How smugglers’re killing SME sector

By Charles Nwaoguji

SINCE June 23, 2015 when the ban on 41 items by the Federal Government, the Small and Medium Enterprises (SMEs) have been at the receiving end. It is es­timated that Nigeria loses nearly $600 million in potential tax revenues to all the items annually. Government also spends millions dollars to secure its borders with­out achieving much result in combating smuggling activities, while on daily basis, most SMEs are closing shop.

The items prohibited include rice, ce­ment, margarine, palm kernel/palm oil products/vegetable oil, meat and pro­cessed meat products, vegetable and processed vegetable products, poultry – chicken, eggs, turkey – private airplanes/ jet, Indian incense, tinned fish in sauce (Geisha/Sardines), cold rolled steel sheets and galvanised steel sheets.

Others are roofing sheets, wheel bar­rows, head pans, metal boxes and contain­ers, enamelware, steel drums, steel pipes, wires, rods, wire mesh, steel nails, security and razor wire, wood particles boards and panels, wood fibre board and panels, ply­wood boards and wooden doors.

In addition, sourcing foreign exchange for the importation of toothpicks, glass and glassware, kitchen utensils, tables, textiles, woven fabrics, clothes, plastic and rubber products, soap and cosmetics, tomatoes/ tomato paste and eurobond/foreign cur­rency bond/share was also prohibited.

Since the policy was introduced, most SMEs are being driven out of business by cheap imported products. There are also worries that the many local industries may collapse and citizens lose thousands of jobs.

Stakeholders who spoke to Daily Sun recently on the matter, decried the high rate these items are smuggled into the country everyday through the porous borders, resulting to loss of revenue and investors. They stated that businesses are closing down and thousands are being laid off in Nigeria on daily basis while super-abundance of jobs, and new businesses springing up in neighbouring countries like Republic of Benin, Niger Republic and Cameroon because of the increased activ­ity in their seaports as a result of smuggled items in Nigeria.

The Chairman of the Nigerian Textile Manufacturers Association (NTMA), Mr. Abiodun Ogunkoya, for instance, stated that smugglers deny government huge rev­enue as well as pose a challenge to SMEs.

According to Ogunkoya, around 85 per cent of the $1.4 billion worth of textile ma­terials that flood the nation annually are smuggled.

‘’About 85 per cent of the textiles being sold in Nigerian markets, especially print­ed textiles, are smuggled into the country including fake and counterfeited materi­als. Wax print fabrics produced in China bear counterfeit trademarks of Nigerian manufacturers and fake Standards Organ­isation of Nigeria (SON) logo printed on the labels,’’ he said.

He said in order to deal with the prob­lem of smuggling of textiles in the coun­try, the Federal Government must design an effective system to protect the local industry, as the sector is still faced with infrastructural problems like poor power supply and bad roads, which will compro­mise the fund if necessary action was not taken to address them. According to him, it takes 20cents/kwh to provide power in Nigeria, which is far higher than India, Pakistan, China and Turkey.

In his submission at the event, Director General of NTMA, Chief Jaiyeola Olaren­waju, said the escalating cost of petroleum products in the country has unsettled most textile manufacturers.

“We are being driven out of business by cheap imported products smuggled into the country. If care is not taken, the whole local industry will collapse and we will lose thousands of jobs. The government should secure our borders and help keep these jobs,” he said.

The thing is that the border between Nigeria and Benin is really just a line on a map. Trade between these areas has gone on for so long and at such scale that it is near impossible for any agency to control it. The same can also be said for Nigeria’s northern borders with the Niger Republic and the eastern borders with Cameroon to some extent.

Executive Director, Nigeria Agricul­ture Development Watch, Dr. Johnson Idowu, said the concessionaires of Ni­gerian seaports are laying off staff mas­sively, the shipping and clearing agents, transporters, and other service providers that evolve as a result of activities in the ports have grounded to a halt in the past one year.

Idowu bemoaned that shipping lines and many other businesses are pulling out of Nigeria. In his words: “The ripple effect of rice smuggling into the country is mass sack and redundancy. Interestingly, the Minister of Labour will soon issue an ul­timatum to these companies not to sack.”

He added that government’s contem­plation of opening the land border initially for the importation of rice was a colossal error of reasoning.