Tuesday, December 14, 2010

Playing politics with the Nigerian economy

I thought I was suffering from visual and auditory hallucination when I learnt that government of Nigeria had decided to lift ban on some hitherto prohibited items. These goods include furniture, textile materials, tooth pick, matches, cassava, energy drinks and vehicles that are less than 15 years old. According to newspaper reports, the government’s decision is ‘to replace the bans with tariffs to protect domestic industries.’ Government opined that banned imports result in huge revenue losses to government through significant trade diversion to neighbouring countries, and the routine smuggling of these items into the country. In un-banning the prohibited items, government therefore decided to slam levies on them.

The tariffs put on the items are: cassava- 15% levy in addition to the substantive 20% duty; toothpick- 20% levy and duty of 20%; furniture- 20% levy and duty of 20%; textile fabrics and articles (lace fabric, brocade, voile, African print, etc. and made-up garments) - 20% levy and duty of 20%; waters and beverages (excluding items like health and energy drinks only)-10% levy and duty of 10%. Health and energy drinks, such as Power Horse, Red Ginseng -10 per cent duty plus 10 per cent levy.

As a Nigerian, I find this new policy preposterous, disingenuous, incredulous and anti-development. How can a country open its borders to all manner of junks in the name of making money? How can a nation worth its salt believe that the solution to the inefficiency of its security agencies in effectively policing its borders is to turn the country into a dumpsite where all non-essential and waste products from Europe, America and Asia can be dumped? What manner of ‘jankara and voodoo’ economics believe that the way to protect local industries is to replace product ban with increased tariffs? I weep for Nigeria.

Of all the products that were unbanned, I cannot see one which Nigerians cannot do without. If a country in its 50th year of independence has to import cassava, toothpick, textile products, matches and energy drink, then the country without any equivocation has become a failed state. It is a crying shame that Nigerian government has deemed it fit to play politics with the country’s economy.

Just few years ago, under the administration of Chief Olusegun Obasanjo, cassava production initiative was launched with pomp and pageantry. What has become of that initiative? It is policy flip-flops like this that has led to the collapse of Nigeria’s manufacturing industries. Today, because of lack of basic infrastructure and exposure to unfair competition with imported goods many industries have closed shop in Nigeria and relocated to better climes including South Africa and Ghana. Some of these include Dunlop and Michelin tyre manufacturing industries. Hitherto, it is a Herculean challenge for regulatory agencies like Standard Organisation of Nigeria (SON) and National Agency for Foods, Drugs, Administration and Control (NAFDAC) to effectively carry out quality checks on most of these imported goods because of their deluge into the country.

Of what use is toothpick to Nigeria’s economy that we do not feel ashamed importing it into the country? Under Chief Achike Udenwa as the Minister of Commerce and Industry, he launched the “Buy Made in Nigeria Product”. Today, all that has become history. There is nothing intrinsically wrong if these unbanned products are those that cannot be produced locally, but the irony is that most of these commodities can be manufactured locally and even exported to other countries if the basic incentives are given to local industries. As it is, cars, better still jalopies that have seen better days and which constitute environmental hazards are now being allowed into the country all for short-term pecuniary gains. We seem to have forgotten that throwing open our borders to these non-essential items will lead to increased demand for foreign exchange which we have in short supply. It will also lead to job loss as many of the local industries that are already producing below capacity utilisation due to the harsh production environment occasioned by multiple taxation, lack of basic infrastructure such as electricity, water and good roads and lack of patronage will now totally close shop and lay off workers.

The lifting of ban on the aforementioned merchandise is short-sighted and inimical to national development. 2011 General Election is looming and patently, government seems to be playing politics in coming up with this decision particularly as it was reported that just a couple of months ago, the Presidential Committee on the Review of Tariffs and Fiscal Incentives in Nigeria had asked government to peg age of imported cars at five years, commercial vehicles at seven years and ban vehicles that are 10 years old. The presidential committee was said to have also recommended that “Government should require that all brands of vehicles for which more than 5,000 units are imported annually into the country should be assembled locally, either by setting up a factory in Nigeria or partner with existing plants on contract manufacturing.” Furthermore, the committee was reported to have proposed total ban on importation of textiles that are produced locally. Rather than implementing these noble suggestions government instead lifted the ban, a move that endangers the ability of local textile manufacturers to repay loans obtained from the Bank of Industry, under the Cotton, Textile, Garment Revival Fund which is a government scheme to revive textile manufacturing.

Enough said, the wise men and women of the Executive Council of the Federation must meet urgently and re-ban these unbanned items. Nigerians should make do with those produced locally or do without them altogether, all in national interest.