Illicit trade in Nigeria is taking a toll on the economy and the operations of manufacturers.
From loss of huge tax revenue and income
to the government and manufacturers to damage to long built brand
reputation and serious health risks to consumers, illicit trade may have
become a hard nut to crack.
to the government and manufacturers to damage to long built brand
reputation and serious health risks to consumers, illicit trade may have
become a hard nut to crack.
Experts at a roundtable in Lagos brainstormed on how to curb the trade.
CHARLES OKONJI reports.
For standards regulatory authorities,
revenue generating agencies, consumers and private sector operators,
particularly manufacturers, the fear of illicit trade (IT) is, perhaps,
the beginning of wisdom.
revenue generating agencies, consumers and private sector operators,
particularly manufacturers, the fear of illicit trade (IT) is, perhaps,
the beginning of wisdom.
Despite measures so far put in place to
halt, or at least minimise the booming trade in the production and
distribution of consumer goods that violate the rules and regulations
governing the relevant industry and regulatory authorities
in Nigeria, IT has refused to abate.
halt, or at least minimise the booming trade in the production and
distribution of consumer goods that violate the rules and regulations
governing the relevant industry and regulatory authorities
in Nigeria, IT has refused to abate.
Rather, the trade, which covers a wide
range of goods and brands, ranging from electronics, apparel, alcoholic
drinks to vehicles and auto parts, drugs, arms, pharmaceuticals,
cigarettes, counterfeit currencies, as well as humans,
appears to have assumed a life of its own, leaving sour taste in the
mouths of various stakeholders in the economy.
range of goods and brands, ranging from electronics, apparel, alcoholic
drinks to vehicles and auto parts, drugs, arms, pharmaceuticals,
cigarettes, counterfeit currencies, as well as humans,
appears to have assumed a life of its own, leaving sour taste in the
mouths of various stakeholders in the economy.
For instance, it has continued to force a
reduction or loss of huge tax revenue to the government. Genuine
manufacturers and other local businesses are also groaning over the
reduction in market share. Many local businesses whose
profitability has nosedived as a result, have also been screaming blue
murder over the colossal damage foisted on their brand image by the
thriving IT.
reduction or loss of huge tax revenue to the government. Genuine
manufacturers and other local businesses are also groaning over the
reduction in market share. Many local businesses whose
profitability has nosedived as a result, have also been screaming blue
murder over the colossal damage foisted on their brand image by the
thriving IT.
Consumes appear worse hit, as the
proliferation of fake and substandard goods have virtually taken over
from the genuine ones, posing serious health risks to end users. Because
IT thrives in the underground economy, the unwholesome
business naturally does not reflect in the country’s Gross Domestic
Product (GDP).
proliferation of fake and substandard goods have virtually taken over
from the genuine ones, posing serious health risks to end users. Because
IT thrives in the underground economy, the unwholesome
business naturally does not reflect in the country’s Gross Domestic
Product (GDP).
These must be why experts and economic
analysts describe illicit trade, which permeates virtually every product
category and industry, as avoidable economic cankerworm, which is not
only destroying businesses in the country, but
also militating against Nigeria’s economic growth and development.
analysts describe illicit trade, which permeates virtually every product
category and industry, as avoidable economic cankerworm, which is not
only destroying businesses in the country, but
also militating against Nigeria’s economic growth and development.
The imperatives of curbing IT
Globally, illicit trade accounted for
between eight per cent and 15 per cent of global Gross Domestic Product
(GDP) valued at $12 trillion in 2015, according to the World Economic
Forum.
between eight per cent and 15 per cent of global Gross Domestic Product
(GDP) valued at $12 trillion in 2015, according to the World Economic
Forum.
A Senior Research Officer, Initiative for
Public Policy Analysis (IPPA), Mr. Olusegun Sotola, also said,
according to the United Nations estimate, more than $1billion is
illicitly traded in small arms alone in Africa, fuelling
the increasing conflict and criminal activities in the region.
Public Policy Analysis (IPPA), Mr. Olusegun Sotola, also said,
according to the United Nations estimate, more than $1billion is
illicitly traded in small arms alone in Africa, fuelling
the increasing conflict and criminal activities in the region.
Sotola, in his opening remarks at a
policy roundtable discussion titled: “Business environment & excise
duty: Maximising economic opportunities through effective anti-Illicit
trade enforcement” said IPPA was of the view that illicit
trade was largely policy induced, while tax and tariff, for example,
often create perverse incentives for illicit trade.
policy roundtable discussion titled: “Business environment & excise
duty: Maximising economic opportunities through effective anti-Illicit
trade enforcement” said IPPA was of the view that illicit
trade was largely policy induced, while tax and tariff, for example,
often create perverse incentives for illicit trade.
He explained that the essence of the
forum was to show the underlying factors responsible for the growth of
illicit trade, the danger associated with it and the economic
dis-incentives it creates for local industries, the accompanying
revenue loss it has caused the government and undermining healthcare
delivery.
forum was to show the underlying factors responsible for the growth of
illicit trade, the danger associated with it and the economic
dis-incentives it creates for local industries, the accompanying
revenue loss it has caused the government and undermining healthcare
delivery.
A Senior Research Fellow at IPPA and don
at the University of Aberdeen, United Kingdom (UK), Dr. Olajide
Damilola, said Nigeria’s absence in the world ranking on IT as captured
by the Global Illicit Trade Index (GITEI) was worrisome.
at the University of Aberdeen, United Kingdom (UK), Dr. Olajide
Damilola, said Nigeria’s absence in the world ranking on IT as captured
by the Global Illicit Trade Index (GITEI) was worrisome.
GITEI is the global body rating countries
on illicit trade. Nigeria’s absence in GITEI’s ranking, according to
Damilola, was as a result of unavailability of data. He said the paucity
of data was even more precarious because the
trade could be causing serious harm to the economy unnoticed and a big
scare to prospective investors.
on illicit trade. Nigeria’s absence in GITEI’s ranking, according to
Damilola, was as a result of unavailability of data. He said the paucity
of data was even more precarious because the
trade could be causing serious harm to the economy unnoticed and a big
scare to prospective investors.
The expert said as an emerging economy
laden with socio-economic obstacles, the challenges of doing business in
Nigeria were many and they affect the growth of the economy as well as
make it difficult to attract investors and
successful investment.
laden with socio-economic obstacles, the challenges of doing business in
Nigeria were many and they affect the growth of the economy as well as
make it difficult to attract investors and
successful investment.
“The challenges range from multiple
infrastructural inadequacy, policy inconsistencies, corruption,
insecurity, bureaucratic bottlenecks, infringements on rule of law and
sometimes a lack of political will to implement business
friendly policies,” Damilola said.
infrastructural inadequacy, policy inconsistencies, corruption,
insecurity, bureaucratic bottlenecks, infringements on rule of law and
sometimes a lack of political will to implement business
friendly policies,” Damilola said.
The Senior Research Fellow stated: “In
such an adverse environment, companies operating legally as net economic
contributors deserve government encouragement and protection of their
goods and services from losing commercial viability
to illicit perpetrators.”
such an adverse environment, companies operating legally as net economic
contributors deserve government encouragement and protection of their
goods and services from losing commercial viability
to illicit perpetrators.”
According to him, Nigeria needs to
urgently work on the critical factors encouraging IT in order not to
compound the economy’s problems. He listed some of the factors to
include government policy, supply and demand of illicit
products, transparency and trade environment and customs enforcement.
urgently work on the critical factors encouraging IT in order not to
compound the economy’s problems. He listed some of the factors to
include government policy, supply and demand of illicit
products, transparency and trade environment and customs enforcement.
In addressing the problem, Damilola
advised that certain questions must be answered to properly direct
policy at the fight.These include government action or inaction that
creates incentives for illicit trade to thrive in the
country.
advised that certain questions must be answered to properly direct
policy at the fight.These include government action or inaction that
creates incentives for illicit trade to thrive in the
country.
He added that there was the need to ask
the following questions: “How do we benefit from illicit trade compared
to the costs? What categories of GITEI should Nigeria aim to improve
upon?”
the following questions: “How do we benefit from illicit trade compared
to the costs? What categories of GITEI should Nigeria aim to improve
upon?”
Other industry operators and experts who
spoke at the roundtable agreed that a holistic approach was required to
curb the trade, which also involves strategies beyond the Nigeria’s
jurisdiction.
spoke at the roundtable agreed that a holistic approach was required to
curb the trade, which also involves strategies beyond the Nigeria’s
jurisdiction.
Some of them noted that illicit trade is a
global phenomenon whose solution should be global in nature, adding
that the preferred global approach to combating the trade, which Nigeria
should be part of, should be aimed at international
cooperation and harmonisation of laws and regulations beyond borders.
global phenomenon whose solution should be global in nature, adding
that the preferred global approach to combating the trade, which Nigeria
should be part of, should be aimed at international
cooperation and harmonisation of laws and regulations beyond borders.
While citing the global fight against
money laundering as a typical example, they, however, cautioned that in
opting for this approach to the fight against illicit trade ravaging the
economy, Nigeria should not rush into signing
the controversial African Continental Free Trade Area agreement
(ACFTA).
money laundering as a typical example, they, however, cautioned that in
opting for this approach to the fight against illicit trade ravaging the
economy, Nigeria should not rush into signing
the controversial African Continental Free Trade Area agreement
(ACFTA).
The AfCFTA was designed to create a
continental trade bloc of 1.2 billion Africans, with a combined Gross
Domestic Product (GDP) of about $3 trillion. It was adopted by the 18th
Ordinary Session of the Assembly of Heads of State
and Government of the African Union (AU) in Addis Ababa, Ethiopia, in
January 2012.
continental trade bloc of 1.2 billion Africans, with a combined Gross
Domestic Product (GDP) of about $3 trillion. It was adopted by the 18th
Ordinary Session of the Assembly of Heads of State
and Government of the African Union (AU) in Addis Ababa, Ethiopia, in
January 2012.
The agreement was seen as an important
milestone in promoting Africa’s regional integration and helping to
increase intra-African trade, which was at 16 to 17 per cent, by more
than 52 per cent, worth about $35 billion per year.
milestone in promoting Africa’s regional integration and helping to
increase intra-African trade, which was at 16 to 17 per cent, by more
than 52 per cent, worth about $35 billion per year.
AfCFTA commits African countries to
phasing out tariffs on 90 per cent of goods, with 10 per cent of
“sensitive items” to be phased out incrementally. It will also
liberalise trade in services, while also signaling a step towards
building strong regional value chains.
phasing out tariffs on 90 per cent of goods, with 10 per cent of
“sensitive items” to be phased out incrementally. It will also
liberalise trade in services, while also signaling a step towards
building strong regional value chains.
Forty-four out of 55 African leaders
ratified the AfCFTA at an Extra-ordinary Summit of the AU Assembly in
Kigali, Rwanda, on March 21. Nine other AU members, including Nigeria
and South Africa, delayed accent to the treaty.
ratified the AfCFTA at an Extra-ordinary Summit of the AU Assembly in
Kigali, Rwanda, on March 21. Nine other AU members, including Nigeria
and South Africa, delayed accent to the treaty.
President Muhammadu Buhari was earlier
scheduled to travel to Kigali to ratify the trade deal, which is easily
the largest trade agreement since the World Trade Organisation (WTO) in
1994. But he backtracked on the opposition
of the OPS who said they were not consulted.
scheduled to travel to Kigali to ratify the trade deal, which is easily
the largest trade agreement since the World Trade Organisation (WTO) in
1994. But he backtracked on the opposition
of the OPS who said they were not consulted.
But at the IPPA roundtable, a Consultant
with the United Nations Industrial Development Organisation (UNIDO), Dr.
John Isemede, said the government must not succumb to pressures to sign
the agreement until some identified gray
areas are taken care of.
with the United Nations Industrial Development Organisation (UNIDO), Dr.
John Isemede, said the government must not succumb to pressures to sign
the agreement until some identified gray
areas are taken care of.
Isemede, a former Director- General of
Nigeria Association of Chambers of Commerce, Industry, Mines and
Agriculture (NACCIMA), said there was the need to explore the salient
issue of Nigeria’s comparative advantage in such an
arrangement to avoid making the country a dumping ground for goods and
services.
Nigeria Association of Chambers of Commerce, Industry, Mines and
Agriculture (NACCIMA), said there was the need to explore the salient
issue of Nigeria’s comparative advantage in such an
arrangement to avoid making the country a dumping ground for goods and
services.
His words: “The country is already
overloaded with imports. I am not saying the Federal Government should
not sign at all, but to put the necessary infrastructure on ground,
something to sell, something to offer before rushing
into the agreement.
overloaded with imports. I am not saying the Federal Government should
not sign at all, but to put the necessary infrastructure on ground,
something to sell, something to offer before rushing
into the agreement.
“The tea you sip comes from Kenya, the
Titus fish you eat every day comes from Morocco, there is Shoprite here
and there owned by South Africans. The majority of the products sold is
imported from South Africa and with the South
African Airline. What is Nigeria bringing to the table and what are we
going to sell?”
Titus fish you eat every day comes from Morocco, there is Shoprite here
and there owned by South Africans. The majority of the products sold is
imported from South Africa and with the South
African Airline. What is Nigeria bringing to the table and what are we
going to sell?”
According to the UNIDO consultant, the
government should review the membership of the 20-member committee to
review the proposed agreement to allow the OPS take centre stage. The
government, he added, should also fix infrastructure
by getting the transport sector especially the rail system up and
running.
government should review the membership of the 20-member committee to
review the proposed agreement to allow the OPS take centre stage. The
government, he added, should also fix infrastructure
by getting the transport sector especially the rail system up and
running.
Isemede also said more local industries
must begin to think more of export, while the government should consider
the coming back of Commodity Board to optimise the nation’s comparative
advantage.
must begin to think more of export, while the government should consider
the coming back of Commodity Board to optimise the nation’s comparative
advantage.
“You know that the Nigerian market is the
target of AfCFTA because of its size. To me, signing ACFTA without
putting the necessary things in place and without more involvement of
the OPS is like a landlord handing over his Certificate
of Occupancy (C of O) to the tenant,” he warned.
target of AfCFTA because of its size. To me, signing ACFTA without
putting the necessary things in place and without more involvement of
the OPS is like a landlord handing over his Certificate
of Occupancy (C of O) to the tenant,” he warned.
It is easy to see the connection between
the thriving IT and Isemede’s insistence that Nigeria must tread with
caution over the controversial AfCFTA. The thinking of some experts is
that, if Nigeria throws its doors wide open
in the spirit of the proposed trade liberalisation deal, perpetrators
of IT might cash in on the situation to continue their trade.
the thriving IT and Isemede’s insistence that Nigeria must tread with
caution over the controversial AfCFTA. The thinking of some experts is
that, if Nigeria throws its doors wide open
in the spirit of the proposed trade liberalisation deal, perpetrators
of IT might cash in on the situation to continue their trade.
The thinking is that combating the influx
of prohibited goods and the harm they cause to the economy may have
already become a hard nut to crack by the authorities. And this was why
the Buhari administration is struggling with
whether or not to sign the ACFTA deal.
of prohibited goods and the harm they cause to the economy may have
already become a hard nut to crack by the authorities. And this was why
the Buhari administration is struggling with
whether or not to sign the ACFTA deal.
Although the Federal Government has said
African countries are targeting the Nigerian market for the
implementation of ACFTA, it was being careful by not hastily signing the
agreement for the good of the economy. But pressures
are still mounting from some quarters for the government to soft pedal.
African countries are targeting the Nigerian market for the
implementation of ACFTA, it was being careful by not hastily signing the
agreement for the good of the economy. But pressures
are still mounting from some quarters for the government to soft pedal.
