Nollywood boom hints at needless FG’s protectionist policies
Protectionism refers to government actions and policies that restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition.
Typical methods of protectionism are tariffs and quotas on imports and subsidies or tax cuts granted to local businesses.
From an abrupt land border closure to restrictions on importation of some items, the Federal Government has been keen to protect local industries against foreign competition.
“Investors are confused over Nigeria’s border closure and are left wondering why the country is building a wall around itself when trade is key to economic development,” one foreign investor told BusinessDay.
Nigeria’s move also contradicts why it is a party to the ECOWAS Treaty and the Africa Continental Free Trade Agreement (AfCFTA).
As the reason for the border closure, the government said it was bothered about the smuggling of rice from neighbouring country, Benin Republic, which left local rice producers with rising inventories.
It, therefore, shut the borders altogether to stem the illegal importation of staple food that the government is determined to produce locally.
That may be unsustainable.
While rice production has grown over the last decade, local production volumes of 3.7 million metric tonnes, according to the US Department of Agriculture, can only meet around half of total demand of 7 million metric tonnes.
The high tariffs on the importation of rice have triggered a surge in smuggling, with the relatively higher price of local rice curbing demand. While foreign rice cost about N14,000 prior to the border closure, local rice was going for N18,000, no thanks to a gaping infrastructural deficit from power to transport that drives up the cost of local producers and renders them non-competitive.
Analysts say closing the infrastructural gap is key if the government is keen on helping the local industries thrive and compete, rather than an “unsustainable border closure”.