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By rasheedakinshola • 11th Mar 2019 • 223 views • 43 comments

Smuggling is a global problem of enormous scale, impacting virtually every industry sector around the world. Nigeria is no exception, as it is suffering significant economic and health and safety consequences as a result of widespread smuggling in the country.

Small businesses, knowingly or unknowingly buy counterfeit technology or equipment, and suffer unanticipated costs in breakage, business downtime, and unenforceable warranties. Foreign investors are reluctant to invest when the return on investment of a new product is made more uncertain by unenforced intellectual property rights. Of even greater concern, individual consumers risk health and safety as they are duped into buying faulty automobile parts or unsafe medicines. Governments themselves have been victims of counterfeiters as fake repair components find their way into military aircraft and equipment.

Local manufacturing industries have been finding it hard to dominate the local market for quite some time mainly due to price difference between locally manufactured goods and imported goods including smuggled goods.

In Nigeria, the government has initiated steps to address  smuggling. Two major efforts stand out. First, the legal framework is fairly well developed in Nigeria. Second, the government has taken steps to protect consumers’ health and safety from dangerous counterfeits through significant education efforts. Despite these actions, a study by shows that  smuggling rates remain high. For example, across seven industry sectors smuggled goods sales caused average sales losses to rights holders of 21.7% in 2012.1 There are multiple reasons why  smuggling continues to increase in Nigeria. Conflicting government priorities, lack of adequate resources to deal with a multitude of critical issue, a lack of political will to deal with the problem and even a sense among some that smuggling is a “victimless crime.

There is a clear consensus that the key action needed to stop the trade in  smuggled goods is stronger enforcement of the existing laws and regulations.

Special tax policies and rebates for industries established by the Chinese have been agreed upon is a treat to local manufacturing industries that may get swamped by industries established by China. Due to such agreements, local manufacturing industries would be facing unfair and unjust competition from Chinese established industries and it would be near to impossible for local industries to compete in the long run at low profit margins, or even break even for most of the manufacturing sectors.

On the basis of the experience of Nigeria, it is also anticipated that there would be an increase in smuggling through the Smense route, which means loss to the national exchequer. If supply of smuggled goods increases in the local market, it would be impossible for local manufacturers to maintain their market share, resulting in heavy losses to local industrialists. Moreover, this would result in heavy losses to the government due to loss of duties and taxes, which otherwise would be collected at the import stage. To address this issue, Nigeria authorities have promised to design a mechanism to prevent smuggling. To ensure the safety of their borders, Nigeria  have to agreed to build a mechanism to exchange intelligence between their anti-smuggling bureaus, to strengthen customs controls at the border and to exchange information to curb illicit  smuggling across the border

The huge illegal flooding of contraband goods into the country, is threatening the survival of local manufacturing companies as well as potential excise and VAT for government.

Many manufacturing companies in almost all the sectors of the economy are collapsing due to this ugly situation. Investigation carried out by Daily Sun, recently revealed  that   besides depriving government of revenue for public expenditure, smuggling distorts market prices, thereby exposing traders to unfair competition which might lead to the collapse of local industries.

It has observed  that smuggling is a serious offence under the Customs and Excise Act, and goods imported without licence are liable to forfeiture. It also shows that a lot of Local  manufacturers are complaining about the influx of imported goods on the market, a development, the manufacturers says was a threat to consumers and their profitability.

Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah. earlier said government has  engaged the private sector on how best to deal with illegal goods imports, which affected local  producers and potential to kill jobs.

“Bringing in more imports means we are reducing the chances of fellow Nigerians to be employed. We need to protect our industries by giving them a better business environment. The moment we are prioritising imports, we are killing our own economy,” he said.

Local industrialists are crying foul over the influx of cheap imported commodities into the Nigeria market. Local products were being pushed out of the market because people prefer cheap, foreign goods imported from Asia.

However, some consumers told the Daily Sun that they preferred imported goods because they were of better quality. Local manufacturing industries have been finding it hard to dominate the local market for quite some time mainly due to price difference between locally manufactured goods and imported goods including smuggled goods.

“The problem is that we think that anything from Europe, Dubai or China is of high quality compared to locally-made products. That’s why some people will buy dresses or shoes that will tear after a few weeks,” said Mr Tunde Oyeloa the Chief Executive of Officer of Worldview Nigeria Limited,  adding that “by consuming local goods, we support manufacturers as well as the economy.”

Oyeloa however, noted that there is a need for government to protect the local manufacturing industry — still suffering from the effects of hyperinflation — from stiff competition until they are strong enough to compete internationally.


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