Princewill Odidi|16 March 2016|5:24am
Kachukwu the petroluem minister says it is cheaper to import petrol than to refine locally. Is he right after all? This is the economic question sometimes difficult to explain to a layman.
He is correct. But it raises an economic question. Do we continue to refine domestically just because we have to maintain employment? Or do we continue to import Petroleum because it is cheaper even when we have the capacity to refine?
Understanding this economic question is vital to appreciating development economics.
Recently, I visited a Nigerian state where it has been rumored has some gold deposits, and the investment commissioner kept repeating himself, we have gold in our state, we need investors.
I refused to utter a word, because I did not want to glorify his ignorance. When he kept pressing and proceeded to request I should give him an invitation letter to come to America and talk to investors, at that point I decided to test his ignorance.
I asked him, have you conducted a study to determine the feasibility and cost analysis of mining gold here in your state, taking into consideration the cost and profit margins, the risk analysis and available markets for your product?
Have you considered the economies of scale for local production vis a vis your closest competitor which is Ghana? At that point he appeared lost.
He proceeded to insist, he argued, when the investors come that's when they will do feasibility studies.
Not willing to make him look more stupid, I told him I will look into it. The fact that you have gold and diamonds in your state does not translate to an investors heaven.
Common sense economics implies that a thorough feasibility study is undertaken and profit margins determined before you start approaching investors else you look stupid in their eyes.
This is what happens when Non enlightened people are given the task of policy making. They look for investors before feasibility studies are done instead of the other way around. This explains why we keep having facilitators hovering around our government houses calling themselves investors.
No meaningful foreign investor will visit a state without reviewing her feasibility analysis of proposed investment options. Sometimes common sense is not really common.
As a country, we can get it right if we decide to get it right, Senator Ben Bruce is right, when he says all we need to make Nigeria great is common sense leadership.
Princewill Odidi
Is a Development Consultant writing from Atlanta
