Monday, October 16, 2017

Why Nigerians Should Be Allowed To Export Imported Items

Just like any other nation in the world, Nigeria has a list of prohibited items for exportation. According to the list on website of the Nigeria Custom services, the items prohibited for export include the following: Maize, Timber (rough or sawn), Raw hides and skin (including Wet Blue and all unfinished leather), Scrap Metals, Unprocessed rubber latex and rubber lump, Artefacts and Antiquities, Wildlife animals classified as endangered species and their products e.g. Crocodile; Elephant, Lizard, Eagle, Monkey, Zebra, Lion and All goods imported.

The reason for the prohibition of most of the products are very reasonable but for one and that is imported items. I strongly believe that we need to review our trade policies in order to make Nigeria a major trade hub in the sub Sahara African countries. The probation of maize is good because we are not producing enough to meet the local demands. The prohibition of timber export is necessary in order to reduce the impact of climate change on our environment. Raw hides and skin prohibition is also okay in order to first reduce the rate of killing the animals and also create jobs via the value added to them before export. Scrap metals need to be prohibited for export because they are greatly needed by our foundries as raw materials in order to revive the sector (which is going comatose already). Same goes for rubber latex whose processing is not so sophisticated and adding value to it before export leads to the creation of more jobs. The Artefacts and Antiquities are necessary prohibition in order to preserve our heritage while the animals categorised as endangered species need to be prohibited in order to prevent them from going into extinction.

The item on that prohibition list that does not have any reason to be there is the prohibition of imported item for exportation. I know that every policy is driven by a philosophy, what I still do not understand is the philosophy behind this policy. Whatever reason that the government might have which is often related to reducing the rate of import into the country and thus reducing the consumption of foreign exchange is no more valid. As a matter of fact, these imported items regularly find their ways out of the countries into the countries West African subregion and beyond via various illegal means and routes. By changing this policy, Nigeria can become a major trading hub for West and Central African countries just like like United Arab Emirates (UAE), United Kingdom (UK) etc who are major trading hubs in their regions. They import a number of items into their countries and these same products are exported out to the countries within their regions. This practice has not collapsed their economy but rather, it has helped them immense economic benefits that I will highlighting in the latter part of this article.

The data obtained from globalEDGE(is a knowledge web-portal of the Michigan State University) revealed that in 2015, some of the top 10 items imported and exported in the UAE involved the same products. For examples, the UAE imported $45.2B and exported $40.5B of Precious stones and metals, imported $21B and exported $7.9B of industrial machinery, imported $19.1B and exported $8.9B of motor vehicles and parts, imported $3.8B and $3.5B exported plastics, imported $3.5B and exported $2.0B iron and steel, imported $18.3B and exported $8.0B electrical machinery. Most of the top 10 export destinations of this country are within its region in the middle east and these include Iran, Saudi Arabia, Iraq, Oman, Kuwait and Qatar. This same scenario play out also in the case of United Kingdom whose top 10 items of import (like precious stones and metals, electrical machinery, industrial machinery, motor vehicles and parts, plastics, pharmaceuticals, precision instruments and minerals and oil) are also exported to its top 10 export destination in Europe and these include countries like Germany, France, Netherlands, Ireland, Belgium, Italy, Switzerland and Spain.

In the same manner and in the interest of sustainable growth in this economy, Nigerians should be allowed to import items, which are neither on the import prohibition list of the Nigeria Customs Service nor in the list of items not valid for foreign exchange as stipulated by the Central Bank of Nigeria, and export the same to our neighbours in the West African subregion and other land locked countries on the continent. This practice, as seen in other countries, has shown the possibility of increasing the revenue of the government via the payment duties and taxes associated with importation. This will also lead to increased employment opportunities that are associated with the increase in trading activities. Legalising the exportation of imported goods will consequently increase the formal trade with West Africa countries and hence the availability of valid data for proper planning. Since the Exporters will now have to open NXP for their export trade, they will also be compelled to repatriate the funds which will in turn increase foreign exchange earnings of the nation. 

In conclusion, I will like to recommend that the Federal Ministry of Finance do a critical review of the policy prohibiting the exportation of imported goods in Nigeria with a view to changing this policy. The presidency should also setup an inter-ministerial committee that comprises of the Ministry of Finance , Ministry of Trade and Investment, the Central Bank of Nigeria together with other relevant stakeholders to jointly issue a guideline that will make this initiative a sustainable one. This guideline should contain a prohibition list that mainly include items that are currently being produced in Nigeria and exported to various African countries.

I am very sure that if the points raised in this article are well noted and the various suggestions acted upon, we will not just begin to see a reasonable increase in the volume and values of non-oil exportation out of Nigeria, but also the humongous economic benefits that comes with such policy as demonstrated in other parts of the world.

Bamidele Ayemibo

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