In my previous contributions to this newspaper on Nigeria’s innovation deficit and counterintuitive economic facts, I examined why our nation struggles to translate abundant human capital and natural resources into technological advancement and broadly shared prosperity. Today, I turn to a more uncomfortable truth: Nigeria’s industrial policy framework — rooted in mercantilist assumptions about protection and import substitution — has systematically destroyed consumer welfare while failing to generate the innovation it promises.
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The urgency of this analysis has intensified with President Tinubu’s approval on 21 October — made public just yesterday — of a 15 per cent import duty on petrol and diesel to “protect local refineries.” This policy, projected to increase the landing cost of petrol by approximately ₦99.72 per litre and push Lagos pump prices to around ₦964.72, represents yet another iteration of the protection-without-accountability cycle that has failed Nigeria across palm oil, rice, tomatoes, sugar, and cement. Despite promises that the tariff will “strengthen local refining capacity” and “ensure stable, affordable supply,” history suggests Nigerian consumers will pay more while protected refineries fail to deliver promised capacity, efficiency, or innovation.
The evidence from decades of comprehensive protection across multiple sectors is now overwhelming. Nigerian consumers pay double or triple international prices for basic goods, while the protected industries demonstrate no meaningful technological advancement, minimal capacity expansion, and zero export competitiveness. We have created a system that enriches a small class of connected oligopolists while impoverishing the majority and foreclosing our industrial future.
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The petroleum tariff threatens to extend this dysfunction to our most economically sensitive commodity — fuel — with cascading effects on transportation, food prices, and inflation that could push our already-strained economy past the breaking point.
The Mercantilist Dream and Nigerian Reality
Mercantilism — the economic philosophy that dominated European thinking from the 16th to 18th centuries—held that national wealth derived from maximising exports while minimising imports, with government actively protecting domestic producers from foreign competition. Modern development economics has refined these ideas, acknowledging that strategic, temporary protection can help “infant industries” develop capabilities before facing full international competition.
The Nigerian version of this policy has operated for over three decades across agriculture, manufacturing, and industry. The toolkit is comprehensive: outright import bans, prohibitive tariffs ranging from 35% to 70%, exclusion from official foreign exchange markets, border closures, concessionary loans at single-digit interest rates, tax holidays extending up to ten years, and subsidized inputs. If protection could generate industrial development, Nigeria should be an emerging manufacturing powerhouse.
Instead, we have produced the opposite: consumer exploitation married to industrial stagnation.
Palm Oil: From Global Leader to Protected Failure
Consider palm oil, where the dysfunction is most starkly illustrated. In 1960, Nigeria accounted for 43 per cent of global palm oil production. Today, our share has collapsed to under 2 per cent. Malaysia and Indonesia — starting from Nigerian germplasm — now dominate global markets with millions of hectares under cultivation and sophisticated processing industries that export worldwide.
Meanwhile, Nigeria’s two dominant producers, Okomu Oil and Presco, have received every conceivable form of government support since 1999. Import bans on refined palm oil remain in force. Tariffs on crude palm oil ranged from 35 per cent to 60 per cent. The companies received tax holidays, subsidised credit, and duty waivers on inputs. The Central Bank of Nigeria’s Oil Palm Development Initiative disbursed over ₦45 billion with a target of cultivating an additional 1.4 million hectares.
The results? Between 2018 and 2024, Okomu expanded cultivated land from 18,946 to 19,044 hectares — an increase of 98 hectares in six years. Presco grew from 23,592 to 26,459 hectares — approximately 2,867 hectares over the same period. Combined, these companies expanded by roughly 3,000 hectares while receiving billions in public support and earning operating margins of 41 per cent to 61 per cent — triple the 10-25 per cent margins of global producers cultivating millions of hectares.
For Nigerian consumers, this translates to paying ₦2,642 per litre of palm oil when international prices stand at ₦1,328 — exactly double. The annual consumer transfer to these protected producers exceeds ₦1.4 trillion, roughly 0.7 per cent of GDP extracted from ordinary Nigerians to enrich two companies that demonstrate zero innovation, minimal expansion, and no export ambition.
The Anchor Borrowers’ Programme: Subsidising Failure at Scale
The rice sector reveals how massive government spending can produce statistical illusions of success while failing in substance. The Central Bank’s Anchor Borrowers’ Programme, launched in 2015 as the flagship of agricultural intervention, disbursed ₦1.12 trillion to 4.67 million farmers through 563 anchor entities.
Government spokespersons trumpeted success: rice production reportedly increased from 2 million tonnes in 2015 to 7.5 million tonnes. Yet, rice prices increased by over 201 per cent between 2016 and 2023, signalling that demand continued outstripping supply despite the intervention. More damningly, rice farmers defaulted on 52 per cent of the ₦283.01 billion in loans, leaving ₦145.77 billion in overdue payments. Experts estimate approximately ₦500 billion was lost to the programme overall.
The defaults were not merely agricultural failures but evidence of systemic corruption. Farmers received ₦150,000 but were forced to sign documentation claiming they received ₦250,000. Billions in loans went to corporate entities with no connection to agriculture. Legitimate farmers faced insecurity, flooding, and fake inputs that undermined production. The All Farmers Association of Nigeria called the scheme politicised, noting that funds were approved based on political connections rather than merit, with recipients paying kickbacks to approving authorities.
When the programme was suspended in 2023 under a new CBN administration refocusing on orthodox monetary policy, farmers called for its revival — not because it worked, but because they had become dependent on the subsidy flow. This dependency without productivity improvement epitomises the failure of Nigerian industrial policy: we create rent-seeking constituencies rather than competitive industries.
Dangote Tomato: When Protection Cannot Create Supply
Perhaps no case better illustrates the futility of protection without capability than the Dangote tomato processing plant. Built as Africa’s largest tomato processing facility with capacity for 1,200 tonnes daily, it has operated at just 20 per cent capacity since 2015 because it cannot secure adequate quality tomatoes from local farmers.
The managing director admitted in 2016, “We haven’t been able to process enough quantity of tomato to make our operations successful. At the moment, we are counting losses,” incurring full overhead costs while processing only 300 metric tonnes daily. By 2017, the plant shut down completely after pests destroyed vast crop swathes. It remained closed for two years. Today, after being shut down for the past four years, high energy costs and expensive fresh tomatoes make it impossible to compete even with smuggled imports.
The policy incoherence is remarkable. The Central Bank refuses to provide foreign exchange for tomato imports, ostensibly to encourage local production. Federal government bans tomato paste imports for the same reason. Yet, Nigeria spent over $360 million in 2024 importing tomato paste from China and the United States through smuggling networks that flourish despite border enforcement.
Nigerian consumers lose triply: paying inflated prices for smuggled imports, subsidising through protection a plant that doesn’t operate, and foregoing the employment and technological spillovers a functional industry would generate. The plant stands as a monument to the belief that protection alone can conjure industrial capability, a belief decisively refuted by reality.
Sugar’s “Designated Champions” and Perpetual Dependence
The sugar sector demonstrates how industrial policy morphs into oligopolistic rent distribution. Three companies were explicitly designated by government to drive sugar development: Dangote Sugar Refinery, BUA Sugar, and Golden Sugar Company. They received concessionary 5 per cent loans through the Bank of Industry, financed by a Sugar Development Fund levied on imports, and exclusive import waivers unavailable to competitors.
After more than a decade of mobilizing state resources, the result is “a litany of failure: no significant cultivation, no meaningful refining, no development of local technology.” These “Sugar Babies” profit by importing raw sugar, conducting minimal refining, and selling at protected prices. A single company concentrates 82 per cent of sugar imports, wielding monopolistic power in a supposedly “protected” domestic market.
The pattern repeats across sectors: three companies concentrate 96 per cent of rice imports, three concentrate 86 per cent of wheat imports. Government grants partial or complete import waivers only to a handful of companies, further increasing market power. Rather than protection forcing import substitution through domestic production, it creates oligopolies that profit from controlled importation, the worst of both worlds for consumers and genuine industrialisation.
Cement: The “Success” That Proves the Rule
Cement represents what passes for Nigerian industrial policy success — domestic production capacity sufficient to meet demand without imports. Yet even here, the pathologies of oligopolistic protection persist.
Three companies — Dangote Cement, BUA Cement, and Lafarge Africa — control over 95 per cent of production capacity. As of 2025, prices range from ₦8,500 to ₦13,000 per 50kg bag, having doubled in three years. Industry observers note that “this concentration of power leaves buyers with few options, forcing contractors and developers to accept high prices or abandon projects altogether.”
Nigeria faces a housing deficit of 15.56 million units requiring ₦21 trillion to address, yet cement prices — the primary building material — remain prohibitively expensive relative to income. When BUA attempted to reduce prices to ₦3,500 per bag, selling over a million tonnes to dealers at this rate, the dealers sold to consumers at ₦7,000-₦8,000, capturing the intended consumer benefit. BUA discontinued the intervention, noting “this was not to subsidise dealers.”
The cement case reveals a crucial insight: even when protection succeeds in generating domestic capacity, it creates oligopolistic structures that extract consumer surplus through pricing power rather than competing on efficiency. The protection that built the industry now perpetuates exploitation, with market concentration preventing the price competition that would benefit consumers and downstream industries.
The Latest Iteration: Petroleum Protection Repeats the Pattern
Yesterday’s announcement of a 15 per cent import duty on petrol and diesel to “protect local refineries” demonstrates that Nigerian policymakers have learned nothing from decades of comprehensive failure across other sectors. The official justification — strengthening domestic refining capacity, ensuring stable supply, creating a “level playing field” — echoes precisely the promises made for palm oil protection in 1999, rice support in 2015, and tomato processing in 2016. None delivered on these promises. All generated consumer exploitation while failing to produce competitive industries.
The petroleum tariff is projected to increase the landing cost of petrol by ₦99.72 per litre, pushing Lagos pump prices to around ₦964.72. For a nation where fuel prices have already increased five-fold since the 2023 subsidy removal and where inflation hovers above 30 per cent, this represents a profound threat to economic stability and household welfare. Unlike palm oil, where consumers can substitute or reduce consumption, fuel is inelastic demand — required for transportation, food distribution, manufacturing, and basic economic activity. The tariff’s impact will cascade through every sector, compounding the cost-of-living crisis that has pushed millions deeper into poverty.
Government officials argue Nigerian prices will remain below regional averages in Senegal ($1.76 per litre), Côte d’Ivoire ($1.52), and Ghana ($1.37). This comparison is fundamentally dishonest. It ignores purchasing power — Nigerians earn far less in dollar terms, making the relative burden heavier. It accepts regional overpricing as justification rather than questioning why West African fuel prices universally exceed global benchmarks. Most perniciously, it shifts success metrics from absolute consumer welfare to relative deprivation: “Others suffer more, so our suffering is acceptable.”
The FIRS Chairman’s memo warning that “import parity pricing often falls below cost-recovery levels for domestic refiners” reveals the policy’s true purpose: forcing consumers to subsidise high-cost production rather than addressing why Nigerian refining costs exceed international benchmarks. If the 650,000 barrels-per-day Dangote Refinery — producing 20 million litres daily — cannot compete with imports that still constitute 67 per cent of national consumption, the solution is improving refinery efficiency, not taxing consumers to protect inefficiency.
This approach inverts successful industrial policy logic. Malaysian palm oil became globally competitive through productivity improvements driven by export discipline, not perpetual protection from imports. South Korean manufacturers survived because protection was temporary and conditional on meeting performance targets. Chinese manufacturing dominates globally because producers faced ruthless competition that forced efficiency gains. Nigeria provides permanent protection without accountability, allowing producers to profit from inefficiency rather than rewarding efficiency with market access.
The petroleum tariff represents mercantilist policy at its most dangerous: extending demonstrated failure to our most economically sensitive commodity, with predictable consequences for inflation, poverty, and social stability. Unless immediately reversed or redesigned with strict conditions and sunset provisions, it threatens to replicate across the energy sector the consumer exploitation and capability stagnation that characterize every other “protected” industry in Nigeria.
The Innovation Desert: What Protection Prevents
The petroleum tariff, like protection across other sectors, will not generate innovation — it will prevent it. The most profound cost of Nigerian mercantilism is not merely higher prices today but the capabilities we’ve foreclosed for tomorrow. Genuine industrial development occurs when companies accumulate production knowledge — tacit expertise embedded in organisational routines, team capabilities, and institutional memory — that spills over to the broader economy through employee mobility, supplier development, and competitive imitation.
This knowledge accumulation requires competitive discipline. When Apple developed the iPhone, it created entirely new production processes, specialised machinery, and quality standards. Foxconn’s willingness to learn, despite initial ignorance, proved more valuable than established competency. The knowledge generated — in touchscreen manufacturing, precision assembly, supply chain coordination — emerged only through confronting genuine market demands and solving real production challenges.
Nigerian industrial policy has created the opposite environment. Protected from import competition, companies need not improve yields, develop better varietals, optimize processing efficiency, or innovate in value-added products. The Okomu and Presco annual reports contain no discussion of research and development, no innovation roadmaps, no export strategies. BUA Foods, Nigeria’s most valuable listed company at ₦10.3 trillion market capitalisation, has no dedicated R&D function and describes adding “premium pasta” as its method of “staying ahead of industry trends.”
Why would they innovate? When you can generate 61 per cent operating margins selling commodity palm oil to captive consumers, investment in productivity improvement offers no additional return. When government ensures you face no competitive threat, capability development becomes unnecessary expenditure. Protection has not nurtured infant industries into competitive adults; it has created perpetual dependents whose core competency is regulatory capture, not production excellence.
The Knowledge We’ve Lost
Malaysia and Indonesia didn’t just surpass Nigeria in palm oil production — they built comprehensive knowledge ecosystems. Research institutions like Malaysia’s MPOB develop high-yield varieties and sustainable practices. Technical training programs produce skilled agronomists. Equipment manufacturers create specialised plantation machinery. Financial institutions develop expertise in agricultural lending. This knowledge network generates spillovers far beyond palm oil, contributing to broader industrial capabilities.
Nigeria has built none of this. Our “palm oil industry” consists of two companies cultivating fewer than 50,000 hectares combined, with no research capacity, no equipment manufacturing, no technical training programmes, and no spillovers to adjacent sectors. The billions in subsidies, tax holidays, and concessionary loans generated profit for shareholders but zero knowledge accumulation for the nation.
This pattern repeats across protected sectors. We have rice mills but no seed development capacity. We have tomato processing plants that don’t process tomatoes. We have sugar refiners that refine imported raw sugar. We have cement plants that capture oligopoly rents rather than drive construction cost reductions. Each represents productive capacity without productive knowledge — the machinery of industry without the soul.
The Political Economy of Perpetual Protection
Why does this system persist despite obvious failure? The political economy is straightforward: protection creates concentrated benefits for powerful producers and diffuse costs borne by unorganised consumers.
The Plantation Owners Forum of Nigeria (POFON) successfully lobbies against any liberalisation of palm oil imports. Sugar refiners resist cultivation requirements that would threaten their profitable import-and-refine model. Rice importers holding exclusive waivers oppose open competition. Cement manufacturers defend market concentration. Each extracts millions or billions in rents; each consumer pays thousands more for basic goods. The former organise, lobby, and fund politicians; the latter remain unorganised and often unaware of how much protection costs them.
This dynamic is self-reinforcing. The longer protection persists, the more dependent producers become — not because they’re developing capabilities but because they’re atrophying them. They cannot survive without protection precisely because protection prevented them from developing competitiveness. Their lobbying becomes desperate: “Liberalisation will destroy us!” — which is often true, but reveals policy failure rather than justifying policy continuation.
Meanwhile, government bureaucrats and politicians benefit from the system. Industrial policy becomes a vehicle for distributing favors to politically connected “entrepreneurs.” Import waivers become tradable privileges. Subsidy programs generate kickbacks. The entire apparatus operates less as development strategy and more as wealth transfer mechanism, with “industrial policy” providing ideological cover for rent distribution.
The Path Forward: Consumer Welfare as Primary Metric
Reform requires fundamentally reorienting industrial policy around consumer welfare rather than producer protection. Any intervention must be evaluated primarily by whether consumers benefit through lower prices, better quality, or greater variety. Producer profitability is a means to this end, not an end itself.
This demands several shifts. First, protection must be time-bound and conditional — automatically sunsetting after five to seven years unless producers meet verifiable performance metrics like cultivation expansion, productivity improvement, and price moderation. South Korea’s developmental state made cheap credit contingent on export performance; Nigeria should adopt similar accountability mechanisms.
Second, competition must be fostered even within protected sectors. Protection should apply to industries, not individual companies. Easy licensing for new entrants, preventing incumbent lobbying against competition, and ensuring access to inputs is not monopolised would create domestic competitive pressure even where international competition is limited.
Third, transparency about policy costs is essential. Import protection imposes implicit taxes on consumers; these should be quantified and publicly reported. When Nigerians understand they transfer ₦1.4 trillion annually to palm oil producers who expanded cultivation by 3,000 hectares in six years, political support for perpetual protection would evaporate.
Fourth, we must build state capacity for accountability. Effective industrial policy requires technical expertise to assess industry potential, monitor compliance with conditions, resist regulatory capture, and coordinate across agencies. If this capacity doesn’t exist, building it should precede ambitious intervention.
Learning from Failure — Before It’s Too Late
The newly-announced 15 per cent petroleum tariff crystallises the choice before Nigeria with unprecedented clarity. We stand at a crossroads where one path leads to repeating failures demonstrated while the other requires confronting uncomfortable truths about what has not worked.
The official justification for the fuel tariff echoes precisely the arguments made for protecting palm oil in 1999, rice in 2015, tomatoes in 2016, and sugar throughout three decades: “protect domestic producers,” “reduce import dependence,” “ensure stable supply,” “level the playing field.” These promises have uniformly failed to materialise. Instead, protection generated oligopolistic rent extraction, consumer exploitation, and industrial stagnation.
The petroleum case presents even graver risks because fuel prices directly affect every economic sector. Unlike palm oil — where consumers can substitute or reduce consumption — fuel is inelastic demand. Transportation costs feed into food prices, manufacturing inputs, service delivery, and household budgets. With inflation above 30 per cent and Nigerians already bearing fuel costs that increased five-fold since subsidy removal in 2023, adding ₦99.72 per litre through protective tariffs risks triggering economic and social crisis.
The government argues that at ₦964.72 per litre, Nigerian prices remain below regional averages in Senegal ($1.76), Côte d’Ivoire ($1.52), and Ghana ($1.37). This comparison is misleading on multiple levels. First, it ignores purchasing power — Nigerians earn far less than Senegalese or Ghanaians in dollar terms, making the relative burden heavier. Second, it accepts regional overpricing as justification for Nigerian overpricing rather than questioning why West African fuel prices universally exceed international benchmarks. Third, it shifts the metric from “can we afford this?” to “others pay more, so we should accept less poverty than them.”
More fundamentally, the petroleum tariff repeats the cardinal error of Nigerian industrial policy: prioritising producer interests over consumer welfare and assuming protection automatically generates capability. The Dangote Refinery has 650,000 barrels-per-day capacity and has begun diesel and aviation fuel production — genuine progress deserving acknowledgment. But does a facility that reportedly produces 20 million litres daily require protection from imports that still constitute 67 per cent of national consumption? If Dangote’s refining costs truly exceed import parity pricing due to forex volatility and operational challenges, the solution is addressing those structural impediments — not taxing consumers to subsidise high-cost production.
History offers clear lessons. Malaysian palm oil became globally competitive not through perpetual protection but through productivity improvements driven by export market discipline. South Korean electronics manufacturers survived and thrived because protection was temporary and conditional on performance metrics. Chinese manufacturing achieved world dominance by exposing producers to ruthless competition that forced efficiency gains. Nigerian policy inverts this logic: we provide permanent protection without accountability, allowing producers to profit from inefficiency rather than rewarding efficiency with market access.
Twenty-five years of comprehensive protection across palm oil, rice, tomatoes, sugar, and cement have generated an unambiguous verdict: Nigerian mercantilist policy destroys consumer surplus while failing to generate innovation, knowledge accumulation, or export competitiveness. We have created rent-extraction mechanisms, not industries. Now we propose extending this failed model to petroleum — our most economically sensitive sector — despite overwhelming evidence that protection without accountability produces oligopolistic exploitation rather than industrial development.
The choice before us is stark. Continue protecting the oligopolists who profit from our captive market, consigning consumers to perpetual exploitation and industry to permanent stagnation. Or embrace competition, accountability, and consumer welfare as the foundation for genuine industrial development.
If the Dangote Refinery and emerging modular refineries are genuinely efficient, they will thrive in competitive markets. If they cannot compete with imports at current cost structures, the answer is improving their efficiency — not forcing Nigerian consumers to subsidise inefficiency through protective tariffs that will cascade through the entire economy, driving up transportation costs, food prices, and inflation.
The petroleum tariff should be suspended pending comprehensive assessment of its necessity, with clear conditions attached if implemented: time-bound sunset provisions (five years maximum), verifiable performance metrics (refining capacity utilization, cost reductions, price stability), and transparent reporting of consumer costs versus supposed benefits. More broadly, Nigeria requires fundamental industrial policy reform: making consumer welfare the primary success metric, fostering domestic competition even within protected sectors, building state capacity for monitoring and accountability, and acknowledging that protection which fails to generate capability after reasonable timeframes should be revoked rather than perpetuated.
History will judge which path we choose. The evidence of what has failed, at least, is now undeniable. The question is whether we possess the political courage to acknowledge uncomfortable truths and chart a different course — one where industrial policy serves national development rather than private enrichment, where innovation emerges from competitive discipline rather than protection from it, and where the prosperity of Nigerian consumers becomes the measure of economic success.
The price of continued failure is not merely economic but civilisational. Every year we persist with policies that reward rent-seeking over productivity, we teach the next generation that wealth comes from regulatory capture rather than value creation. We entrench the lesson that improving Nigerian lives is optional for acquiring Nigerian riches. The petroleum tariff threatens to extend this lesson to our most critical economic sector, with consequences that could prove catastrophic for an economy already strained past endurance.
Nigeria deserves better. Our consumers deserve better. Our industrial future demands better. The question is whether our policymakers possess the wisdom to learn from decades of failure and the courage to choose a different path — before imposing another protection regime that history suggests will enrich few while impoverishing many, generate rents rather than capabilities, and foreclose the competitive industrial future that market discipline alone can create.
Olumide Awoyemi is Founder/CEO of Symmex, an industrial–technological solutions provider and developer of Huraflow.
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