Unpacking ‘Nigeria First’ Policy: Impacts, Challenges, Pathways To Effective Implementation
By Oyewole Sarumi
The Nigerian Federal Government, under President Bola Tinubu, recently announced a bold policy directive banning Ministries, Departments, and Agencies (MDAs) from importing goods and services that can be produced locally. Dubbed the “Nigeria First Policy,” this move aims to strengthen domestic industries, reduce import dependency, and stimulate economic growth.
This policy comes against the backdrop of Nigeria’s recent economic reforms—fuel subsidy removal and exchange rate unification—which have had mixed impacts on inflation, purchasing power, and industrial competitiveness. This article critically analyzes the new procurement policy, its alignment with broader economic reforms, potential benefits and drawbacks, implementation strategies, and recommendations for policymakers.
Section 1: Context of Nigeria’s Economic Reforms
1.1 Fuel Subsidy Removal and Its Economic Impact
In May 2023, President Tinubu announced the removal of fuel subsidies, a move aimed at reducing fiscal strain (subsidies cost Nigeria $10 billion in 2022 alone). While this was economically justified, it led to:
• Sharp rise in fuel prices (over 200% increase)
• Higher transport and production costs, worsening inflation (currently at 33.2% as of April 2025)
• Reduced disposable income, increasing poverty levels (World Bank estimates 4 million more Nigerians fell into poverty in 2024)
1.2 Exchange Rate Unification and Its Mixed Outcomes
The Central Bank of Nigeria (CBN) floated the naira in June 2023, leading to:
• Initial depreciation of the naira (from ~N460/$ to over N1,500/$ in 2024)
• Improved forex liquidity for manufacturers, but at higher costs
• Increased import costs, worsening inflation
1.3 The Rationale for the “Nigeria First” Procurement Policy
Given these economic shocks, the new policy seeks to:
• Reduce forex demand by limiting unnecessary imports
• Boost local manufacturing through enforced patronage
• Create jobs by revitalizing idle factories
• Improve trade balance by cutting import bills
Section 2: Pros and Cons of the Import Ban on MDAs
2.1 Potential Benefits
. Stimulating Local Industries: If enforced, this policy could revive Nigeria’s manufacturing sector, which contributes only 9% to GDP (World Bank, 2024).
. Job Creation: Increased local demand could generate employment, especially in agro-processing, textiles, and construction materials.
. Forex Conservation: Reducing government imports will ease pressure on the naira.
. Technology Transfer: Contracts requiring local capacity-building could enhance domestic expertise.
2.2 Potential Risks and Challenges
. Limited Local Capacity: Many Nigerian industries lack the capacity to meet demand (e.g., pharmaceuticals, machinery).
. Quality Concerns: Some locally produced goods may not meet international standards, risking inefficiency.
. Corruption in Waiver Grants: If the Bureau of Public Procurement (BPP) is not transparent, waivers could be abused.
. Higher Short-Term Costs: Local alternatives may be more expensive initially due to inefficiencies.
Section 3: Strategies for Effective Implementation
3.1 Strengthening Local Production Capacity
• Public-Private Partnerships (PPPs): The government should incentivize private sector investment in critical sectors. State governments must embrace the enabling law to setting up State Electric Power Sector Reform Law to pave the way for availability of electricity to all, which remains an albatross for our industrial development.
• Industrial Clusters: Developing sector-specific hubs (e.g., Lekki Free Trade Zone for tech, Kaduna for textiles, Aba axis for real cottage industries etc.). We can create more industrial clusters around each of the geopolitical zones across the country.
• Access to Credit: CBN and Bank of Industry (BoI) and other relevant government agencies or parastatals involved in finance/money lending should provide low-interest loans for manufacturers.
3.2 Ensuring Transparency in Procurement
• Digital Procurement Systems: e-procurement platforms (like GEM in India) can reduce corruption.
• Strict Waiver Criteria: The BPP must publish clear guidelines for exemptions, and refuse to be used as political patronage.
• Independent Audits: Regular reviews by civil society groups to ensure compliance. Let’s remember that what gets measured gets done.
3.3 Addressing Inflationary Pressures
• Subsidized Inputs: Temporary subsidies for raw materials (e.g., steel, chemicals) to lower production costs.
• Tax Incentives: VAT exemptions for locally made goods.
Section 4: Recommendations for Government and Policymakers
4.1 Short-Term Measures
• Gradual Implementation: Phase the ban to allow industries to scale up. I will recommend the next 12months in phases.
• Immediate Capacity Audit: Identify sectors with sufficient local capacity versus those needing support.
4.2 Medium to Long-Term Strategies
• Infrastructure Development: Stable power supply (via solar/gas investments) to reduce production costs.
• Skills Development: Technical training programs to improve workforce quality.
• Export Promotion: Encourage local manufacturers to meet regional demand (AfCFTA opportunities).
4.3 Mitigating Risks
• Anti-Corruption Safeguards: Strengthen EFCC/ICPC oversight on procurement processes.
• Consumer Protection: Standardization agencies (SON, NAFDAC) must ensure product quality.
CONCLUSION:
This policy for me is a step in the right direction, but my greatest concern is this: “Execution”. That remains the bane of most laudable policies in our polity. Let me explain: The “Nigeria First” procurement policy is a bold and necessary move to reduce import dependency and boost industrialization. However, its success depends on effective implementation, transparency, and complementary policies to strengthen local industries.
If well-executed, Nigeria could replicate successes seen in countries like India (Make in India) and Ethiopia (local content policies). If poorly managed, it could lead to shortages, inflation, and corruption.
My Final Recommendation: The Tinubu administration must adopt a phased, transparent, and industry-supportive approach to ensure this policy delivers sustainable economic growth.
Prof. Sarumi is the Executive Director of ICLED Business School, and writes from Lagos, Nigeria Tel. 234 803 304 1421, Email: [email protected]._
