April 10th, 2006 Media Report #7
BAN ON IMPORTS: IMPACT ON MANUFACTURING SECTOR.
In January last year, President Olusegun Obasanjo placed 41 items in the import prohibition list. A year and six months after the exercise, our industry correspondent, Johnmark Ukoko takes a look at what has been achieved so far. In January 2004, President Olusegun Obasanjo announced an import prohibition of 41 products which he believes could be produced in the country. Some of the products that were banned are: printed textiles, fabrics, mutton, bottled water, toothpicks, leather shoes furniture, plastics and a host of other items. The government took the division to ban the items based on the recommendations from local manufacturer and suppliers who felt that the country could produce them. The local manufacturers lobbied the government to take the decision in the interest of the economy and to protect the local industry in particular. The manufacturers felt that the ban would go a long way to save millions of local jobs and keep the economy on the path of growth. The president of Manufacturers Association of Nigeria (MAN), Charles Ugwuh, while commending the ban said it was in the interest of the economy and the manufacturing sector in particular. He maintained that his members have the capability to produce the imported items, The MAN boss believed that all the items under review could be conveniently produced locally. This view was also shared by the president of the National Association of Chambers of Commerce, Mines and Industry (NACCIMA), John Odeyemi, who said the governmentís action is bold, timely and well informed. To enforce the ban, the Nigerian Customs Service (NCS), announced that they will be raiding the markets to seize the outlawed goods. However, the traders have reacted negatively to this, vowing to resist the threat by the Customs Service. They also got the backing of the president of Igbo National Congress, Peace Nwajolu, who promised his associationís support to the traders. He argued that past seizures were sold back to the traders who now sold the items in the markets at exorbitant prices. Also, the Textile Dealers Association of Nigeria (TDAN) has condemned the customís threat.The body described the planned action as crude and uncalled for. It also disclosed that textiles already imported before the ban could take up to three years before they can all be exhausted in the market. However, majorly of the manufacturers who hailed the ban as the best thing that could happen to their business have since discovered that the ban is not working as more to these banned products have flooded the market s never before. It is even alleged by sources that most of the banned items are being brought in by powerful Nigerians close to the government.The sources disclosed that these powerful Nigerians have kept on lobbying for governmentís change of position on the issues. The Lagos Chamber of Commerce and Industry (LCCI) has a contrary view on the ban of most of the items. The chambers is of the view that the governmentís action was not well informed as most of the items are in short supply in the country. Textiles Dealers Association of Nigeria, an association affiliated to the chamber, at a press conference last year, kicked against the ban. It also disclosed that its members and LCCI will lobby the government for a change of policy. The group berated the governmentís action as being ill informed and untimely as most of the items could not be produced adequately locally. However, a year and six months after the ban was made, it appears nothing much has been achieved. Firstly the items that have outlawed, are more in the market now than before. The government that defended the ban now believes that it was misled by the local manufacturers. The Minister of state for finance, Nnamdi Usuman was bold and honest enough to tell the world that the government was deceived by the manufacturers. She explained that the local manufacturers exaggerated their capabilities. According to her, ďThe Federal Government has realized that the ban was uncalled for. The government might be forced to review its positions" Beyond all these is, the fact that most of the banned items are coming through the countryís land borders with neighbouring countries. Reports in the media have also shown that apart form the land borders, the sea and the airports are being used by smart and greedy Nigerians to bring in the goods. However, a year and six months after the ban was made, it appears nothing much has been achieved. Firstly, the items that have been outlawed, are more in the market now than before. The government that defended the ban now believes that it was misled by the local manufacturers. It is obvious that the officials of the Customs have not done much to discourage the smugglers, although some major arrests and seizures have been made in recent time. The general impression of industry watchers is that the Customs has not lived up to expectation. President Olusegun Obasanjo was quoted some time agos saying that if he had his way he would scrap the custom service for their poor performance. Analysts have rated Customs low in its performance, noting that corruption which is a big problem in the country is serious in the countryís Custom service. Industry watchers agree that the ban is good, but it has been poorly enforced by the government and Customís officials. The reason behind the governmentís weak implementation of the laudable action is the political will. BUSSINESS TIMES investigations have shown that most of the big time smugglers are highly connected people with considerable influence in government. Also uniformed person are used to escort these smugglers goods into the country.Beyond these known smugglers, who have made nonsense of the governmentís god intention, is the fact that some top members of the government also consume the banned items. Recently at the wedding of a ministerís daughter most of the drinks served were imported because people do not like local ones. Manufacturers say they have not witnessed any significant growth in their business, as the intended result has not been achieved. The textiles industry is on the verge of collapse. Industry watchers have berated the government and custom officials for little results achieved so far. From the look of things, it appears the ban has to be revisited, if the desired result is to be achieved. A review of the import prohibition list has become imperative as some of the items outlawed are the key raw materials of some companies. These companies have cried out that the ban has to be revisited for the sake of their firms before they are force to go under.