It is no longer breaking news that Nigeria will need to aggressively diversify her economy or die. With Oil price below $35 and the entire market at the mercy of global demand, It will be catastrophic for Nigeria’s economy to be heavily exposed to the crude oil markets during and after the pandemic.
There are multiple examples Nigeria can copy and implement from Asia, from the Chinese Model of global supply chain, to India’s I.T consulting economy with software exports valued at $100 Billion in 2017 alone.
The best alternative for Nigeria however, should be the ASEAN model, which has seen South-East Asian Nations leverage of market reforms to become export superpowers, leveraging on their human capital for western global supply chains.
The association of Southeast Asian Nations (ASEAN), established in 1967, is a regional intergovernmental organization comprising of ten countries in South East Asia.
The countries are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam with a combined GDP of $2.8 Trillion today and the 3rd fastest growing economy in Asia after China and India.
Over $3.4 trillion worth of global trade transits the ASEAN region every year, making it an important global hub for International Trade.
In 2018, the top ASEAN exporters to the United States according to the Office of the United State Trade Representative were: Vietnam ($49.2 Billion), Malaysia ($39.4 Billion), Thailand ($31.9 Billion), Singapore ($26.6 Billion) and Indonesia ($20.8 Billion).
The top export categories of ASEAN nations to USA in 2018 were: Electrical Machinery($52.8 Billion), Machinery($23.3 Billion), Knit Apparel ($12.8 Billion), Woven Apparel ($8.7 Billion) and Footwear ($8.3 Billion).
The stand out nation in exports to USA from South East Asia is Vietnam. How did a country that experienced 20 years of brutal war become an export powerhouse today? That is the question we should be asking here in Nigeria.
In 2019, Vietnam’s exports rose 8.4% to $264 Billion recording a trade surplus of $11.12 Billion after imports of $253.071 Billion. With key exports being electronics and machinery.
Vietnam did not reach there overnight, the road to Vietnam’s economic started in 1986 when Vietnam started political and economic reforms known as “ Doi Moi”. After a 20 year period of wars ended in 1975, Vietnam was one of the poorest nations on earth with a per capita GDP of just over $200, since the implementations of the “ Doi Moi”, Vietnam’s GDP per capita has risen five times to about $2,500 today.
The reforms transformed Vietnam into a socialist oriented market economy by letting go of text book Marxist economic rules like price control and production targets and opening up Vietnam to Foreign Investment.
Today Vietnam is home to over 500,000 private Businesses, unemployment of just 2.2% and only 6.7% of Vietnam’s population living below poverty.
Vietnam is the textbook example every 3rd World nation should aspire to be. Nigeria has many lesson to learn and first of all it’s the angle of reforms. Without reforms nobody will invest in Nigeria, foreign investors need to see that their investments are safe and ease of doing business protocols will ensure smooth movements of services.
Secondly, just like the Doi Moi did in Vietnam where it liberated the Communist party’s monopoly on power and gave Vietnamese the freedom to voice their suggestions on tackling governance and economic policy. Nigeria should be ready to give up control too.
A conscious effort in giving up central control will lead to fixing the most important asset for an industrialized 21st Century economy, Power.
For Nigeria, the control our leaders should be willing to give up is the centralization of economic policy, with a decentralized effort on economic development; the Federal Government’s role is to bring the policy framework for Foreign Direct Investment while the states and regions work on collaborative plans in capturing FDI for their personal emancipation.
Vietnam is the best model not just for Nigeria, but for African nations willing to move from 3rd world to First. A pragmatic willingness to reform plus implementation of the reforms has seen Vietnam become the darling of the ASEAN countries.