Sunday Edition — Protecting Business, Hurting Markets

EDITOR'S NOTE

This week's Sunday Edition comes from Temitope Akande, who argues that Nigeria has confused protecting businesses with protecting markets, two instincts that often work against each other in practice. Drawing on Nigeria's cement and food import restrictions, the Dangote–BUA sugar dispute, and Mexico's 2013 telecom reforms, the essay makes the case that shielding incumbent champions from competition, however well-intentioned the rhetoric, has quietly constrained Nigeria's economic growth for decades.

To Grow The Economy, Nigeria Needs to be Pro-Market, Not Pro-Business.

 

Nigerians fundamentally misunderstand what capitalism looks like in practice. When we watch a local billionaire commission a massive manufacturing plant, flanked by government officials who promise to aggressively block foreign competitors, we applaud it as a triumph of the free market. It is not. We suffer from a fatal public confusion between a state that is pro-business and a state that is pro-market. They are not synonyms. In our political economy, they are actively at war with each other, and this conflict is the primary reason our economy refuses to grow.

A pro-business government serves the incumbent. It views the financial survival and profit margins of established companies, almost exclusively owned by a politically connected elite, as equivalent to the national interest. It shields these firms through direct import bans, punitive tariffs, and preferential foreign exchange allocations. By effectively privatizing the financial gains of these enterprises and socializing their structural inefficiencies, the state shrinks the overall economic pie simply to guarantee the incumbent's slice.

A pro-market government, conversely, serves economic expansion. It prioritizes open entry, transparent regulations, and contestable sectors. It is entirely indifferent to whether an incumbent firm goes bankrupt, provided a more dynamic, efficient competitor can step in to take its place. It enforces contracts, maintains a level playing field, and refuses to design localized monopolies for the president's friends.

Nigeria has never possessed a pro-market government. From military regimes to our current democratic dispensations, we have been ruled almost exclusively by pro-business administrations. The downstream result is not just expensive consumer goods; it is a chronically stunted economy engineered to extract wealth rather than create it.

The Growth Penalty

This wealth extraction is usually obscured by the noble rhetoric of self-sufficiency. We are consistently told that high import duties are the necessary, temporary price of industrialization. The argument possesses a superficial logic: our factories face bad roads, poor electricity, and expensive credit. If we expose every young factory to foreign competition immediately, some will die before they learn to stand.

Fair enough. But protection must pass its own test. It should create efficient producers that eventually compete without state assistance, driving national GDP forward. Crucially, it should have a firm date on which the shelter ends. Ours usually has none. The promised industry is reviewed later, and in the meantime, the wider economy suffocates.

Take the cement sector. The backward-integration policy did expand local production, and Nigeria successfully built large plants to reduce its dependence on bagged imports. But by closing the border to protect local producers, we left the domestic market under the absolute control of a strict oligopoly. The economic damage goes far beyond the price of a single bag.

In March 2026, the Real Estate Developers Association of Nigeria revealed that a 50kg bag of cement, which sold for about ₦7,500 in the last quarter of 2025, had surged to between ₦11,500 and ₦15,000 in several parts of the country.¹ Expensive cement translates directly into abandoned infrastructure projects and halted real estate developments. When building costs artificially double, construction firms stop hiring. Architects, bricklayers, plumbers, and electricians lose their wages. The protection granted to three cement companies functions as a massive tax on the entire construction sector, actively choking off one of the highest-employing industries in the country. We protected a business, but we shrank the economy.

The growth penalty is even steeper when we examine food. Food protection heavily borrows the language of farming, buy Nigerian, save foreign exchange, create rural jobs. Yet a ban at the border does not irrigate a single farm, repair a rural road, or provide storage facilities. It simply restricts supply.

When the federal government closed Nigeria's land borders in 2019, the prices of both imported and local food surged simultaneously. The World Bank assessed this policy and found that the resulting price shock from these import restrictions could have increased poverty by around 1.1 percentage points.² But the macroeconomic damage is the real story. The World Bank estimates that replacing our import bans with standard tariff duties would result in a 9.4% increase in household real income, and a 10% increase for the poorest quarter of the population.²

Economic growth requires consumer spending. When households are forced to spend seventy percent of their income on artificially expensive protected food, they have zero disposable income left for anything else. If Nigerians cannot afford to buy clothes, electronics, or local services, those secondary industries cannot scale. Protecting food producers starves the rest of the retail and service economy of capital.

The Innovation Deficit

This protective instinct actively destroys domestic capital formation. When firms know their financial survival is guaranteed by a presidential import ban, they have absolutely no reason to optimize their supply chains or invest in research and development. They become rent-extraction machines.

In 2021, BUA Group commissioned a major sugar refinery in Port Harcourt. Almost immediately, Nigeria's two largest sugar producers, Dangote Sugar and Flour Mills of Nigeria, jointly petitioned the Federal Government to shut the new plant down.³ Their argument was revealing: they claimed BUA's operation undermined the National Sugar Master Plan, which had historically granted the dominant players massive raw sugar allocations. They openly argued that Nigeria already possessed enough refining capacity and that a new competitor would upset the market.

Rather than welcoming capital expenditure and job creation in Rivers State, the immediate instinct of the incumbents was to ask the state to eliminate the rival. This mindset prevents the agglomeration of businesses that drives national prosperity. It builds a queue outside a minister's office, not a dynamic industrial base.

The Transition Mechanics

The strongest objection to opening our markets is that exposing fragile local industries to global competition will trigger immediate factory closures, destroying what little industrial capacity we have. Opponents argue that we would simply become a dumping ground for state-subsidized foreign giants, destabilizing the economy long before new growth materializes.

This is a valid, serious concern. However, it falsely assumes that liberalization means dropping all tariffs to zero overnight. A serious transition away from protectionism requires active, phased state management.

India faced this exact crossroad in 1991. The Indian state had spent decades trapping its economy in extreme protectionism, with peak customs duties initially exceeding 300 percent.⁴ When they finally reformed, they did not abandon their industries to immediate ruin. They instituted a massive, phased reduction schedule, lowering peak tariffs to 150 percent in 1991, down to 110 percent in 1992, and steadily downward over subsequent years. The phased approach gave local manufacturers a clear, unalterable runway to adapt. Indian companies did not collapse; they optimized their supply chains, absorbed new technologies, and emerged as globally competitive giants, ushering in an era of unprecedented GDP growth. We do not abandon local industries; we simply refuse to offer them unconditional, permanent sanctuary.

This principle must urgently apply to our most critical energy supplies. Nigeria should absolutely want the Dangote Refinery to succeed. It is a monumental industrial achievement. But we must also remember the math of national economic momentum. In February 2026, the refinery supplied about 36.5 million litres of petrol a day.⁵ However, our national consumption during that exact same period stood at 56.9 million litres daily.⁵

An expanding economy runs on cheap, reliable energy. Protecting a local refinery cannot mean suspending the entire nation's logistics and manufacturing sectors between one company's maximum output and the country's actual need. When local supply is insufficient to fuel economic activity, imports are not a betrayal of national interests. They are basic supply. Banning imports entirely to guarantee a single domestic refiner's dominance guarantees that pricing power will forever sit with a monopolist, acting as a hard ceiling on national economic growth.

Breaking a Champion to Grow a Nation

To understand how pro-market intervention creates prosperity, we should examine how a highly capable state handles a domestic monopoly that has become a bottleneck to national development.

In 2013, Mexico faced a crisis of corporate concentration strikingly similar to ours. Its telecommunications sector was utterly dominated by Carlos Slim's América Móvil, which controlled a massive share of the mobile and fixed-line markets. Slim was Mexico's wealthiest man. However, his monopoly meant Mexicans paid some of the highest telecommunications costs in the region. This lack of affordable connectivity was actively suppressing Mexico's broader digital and service economies.

The administration of Enrique Peña Nieto decided to shift to a strictly pro-market stance. Through sweeping constitutional reforms in 2013 and the passage of the Federal Telecommunications and Broadcasting Law in 2014, the state created a powerful, autonomous regulator, the Federal Telecommunications Institute (IFT).⁶

The IFT formally declared América Móvil a "preponderant economic agent" and subjected it to severe asymmetric regulations. The company was legally forced to share its physical infrastructure with smaller competitors. Furthermore, the state actively invited external capital to wage a brutal price war against its own champion.

In January 2015, the American giant AT&T formally entered the market, acquiring the Mexican operator Iusacell for $2.5 billion.⁷ The result was an economic explosion. As competitors flooded in, broadband access expanded rapidly, integrating millions of citizens and thousands of small businesses into the digital economy. América Móvil lost significant ground, but Mexico's overall GDP and technological base expanded massively. The state traded the financial dominance of its most famous billionaire for the economic welfare of its entire population. That is how you grow an economy.

A Market Needs a State

This Mexican parallel exposes a critical flaw in our domestic economic discourse. We often mistakenly assume that being pro-market means the government should simply step back, deregulate everything, and do nothing. That is a libertarian fantasy.

A market is not a state of nature; it is an artificial human construct. Contracts need independent courts. Dominant infrastructure needs rigid open-access rules. Cartels need ruthless investigation. New firms need electricity, deep-water ports, and credit systems that do not already belong to the well-connected elite. When businesses are left entirely to their own devices, they will naturally seek to destroy competition. The job of a pro-market state is to aggressively counteract these monopolistic urges with robust antitrust enforcement and the systematic removal of artificial barriers to entry.

Failed firms must be allowed to fail, so that their workers, physical assets, and customer base can move to someone better equipped to serve them. If a local manufacturer complains that they cannot compete with foreign goods even after a multi-year phased transition, the government's response should be to tell them to innovate, reduce their profit margins, or shut down entirely to make room for industries where Nigeria actually holds a comparative advantage.

For decades, the old question in Abuja has been which Nigerian company the government should help to win. The better question is whether an unknown Nigerian can enter the market, build a better product, and take customers from today's winner. If the answer is no, we have protected a business, but we have stopped the economy from growing.