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Nigeria’s import economy: Gains, pains

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NIGERIA is a colonised nation of the British government before her sovereignty in 1960. As a result of this master – servant politics which the British government played in Nigeria, they exploited the mineral resources of the country at  little or no cost and returned them to us as finished products at very exorbitant cost and this has plunged the nation into a dumping ground of the white man till date.

No country can be self-sufficient and so must engage in trade to procure those items of goods and services it has no capacity and capability of producing. Different countries are endowed with different types of natural resources. Hence, they tend to specialise in the production of those commodities in which they are richly endowed and trade them with others where such resources are scarce. Every country cannot produce all commodities due to geographical and climatic conditions.

Wittingly, since there is no attempt to industrialise Nigeria, the nation became a primitive agrarian, import consumer oriented country; unable to produce enough foods, goods and services from her rich natural deposited minerals and still experiences more pains than gains in her import economy.

This has continued until in October, 2019, when Nigeria’s President Muhammadu Buhari led administration closed the country land border to imported goods.

According to the President, the closure of the border was due to the smuggling activities of food, items, particularly that of rice.

In his reaction towards the border closure, the Minister of Foreign Affairs, Geoffrey Onyema, said goods imported into the country must have at least 30 per cent local inputs. The country would no longer tolerate repackaging of goods imported for the Nigerian market and must be escorted directly from the port of member states to the borders.

Stressing further, the minister said that the preconditions to allow goods and humans into the country would apply to all ECOWAS member states, explaining that the conditions are aimed at ensuring Nigeria does not end up a dumping ground.

Contributing, the CBN Governor Godwin Emefiele said, border closure positive economic results which include ends commodities smuggling, especially rice, poultry products, revamping the economy.

The present reality is that the pain has continued to pang and take a toll on citizens of all the countries involved. Expectedly, there has been pressure from the Benin Republic, the Niger Republic, Western and Northern nieghbouring countries because of the effect the border closure to importation and exportation has had on their economy.

Yet, Togo and Ghana have been clamouring for the borders to be reopened without further delay as the situation is hitting their economies.

Statistics has shown the negative impact of the border closure to importation of goods and services as the inflation rate has galloped to 12.5 per cent as of July 2020.

Food prices have risen, especially stable foods like rice. Manufacturers who rely on imported raw materials to produce can no longer push goods through the land border to the West African markets. As such, they are required to pass through the seaports which make distribution cost more expensive, while delivery time takes longer.

Certain economists observed more pains encountered in importations, saying that it is not the difference in currencies alone that are important in importations of goods and services, but changes in their relative values. Every time a change occurs in the value of one currency in terms of another, number of economic problems arises.

Further, currencies of some countries like American dollar, the British pound, German Mark, and the Japanese yen, are more widely used in international transactions, while others are almost inconvertible. Such tendencies tend to create more economic problems at the international plane. Moreover, different countries follow different monetary and foreign exchange policies which affect the supply of exports or the demand for imports.

Economists pointed out other pains of importation, which include high transport cost because of geographical distances. The longer the gap between one trading nation and another, the higher cost of transport. The imposition of taxes on importation creates artificial barriers to trade. Difference in language, ideology, national value system and philosophies create pains in importation.

Yet, there is need to protect infant industries, to enjoy self-reliant economy and to raise income through tariff if Nigeria will engage in more export services than importation.

Notwithstanding the pains in importation in Nigeria and closure of the land borders, certain businesses favoured, such as the agro-processors will hope the odds continue. Rice farmers are equally rejoicing as rice which is the third stable food in Nigeria is sold three times more than the price in the first quarter of this year. In fact as at  press time, a cup of rice which was sold for N50 is currently sold for N150.

But according to reports, Nigeria rice production volume for 2020 is put at 8million tones, with 2.5 million tones expected from Kebbi State. Report shows that there is a huge setback as over 2million tones of rice was recently washed away by floods.

Economists still recognised other gains from importations as import makes it possible to maximise world output of goods and services. This creates a situation whereby every household in the world consume more goods than it could without trade or importation.

Other gains include the increased output as a result of specialisation which leads to increased gross and disposals income, transfer of technology among nations of the world, world peace and it increases the absorption capacity of the domestic markets as well as savings, investments, employment, the growth rate of the economy.

Contributing through a chat, an importer, based in Alaba International Market, Lagos, Lagos State, who would not want his name in print said that there were certain economic benefits from importation. He said that “there is profit as long as such goods do not run into so much demurrage at the port. It leads to high level of turnover, creates political awareness and helps the importer to make more friends, have more connections and isalways informed about certain government policies on businesses in the country.

The Lagos based importer, lamented that “exchange rate makes it hard to have a stable price of goods and services. Sometimes, importers could easily run into unexpected losses due to increase in exchange rate. Once there is increase in exchange rate, customs duty also increases.”

Another pain attached to importation is the issue of double taxation. After clearing and paying every due in the port, they still settle people on the way who claim to be Customs officers, not minding that the goods have been correctly cleared. Touts are also settled.

The importer lamented the cost of goods overseas, making it difficult for Nigerian importers to make their own profits. “Transport fare has increased more than 100 per cent. Places that previously cost between 150, 000 to N180, 000, now cost between N400, 000 to N450, 000 for a 20ft container. Truck owners equally claim to pay certain dues at the port to allow them entrance into the port.”

Continuing, the importer said, “before now, shipping companies used to refund certain deposit but now, they no longer refund any amount on container deposit as before. The worst is that certain policies and laws in the country have forced many importers out of business and restricted them and make it impossible to receive forex from banks. When eventually the goods arrive, bad roads affect businesses as some goods get spoilt before getting to their destination.

For a way forward, an analyst emphasised that the policies and programs which the government has implemented; from forex restrictions to border closure and the Anchor Borrowers Program, which provides farm input to farmers, are all impressive.

But the analyst said, all the policies, as stand-alone without adequate infrastructures, are not sufficient to combat exogenous factors like flood, which is beyond the control of the government and the society. Proper irrigation and drainage infrastructure would help to cushion the effects of water logging in farms.

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