certificated illiterates?

Like I noted earlier, this is not about where a person lives, his or her support for any government or otherwise. This is about common sense and knowledge of economic fundamentals. So, before you accuse me of being a supporter of Buhari and his government, it is important that we sit back and ask ourselves how long we have been importing and how much or less it has benefited us. If we are not ready to suffer to turn our situation around, then we should, by all means, enjoy our short-term boom and be ready to endure a long-term doom as a dependent nation.