Government’s smuggler-friendly policies

Countries ban importation of certain items mostly to protect their local industries but in Nigeria, the resultant effect is more often than not, the opposite of that intended by government.

I have taken time to study our country’s import prohibition list as published on the website of the Nigeria Customs Service. I think it will easily qualify as the world’s longest prohibition list. In all, there are 24 headings under the list. They include live or dead birds including frozen pork, beef, birds eggs, refined vegetable oils and fats, cocoa butter, powder and cakes, spaghetti/noodles, fruit juice in retail packs and waters, including mineral waters and aerated waters containing added sugar or sweetening matter or flavoured, ice snow (but excluding energy or health drinks, liquid dietary supplements e.g. Power Horse, Red Ginseng etc) and beer and stout (bottled, canned or otherwise packed).

The list also includes textile fabrics of all types and articles thereof and yarn including African print (printed fabrics) e.g. Nigeria wax, Hollandaise, English wax, Ankara and similar fabrics, carpets and rugs of all types; all types of foot wears and bags including suitcases of leather and plastics and so on. You can view the full list athttps://www.customs.gov.ng/ProhibitionList/import.php.

The ban placed on a good number of the items has much more serious side effects on the economy than government may be willing to admit.

Except for a few, most of the listed items have insufficient local substitutes. The ban on importation of textiles for instance is ill-advised because all the textile mills in Nigeria have closed shop due to the high cost of production. It is impossible for our textile mills, with the erratic power supply and poor state of infrastructure in the country, to manufacture products that will compete with the cheap Chinese imports that flood our markets.

The consumption of textile materials is very high and since local production is insufficient, smuggling is bound to thrive.

When there is a huge demand and when the legitimate supply line is cut off, people will naturally look for other avenues/options available to them. This is what has led to importing these goods through unofficial channels. We all know what impact these unofficial channels have on the official economy.

The point I try to make here is that if there is sufficient local substitute for an item, it will make a lot of sense to prohibit its importation but where there is an obvious gap in local production, banning such item will only fuel smuggling.

With the porous nature of our borders, it is important to ensure that local substitutes are also able to compete in terms of price and quality with imported ones before a ban is put in place otherwise, the cheaper imports will soon find their way in and send the local manufacturers packing as has happened with textiles and is happening with rice.

We see all these banned items everywhere; at the supermarkets, at local shops, by the roadsides; name it. The items are smuggled in and government is unable to charge import duties on them because they are banned. It is double loss to the economy.

Government’s stance on rice importation, for instance, is ill-advised with the imposition of 110 per cent Customs duty on the commodity. There is a huge gap between consumption and local production. According to government statistics, yearly consumption of rice is about 5.5 million metric tonnes with local production accounting for about 1.8 million metric tonnes, thus necessitating the need for importation to bridge the gap. Unfortunately, because of the excessively high import duty imposed at the beginning of this year, more than half of these imports are smuggled into the country.

An analysis of the vessels coming into the country at the Lagos Port Complex, Apapa revealed that since the beginning of this year, not a single vessel of rice has discharged at the port whereas more than 10 vessels were discharged monthly prior to the 110 per cent import duty policy. And there has not been scarcity of imported rice in the market simply because Customs operatives are incapable of stopping the commodity from being smuggled into Nigeria. Importers simply discharge the commodity at Cotonou port and allow smugglers ferry it, in small quantities, into Nigeria sometimes with the active connivance of security operatives.

What government has done with this long prohibition list, and other import policies that were not properly thought out before they were slammed on the economy, therefore, is promote smuggling with its attendant consequences.

It is not too late take another look at the list and other smuggler-friendly policies to stop the economy from haemorrhaging.