Lifting the ban on textile imports

The Comptroller General of the Nigeria Customs Service (NCS), Alhaji Abdullahi Dikko, who made this known last month in Lagos, said textile materials, furniture and the other delisted items could now be imported subject to the payment of a 35 percent duty as agreed to by all 16-member countries of the sub-regional body.Dikko, speaking at […]

The Comptroller General of the Nigeria Customs Service (NCS), Alhaji Abdullahi Dikko, who made this known last month in Lagos, said textile materials, furniture and the other delisted items could now be imported subject to the payment of a 35 percent duty as agreed to by all 16-member countries of the sub-regional body.
Dikko, speaking at the launching of the implementation of the CET, at which he was represented, noted that there was also provision for an Import Adjustment Tax.
He said that with the CET, some adjustments for member countries had to be made, adding that there were 97 chapters with the 5,899 tariff headings, but every member country was entitled to 3 percent adjustment. The adjustment would translate into 177 tariff headings, to enable member countries protect their local industries, he said.
The new policy came into effect in June following a directive by the Federal Ministry of Finance. It will be flexibly applied over the next five years before its full implementation expected to begin in 2020. The flexibility window is to enable member states adjust their tax systems to align with the CET provisions, which are reviewed every five years.
The ECOWAS Commission has already set up a committee to monitor the implementation, to ensure adequate compliance so that the provisions are not abused. The CET itself is not exactly new; it has been on the drawing board for more than a decade, as part of efforts to integrate the economies of countries in the sub-region.
As expected, the delisting of these items, especially textile materials, has attracted outrage from a section of the organised private sector, with some manufacturers saying it could lead to a slump in the capacity utilisation of local industries from an all-time low of 30 percent.
Some have even argued that the federal government stood the risk of losing the N50 billion intervention funds in the textile sector if undue exposure to imported commodities was not checked. The implementation of CET was bound to create suspicion, coming just a few weeks after the NCS released multi-million naira worth of assorted foreign fabrics seized in Kano.
Their concerns are valid, but these perceived negative effects would only be in the short-term because looking at the broader picture, Nigeria stands to benefit immensely from the policy which aims at consolidating the sub-regional market, while stimulating its productive capacity and deepening economic integration.
If properly implemented, the CET could minimise cargo diversion to neighbouring countries, which have also embraced the policy. As the biggest economy in Africa and with its huge population, Nigeria stands to lose nothing by opening its borders if the rules are fair.  
The federal government imposed the textile import ban in 2010 to protect local industries; but it clearly failed because the listed items were still being smuggled in, badly hurting the nation’s economy. The factories it was designed to protect became either moribund or have completely shut down, rendering thousands jobless.
With the ban, textile materials for instance, faced unequal competition with imported fabrics, most of them sub-standard stuff from Asia, which took up about 85 percent of the Nigerian market. The federal government lost billions in revenues as importers, rather than pay duties, bribed officials who also seemed to be eager to look the other.
President Muhammadu Buhari has pledged his determination to increase internal revenue generation in the face of the slump in oil earnings. There is no better way to do it but by plugging leakages in the financial system.  
But the federal government must tread cautiously in order not to throw out the baby with the bathwater. It should design measures to ensure that Nigeria is not turned into a dumping ground for sub-standard imports, especially from Asia. It should not all be lamentation though. The textile firms also now have a vastly expanded market to compete in it and even excel.
The government should fast-track its efforts to improve power generation and distribution, ensure that manufacturers have greater access to loans at lower interest rates and generally check the cost of doing business in Nigeria. This will help bring down the prices of locally manufactured goods and make them more competitive.