Making CET work for Nigeria

The ECOWAS Common External Tariff (CET) which came into force this year is a great opportunity for Nigeria to really grow and become a more dynamic economy, chiefly because it creates a market of 320 million people, for Nigeria’s products. But as it is at the moment, the country still has a lot of shaping up to do if it is going to benefit from the increased market.

The Common External Tariff is a single tariff rate accepted by all members of a customs union on imports of a product from outside the union. The ECOWAS CET was adopted by the 46th Ordinary Session of the Economic Community of West African States ECOWAS which held in Abuja last year. A successor to the ECOWAS Trade Liberalisation Scheme (ETLS), which although designed to promote the free flow of goods manufactured within the West African sub-region had major impediments, the CET which is already in force is expected to reduce the incidents of dumping of substandard goods in West African countries.

Unlike before, all imports coming into Nigeria shall now be given the rates contained in the CET 2015- 2019 and 2015 Fiscal Measures without recourse to the rates applicable before. In addition, all the participating countries have to scrap their import prohibition lists, export prohibition lists, and abrogate import duty waivers and import levies.

However, non-ECOWAS countries have to still pay tax on goods and services that are entering any ECOWAS country.

Leveraging her population – the biggest among the ECOWAS countries – and her economy (the biggest in West Africa), Nigeria should ordinarily be the biggest beneficiary from CET. But there are serious barriers to that.

Firstly, the state of Nigeria’s infrastructure is very poor, compared to that of its much smaller neighbours. Nigeria’s port access roads to its busiest port area are nothing but a disgrace. Rather than facilitate the quick movement of goods, these roads actually hamper it. While its neighbours have well-maintained port access roads that facilitate trade, Nigeria’s own roads seem clogged up in perennial gridlocks, and all it takes is for a single truck to fall across a port access road to grind business to a halt.

Secondly, we have the thorny issue of security challenges. The North East Zone  is locked down in a fearful insurgency that always seems to be on the verge of bursting out of that zone to envelop the remaining five zones in the country. In fact, several investors, feeling that the entire North (three zones) is unsafe for business have withheld great and badly needed investments that would have enhanced Nigeria’s industrial and agricultural capacity. With Nigeria’s internally displaced population at about 3.3 million we have serious work to do.

 

 If properly implemented, CET will increase turnover due to a larger domestic market, enlarge Nigeria’s industrial sector, lead to higher capital accumulation and strengthen its place in the world.

 

But if treated with kid-gloves it will only benefit neighbouring countries, who although smaller, are currently much more organized and have a stronger maintenance culture than Nigeria. In that case, it would just lead to neighbouring countries dumping their goods on Nigeria’s doorstep, with the country being unable to say no.

The Government urgently needs to develop infrastructure, find a military or political solution to the insurgency in the North East, equip Customs to tackle piracy more effectively and find ways of keeping crime on the low, while enhancing electricity supply which is currently a joke.

Otherwise, this opportunity will go the way of AGOA – the African Growth and Opportunity Act – where Nigeria had opportunities to export 6400 products duty free to the United States for years, but blew it.



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