• Monday, June 17, 2024
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BusinessDay

Still on illicit trade and impact on Nigeria’s wellbeing

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Which route a society should go as it debates its future wellbeing sometimes throws up unintended consequences and also issues that were hitherto not thought of. What to do about tobacco use, its impact on health and the society, and to an extent the economy, is a continuous preoccupation of policy makers and regulators the world over. Nigeria is closely aligned with these global efforts. May 31 of every year is usually set aside to focus more extensively on tobacco, its production and use.

The theme of the 2016 WNTD was plain packaging as a regulatory tool to reduce the consumption of tobacco products. The anti-smoking lobby in mature markets and even developing countries has tried to project plain packaging of tobacco products as the silver bullet that will stem the tide of tobacco consumption. Illicit trade in tobacco products, which is increasingly being controlled by well-organised trans-border criminal gangs and terrorist groups, is by far a more worrisome trend than the exaggerated benefits that plain packaging advocates for. The WHO estimates that the illicit trade in tobacco products accounts for at least 10 percent of all cigarettes sold worldwide, running into billions of dollars annually.

The impact of illicit trade on youth access to cigarettes and reported rates of smoking is worse in less mature markets because of the historically weak law enforcement environment. Porous borders, poor market surveillance and the conflicts around many border regions have made it easier than ever before for illicit trade in tobacco products to continue to thrive. In Nigeria, regulators estimate illicit trade accounts for at least 20 percent of all cigarettes in the market.  With its vast borders that are almost impossible to police, coupled with the activities of terrorists at some major border regions, it is no surprise that Nigeria is lagging behind in reducing illicit trade in tobacco products.

Compared to illicit trade, plain packaging is a very remote and distant issue; in fact, it is a non-issue in this market. In any case, only few countries are contemplating adopting plain packaging regulations because its benefits are at best debatable and unproven. Australia, which adopted plain packaging a few years back, has not experienced any significant drop in smoking rates.

The need to enforce the provisions of the Tobacco Control Act is greater as Nigeria continues to grapple with the impact of illicit trade in tobacco products. Old tricks are still being employed to get people who are under the legal age attracted to tobacco. One of such tricks, as confirmed by the Standards Organisation of Nigeria, is flooding the market with flavoured cigarettes which are particularly attractive to young people because of their sweet-smelling aroma. Flavoured cigarettes are completely outlawed under recently enacted regulations. A walk around markets will indicate that they are as available as brands that are legally allowed to be sold in Nigeria. Regulators have all but given up on enforcing the law as it concerns flavoured cigarette.

Coupled with endangering the health of the youth, which flavoured cigarettes represent, is also the issue of evasion of statutory payments. Flavoured cigarettes, because of their contraband status, most likely entered the country via illegal routes or through designated import points but with the active connivance of officials manning those entry points. In both scenarios, the government loses taxes, import duties and other statutory payments that ought to be due it.

The continuous importation of banned tobacco products and legitimate products without passing through statutory requirements not only deprives government of income, it also has the potential to lead to job losses as a result of unfair competition posed by imported products. Importers can sell cheaper because they do not pay taxes. Importers can also sell cheaper because they have not made any investment in infrastructure such as factories, nor do they have employees beyond casual sales staff. Because they can sell cheaply, there is the potential that they can render the legitimate industry redundant and put employees out of work.

While it is easy to dismiss the threat posed by illicit trade in tobacco products as too distant compared to the major socio-economic problems Nigeria is currently contending with, the illicit trade represents a landmark challenge which governments have tried to tackle with limited success.

Nigeria achieved a major milestone last year when it enacted the Tobacco Control Act. The legislation has been hailed as modern, futuristic and that one if well enforced, has the potential to protect the wellbeing of Nigerians. For the fact that no stakeholder, be it the anti-tobacco lobby or pro-industry group, was entirely happy or sad over the legislation, is an indication that it largely conforms with the WHO Framework Convention on Tobacco Control, a set of protocols which countries adopt to mitigate the impact of tobacco consumption, particularly the more harmful illicit trade in tobacco products. It is, however, regrettable that the legislation is going awry like others before it that were based on lofty visions and finely crafted but hardly implemented. If regulators and law enforcement agencies were enforcing a quarter of the provisions of the TCA, flavoured cigarette would not pose as much menace to Nigerian youths as it currently does.

Regulators and governments also have to worry about the importation of lifestyle products which Nigeria has the capacity to produce in order to meet local demand and indeed export. Government policies over the last two decades have led to the establishment of tobacco factories with backward linkages such that Nigerian farmers also grow the tobacco that feeds the factories, providing jobs and equitable wealth distribution even in remote, rural locations. With the licensing of importers to import finished tobacco products, the government is sending out the message that it does not care about jobs or the wellbeing of the citizenry. When local production is unfairly targeted by importation, the country suffers. Nigeria has the potential and capacity to produce a lot of the products that are currently being imported beyond the 41 items banned by the Central Bank from accessing forex at the official market. Cigarettes and many other lifestyle products ought to be included in the forex prohibition list.

Nigerian regulators and indeed other stakeholders in the tobacco industry should address their minds as to how they can tackle the menace that illicit trade in tobacco products poses and an equally big threat, the impact of the importation of products which Nigeria has built capacity over the years to produce and also export. The interest of the country should always be the common denominator that underpins the activities of the regulators.

 

Akeem Ogunlade