Closing Nigeria’s border to stop smuggling of rice and other goods into Nigeria from other Neigbouring West Africa countries is one of the most crude and retrogressive decisions /actions of the Buhari government in the most recent times .
A rational and deep thinking government with long term strategies of maximizing Nigeria’s strength and advantages under the new ACFTA would have taken a different policy and action route .
Let me share with us what we would have rationally done differently.
1. Nigeria is the biggest economy / market in Sub-Saharan Africa. Benin Republic today has become a menace to us because we have leaders , who cannot reason and have refused to do the right things .
The tariff regime at Benin ports are low . As low as between 5-20%. There port services are also very efficient, unlike the madness and bedlam we experience at lagos port because our oppressors refused to open up Onne and Koko ports, just to keep those they loathe under perpetual bondage.
What we would have done long ago is to decongest Lagos port, open up Onne and Koko ports in Port Harcourt and Warri and improve efficiency of port operations /services there, so as to make it far better than what we have at Benin ports .
Once, this above is in place , then, crash the tariff on rice and car imports and allow those, who want to import foreign rice to do so .
Then, impose massive 50% consumption or local sales tax on the rice imported into Nigeria.
For the vehicles, especially, certain categories of luxury vehicles, impose consumption/sales tax of 80-100% on them , once they are cleared into the country at the point of registration. FIRS should link their system to that of the car Registrars.
By doing the above, Nigeria is not denied the 10% that the importers will pay to customs at the Lagos or Onne port. We are also not denied the tax because, the tax receipt that is verifiable online is issued by the FIRS. It is easy to track the true value of consumption tax that a luxury car owner is suppose to pay by matching the year that his car was produced, through the Vin Number, to the date of registration and then cross checking it with the amount paid.
Through this policy scheme , you would have cut off the shipment of rice and vehicles to Benin ports and impose sales tax on them within, so as to make the foreign imports far more expensive than locally produced rice . This will encourage more local production for rice. With the involvement of domestic rice producers, cooperatives and distributors in the enforcement of this high consumption tax on foreign rice, people will be forced to seek for domestic options.
In UAE, despite being a Muslim country that abhors whisky and alcoholic beverages, the rulers of Dubai, to discourage people from drinking alcohol , always impose over 300% tax on the drinks in designated areas where they are sold. They did not ban its sales or blocked their borders or created Hisbah to destroy the business of the sellers . We just need to stop this madness in Nigeria.
We will set up a tax force working closely with local rice farmers and distributors to enforce it .
It is very foolish for us to put 70% tariff on imported used cars .
Car is not a luxury . We do not manufacture cars in Nigeria and do not have the technology.
What we do here is car assembly.
Over 92% of Nigerians live on less than N60,000 income per month and N720,000 per annum . So, most of these categories of Nigerians, who spent years saving to buy a car of N1 million , will prefer to go to Cotonou to buy it and smuggle it into Nigeria, rather than experience the pains of our policy foolishness .
If we crash the tariff on imported used cars to match what we have in Benin Republic and decongest lagos port by opening up the other ports for efficiency, Nigeria automatically by the reason of our size and capacity becomes the transhipment port for the rest of West Africa .
Other countries in West Africa will now be using our ports as destination port for their imports . We will earn revenues from other sectors as the traffic from other countries now inflows into Nigeria
By doing the above , we shall reverse the trend and turn the table against our neigbours.
Benin Republic will either go down or they will become the Pueto Rico of Nigeria.
These things are not sky rocket science. You do not impose heavy tariff on goods and services you cannot produce locally and competitively
God help us from this unthinking and analogous men in power
Nnaemeka Onyeka is a Financial Engineer, highly rated economist, consummate investment banker and serial entrepreneur with great stakes in the diverse sectors of the Nigerian and Sub-Saharan economy.
The opinions expressed in this article are solely those of the authors.