Unequal Exchange and Foreign Investment In Nigeria

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Unequal exchange in international trade allows advanced capitalist countries to exploit developing countries like Nigeria. It represents a key economic mechanism of capitalist imperialism. It could take the form of price disparity in goods or salary disparities in labour between what multinational companies pay to their workers in a developing country and what they would have paid to workers in their own countries for doing the same work. Foreign investment Is the investment of capital by foreign individuals or companies in other countries which could be in the form of acquiring raw materials and building or acquiring factories (Direct Investment) or investing in shares and stocks(portfolio investment).

Foreign investment in Nigeria and unequal exchange affecting the Nigerian economy date back to colonial times. Foreign investors such as Unilever, invested in the palm oil industry for the production of soap while the United Africa Company and the Royal Niger Company were involved in the trading of various commodities. This period was marked by colonial exploitation and expropriation. Natural resources in different parts of the country were acquired through the decrees of the colonial powers and sold cheaply to British investors. The prices of raw materials were set as low as possible and the imported finished goods were set so high that people who sold the raw materials couldn’t afford the finished goods. People might claim that this period also brought development, but this is not true as the only development was in the collection centres for the raw materials. Roads and railways built during this period were built by Nigerians and they were only built to facilitate the exploitation of our resources. The Nigerian working people built what was used for our exploitation.

All this exploitation and expropriation of profits were said to have ended at the end of the colonial period, and it was all about “free trade” from then on. But it hasn’t ended as the leaders of the country since then have been junior partners to Western imperialist powers.  Since Independence, the Nigerian state has done little to industrialize the national economy and has continued to favour the exports of raw materials such as cash crops and crude oil.

They have also enacted policies which have made Nigeria a hub in which foreign investors can get super profits with the extraction of surplus value from the working class and rents through unequal exchange. Unequal exchange has been enabled by the IMF and World Bank’s structural policies implemented by successive federal governments such as the devaluation of the currency to make it easier for foreign industrial capitalists to make super profits. Also, the fact that the raw materials aren’t refined locally and the local industry is not developed will always lead to unequal exchange and bad effects of foreign investment for working-class people.

According to the Marxian Labor theory of value, the value of a commodity is determined by the socially necessary labour time required to produce it. Indeed, it is labour that creates wealth, as the NLC motto says, by acting on raw materials to turn these into finished products. In newly industrialised developing countries, socially necessary labour is cheaper for Western imperialists who make gains by offshoring production to these countries in the Global South. In unindustrialised developing countries like Nigeria, there is little production taking place. Essentially, you have the extraction of primary commodities like agricultural produce or mineral resources being the main forms of economic activities for foreign trade.

This intensifies unequal exchange and countries like Nigeria are bled (with the connivance of the governments of their countries). The Central Bank estimated that between October 2022 and March 2023, foreign firms repatriated US$5.86 billion and that US$5.13 billion as dividends was paid to foreign investors. These are substantial amounts of money in just 5-6 months that could have been used to provide social services for the people and further the industrialization of the national economy.

Another adverse social impact of foreign investment, mostly in the oil sector, is environmental pollution. Farmland and drinking  Oil exploitation by multinationals has destroyed the farmlands and sources of drinking water of various local communities. The means of livelihood and means of subsistence of poor people in rural areas in the Niger Delta have likewise been despoiled. The government turns a blind eye to all these or in some cases stands with the multinationals as they pollute the land, water and air of the people they are supposed to be representing while the companies make super profits. This system has also led to a lack of substantial technological development as the technology implemented is one of just extraction and production of raw materials without technology for refinement.

Different solutions have been put forward on this topic. These include the argument in some quarters that Nigeria should reject global capitalism and practice “its own capitalism”. But this idea is based on an illusion. Capitalism is an international system which drives social inequality within and between countries. Enhancing the growth of the national capitalists in Nigeria as monopoly capitalist corporations through mergers, takeovers and the formation of cartels which would control the capitalist market, the economy and the society would lead to not only the concentration of wealth but also the expansion of the gulf between the wealthy few and the large numbers of working people. It would not change or improve the social and political situation for the poor masses. The state and governments at all levels will continue to protect capital and work in the interests of a minority of the population, the capitalists while the majority who are the working people will keep suffering.

Lastly, the drive for more profit and growth of monopoly capitalism will lead to an expansion of the sub-imperialist role of Nigeria in Africa, and suck it into deepened rivalry with stronger imperialist powers. This could lead to tensions and wars which would be very costly, all the funding and sacrifice would come from the working people who would not even have benefitted from such a transformation of capitalism in Nigeria. And they would be the ones to lose everything.

In conclusion, the only real solution is a socialist revolutionary transformation of society. This would be based on the self-emancipation of the working class, and its establishment of a workers’ state that will drive an all-rounded development of the people. Growth and development will not be based on the profit motive or to serve to expand  Socialism, like capitalism can and will be built as an international system. Nigerian workers in solidarity with working-class people across Africa and worldwide will have to fight to overthrow the capitalist system and the handful of people who benefit from it to end unequal exchange, and the subordination of people’s needs to the profits of a few.

by Emmanuel IRO-OKORO

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