• Saturday, May 18, 2024
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Time to relax ban on imports

Nigeria trade balance declines as import jumps 73.8% in Q3

Smuggling is not a phenomenon that is unique to Nigeria . It is a universal menace. And for Nigeria, it is not a problem that surfaced only recently, it is one that has been with us since the pre-colonial days. It dates back to the second half of the 19th century. It came with the annexation of local kingdoms, fiefdoms, royalties and territories in West Africa by the British and the French.

The British West Africa and the French West Africa had different economic zones. This as well as the imperial rivalry between these colonising powers fuelled by conflicting heritage and values and the protectionism that came with it, created a favourable economic climate for smuggling across Anglo-French territories, especially between Nigeria and the present day Republic of Benin which was known as Dahomey.

Historical evidence available helps explain Nigeria’s smuggling menace. Nigeria ‘s colonial pattern of smuggling fuelled by contrasting economic and tariff regimes are not different from the trend that has been in place since the 1970s. For instance, the smuggling of fairly used clothes from Benin Republic became a major economic activity during the Nigeria Civil War of 1967-70. The critical point here is that when products that are not available locally are banned the smuggler, like the sheep, is given a greener field to feed from.
Related to the second hand clothes smuggling story is the robust smuggling of textiles into Nigeria and the much-talked-about death of this sector, which as far back as 1980 was number three in Africa, coming after Egypt and South Africa.

Read Also: Has Nigeria’s 2015 FX ban on imports worked?

Nigeria has a long list of prohibited items. According to industry sources, Nigeria has up to 80 banned items in its prohibition list while countries like Sierra Leone, Liberia, Congo and Guinea have none. Senegal has four, Ghana, 19; Republic of Benin, 10; Cameroon, 13 and Gambia, one. In Nigeria’s import prohibition list are items such as sugar, sweet, soap, fruit juice, textile fabrics, shoes, tooth paste, envelopes, mosquito nets and biscuits, which are in short supply apparently because of inadequate capacity accounted for by the harsh operating environment.

The case of textile is the most pathetic of them all. Way back in the 1980s Nigeria had 120 textile factories. This was a period we can rightly refer to as the era of textile boom in Nigeria. Today, this figure has dropped to 45. The productive capacity of the sector is so low to the extent that about 90 per cent of textiles/fabrics needs of the country are being fed through importation. As at 2005, the contribution of the industry to GDP dropped to less than one per cent. The market share of the industry equally dropped from 27 percent in 2003 to 15 per cent in 2005.
The implication of this is that we now depend almost wholly on the outside world for our clothing needs. Why then will smuggling not thrive when textiles are banned?
Studies carried out on small scale traders in Nigeria by analysts show that Nigeria spends a minimum of about $158.4 annually on importation of fabrics and textiles from Dubai alone. This figure can be up-scaled six times if we consider imports from such countries as China, India, Turkey, Hong Kong, Malaysia and other textile producing countries.
Note that when we say importation we are largely talking of smuggling because the goods that come in are prohibited items.
A recent independent survey by a private consulting firm in Lagos with focus on the need for the rehabilitation of Nigeria’s textile sector notes that the total value of smuggled fabric in Nigeria in a year is N4.9 trillion; that 90 per cent of fabrics used in Nigeria is smuggled.
The case has even been made in the industry that government should lift ban on textile fabrics for one year, charge 10 per cent duty for that year and realise N490 billion on duties which can be used to rehabilitate the moribund textile industry. This is believed to be a better option to the unending search for N70 billion fund which the Federal Government has promised the sector for rehabilitation. The government has tried this strategy for cement and in the recent past it has done so in respect of petroleum and automobiles.
The point must, therefore, be made that it does not make economic sense to maintain a long list of prohibited items whose demand we cannot meet locally when such prohibition gives sharper teeth to smugglers who deplete the nation’s purse. The strategy proposed for textile can be applied to other items in the prohibited list.