Last week, we beheld Kehinde Aluko, a telecoms expert, who believes that the government must regulate the importation of cheap and substandard products into the country and place embargo on them.
Said Aluko further:
“I think that a multi-dimensional approach would be necessary to tackle the problem of substandard goods into the country. The government should set up a task force specially to monitor the activities of the Nigeria Customs Service and the borders as well. I also believe that if the Federal Government solves the problem of power supply, more manufacturing companies would thrive because it would provide ample opportunity for indigenous brands to showcase quality goods. I know that Nigerians can produce just about anything if the enabling environment is provided”.
The telecoms expert, who recommended stiff penalties for importers and companies that bring in substandard products into the country, added, “All in all, I think the greatest solution would be improved power supply. With improved power supply, manufacturing companies would not need to waste funds on diesel or other means of power generation. Instead, they will channel their funds into improving production of goods because if we cannot produce, we will end up importing cheap things from abroad, and that is why Nigeria has become a dumping ground of sorts, where simple things that can be produced are imported,” he stated.
Bede Obayi, Director of Compliance, SON, told The Guardian that his organization has been unrelenting in its efforts to sanitize the ICT market, as well as other affected markets. He noted that the task could be made easier, when collaborations are struck and information shared among government agencies, operators and other stakeholders. Obayi regretted that these imported products come through the seaports and land borders undetected.
“All these are sources through which they come into the country, and you must be aware that SON is not inside the port. But we use the opportunity in the Nigeria Integrated Custom Information System to see the importation of products from the seaports. But the point is that what you are made to see can change from one point to another at the point of clearing, because you are not physically there,” he said. It, was learnt that most of these products come mostly from Asia, especially Vietnam, Thailand, Taiwan and China.
Health care: sector ravaged by fake and
Similarly in the healthcare sector, fake, adulterated and substandard drugs have not only led to the death and suffering of many, but have also stalled the growth of pharmaceutical industries in the country. Without doubt, this development is depriving the country quite much in terms of income, as well as the fact that the healthcare sector is badly affected by it. But, if reports and researches are anything to go by, the Nigerian market is not the only one suffering from this malaise, as such is said to be the case in nearly all African and developing countries, where Chinese businessmen operate.
The relationship between Beijing and these countries is quite multi-faceted and lopsided, in that it appears to favor China more than the host nations. This is brought about by the fact that these countries not only have to fight low commodity prices, but China’s highly competitive manufacturing sector has also upset many of their small-scale industries.
It is worth noting that, most of these Chinese companies are not even properly registered to do business in Nigeria. Recently, a global consulting firm, Mckinsey, said more than an estimated 60 per cent of Chinese companies operating in Nigeria are not documented by the Chinese Ministry of Commerce.
Specifically, the firm had put the total number of Chinese companies in Nigeria at 930, out of which it said only 317 are documented back in China. Again, in recent research conducted by Mckinsey, it was discovered that there are over 10, 000 operational Chinese firms in the manufacturing, construction, trade services and real estate sectors across Africa. But despite the high Chinese presence in Nigeria, the institute said only Ethiopia and South Africa have a high level of engagement.
These three governments (Nigeria, Kenya and Tanzania) recognize China’s importance, but they are yet to translate this recognition into an explicit China strategy. Each has several hundreds of Chinese firms across diverse sectors, but this presence has largely been the result of a passive posture, relying on large markets ties; much more is possible with true strategic engagement,” the report said.
The firm went further to explain that only 47 per cent of raw materials used by Chinese firms were of African origin and only 44 per cent of the local managers at Chinese-owned companies were Africans, representing a loss for the continent.
“On balance, we believe that China’s growing involvement is strongly positive for Africa’s economies, governments and workers,” the firm concluded. Back home in Nigeria, whenever appropriate Chinese authorities are confronted with some of these accusations, they have always attributed the problem to a general misconception on the part of the people.
In their explanations, they point to the fact that production of fake and substandard products is not limited to China, as other countries equally engage in it. And since Nigeria imports goods from other countries, the searchlight should also be beamed on those countries. They find it baffling why accusing fingers are always pointed only at China, when other countries are to blame for such.
And while some of them acknowledge that there are substandard Chinese products in the country, they, however, believe the rate is so low that it shouldn’t overshadow the goodwill and positive contributions of the majority to the country’s economic growth and wellbeing.
Howbeit, truth be told, condemning all Chinese business activities in the country would tantamount to throwing away the baby with the bath water. I sincerely believe, it is only natural and to be expected that Beijing would do all in its power to protect its various interests in the country, as well as ensure that set economic and social targets are met. After all, it is said, “all is fair in love and in war.”
The onus is, therefore, on Nigeria to equally protect its economic and environmental interests, as well as that of its citizens, by ensuring that relevant agencies apply due diligence, through promulgation and strict implementation of appropriate laws.
In my humble opinion, it is pertinent to state here that, if Nigeria does not wish to become a dumping ground for inferior and counterfeited products from across the globe, it behooves on our government, through relevant agencies, to set the necessary standards and maintain same. The truth is that, if we do not do it for ourselves, no one else would, and the sooner this is grasped in all its ramifications and acted upon, the better for the country and its citizens. Nigeria is import dependent, with porous borders and for them not to be at the port to inspect these goods first hand is not good enough. They should be allowed to be at the ports to see these products before they enter into the market.
The issue of standardization is the core for every manufacturing output. Most products come into the country from countries that do not have standards, but clone SON logo. This is certainly not good for the Nigerian economy.
Another look at the effect of the Chinese investments in Nigeria as stated earlier, one can either call it good, bad, or an ambiguous situation we find ourselves in, being that the China’s economic activities are usually benign but occasionally can be destabilizing. When these activities do aggravate domestic conflict, it is often because they exacerbate homegrown conflict drivers such as corruption, criminality, and misgovernance. Although bilateral trade and investment has mostly a beneficial effect, bribery and illegal extraction have a negative impact on Nigeria’s stability and security, and Chinese arm sales to Nigeria result in mixed outcomes.
Decades of Chinese investment in Nigeria have, on the balance, contributed to the socioeconomic development—and thus the stability and security—of Africa’s most populous country. Although at times flawed and unevenly distributed, China’s trade with and investment in Nigeria stands in sharp contrast to the relative lack of US and European interest outside the country’s oil sector. Chinese investment—whether organic or state directed—generates both formal (such as factory workers) and informal (such as market traders) employment, boosts tax revenues, and creates opportunities for local suppliers.
The economic benefits Nigeria realizes from bilateral trade are similarly tangible. For example, a 2014 study suggests that these imports might have a powerful impact: it estimates that a one percentage point increase in imports from China correlates to a 0.2 percent rise in Nigeria’s gross domestic product. Even though Nigeria remains one of the most difficult places in the world to do business, Chinese-owned firms operating there depend on local labour. Sixteen firms surveyed each employed 377 Nigerians on average, accounting for roughly 85 percent of their workforce. Most of the companies had been operating in Nigeria since the mid-2000s or before and mainly engaged in light manufacturing, making items such as furniture, building materials, and household consumables.
Compared with their Western counterparts, Chinese firms have a higher risk threshold and are open to undertaking work in conflict-prone areas where stability can be enhanced by the employment and infrastructure development that such work generates. Despite its meteoric expansion, the China-Nigeria trade and investment relationship still has some drawbacks. First, the increased flow of Chinese imports in Nigeria since the 1990s accelerated the collapse of a domestic manufacturing sector already weakened by decades of economic mismanagement, unreliable electricity supply, and high borrowing and operating costs.
Government import bans on textiles and other domestically made goods failed to stem these imports but fueled smuggling—especially of Chinese-made textiles tailored to Nigerian consumers’ tastes. These ban-busting imports had an outsized impact: between 1985 and 2010, Nigeria’s textile industry lost roughly 180,000 jobs.
Interestingly, a little twist to this issue which is a personal observation is that the Nigerian government has failed to curb imports of substandard Chinese-manufactured goods, particularly items such as generator sets and consumer electronics.
Now, far from being a Chinese government conspiracy, the flow of defective imports is instead driven by some opportunistic Nigerian traders’ keen to maximize the quantity of goods—regardless of their quality—they can obtain on expensive purchasing trips to China. The more goods these traders are able to buy, the more profit they can make from each trip. Nigerian merchants trading with China operate at a disadvantage relative to their international counterparts. Nigerian traders’ commercial activities are constrained by high travel costs, restrictive Chinese visa policies, and an antiquated air-service agreement that allows only one airline from each country to fly into one city in the other country (such as Lagos and Guangzhou). If this restriction on air service were lifted, the resultant travel-cost savings would lead to an estimated annual economic gain of more than $650 million dollars for Nigerian consumers from increased trade alone. (To be continued).
CRACK YOUR RIBS
“Before you embark on weight loss, check the size of your head to avoid looking like a standing fan… Shey you grab?”.
THOUGHT FOR THE WEEK
“The loss of national identity is the greatest defeat a nation can know, and it is inevitable under the contemporary form of colonization”. (Slobodan Milosevic).
God bless my numerous global readers for always keeping fate with the Sunday Sermon on the Mount of the Nigerian Project, by humble me, Chief Mike Ozekhome, SAN, OFR, FCIArb., LL.M, Ph.D, LL.D. kindly, ride with me to next week’s exciting conversation.