April 2, 2012

Product dumping: How Asians are killing made-in-Nigeria goods

Product dumping: How Asians are killing made-in-Nigeria goods

some of the made in Nigeria goods

By Our Reporters
…as manufacturers, other stakeholders react
The increasing menace of dumping of products from Asian countries, especially China, into the Nigerian market is seriously undermining the competitiveness of the nation’s already distressed manufacturing sector.

China’s staggering population of 1.6 billion needs new trading routes for industrial goods, and Nigeria which is the most populous black nation, with a big capacity to easily absorb many of these goods, is an obvious target by the Chinese authorities.

Investigations by Financial Vanguard reveal that products from China are heavily subsidized for export which makes it possible for them to be sold at much cheaper rates in Nigeria than similar products that are manufactured locally in the country.

The list of such items imported into the country range from textile materials, bags, shoes, men and ladies’ clothing, all types of electronics, phones, generators etc. China is exporting goods at rock-bottom prices to Nigeria, and because Nigerian consumers are highly price-sensitive, they keep picking up the imported goods without questioning their quality.

The systematic flooding of Chinese products into the Nigerian market is very organised and coordinated. The main outlet is the popular China Town from where major markets in Lagos are infiltrated and then to other parts of the country.

Apart from the China Town market, Chinese citizens go round markets like Alaba International, Auto-parts and Balogun markets, looking for new channels for shipping in more of their goods.

The dumping of goods ranging from household items to consumables into Nigeria comes through unapproved border routes. This is so because the local manufacturers are having a running battle in finding markets for their products as Nigerians prefer to patronise these cheaper products as against made-in Nigeria.

A visit to Seme border showed that with as little as N200.00, one can bring in a bag of rice, 2’x4′ two wheel truck load of St. Louis sugar, bags of detergent soaps, and a commodity as low as nylon bags can pass through the border.

Mrs Nofi Ahodipe, a dealer in all kinds of consumables said that no matter the quantity of goods one brings in through Seme border, one must ‘settle’ the security operatives that mount check at every 100 metres. Some of these goods according to Ahodipe, come in trickles until a medium-size warehouse is filled up.

Financial Vanguard observed that even banned poultry products come into Nigeria freely, but another trader who preferred to remain anonymous said that you only hear of seized poultry products when the importer tries to play smart by not ‘settling’ the appropriate security official or that the ‘settlement’ is not commensurate with the quantity of banned import.

A car washer based in Seme also told Financial Vanguard that all kinds of vehicles  including buses, motorcycles, wheel barrows, bicycles and sometimes hawkers, are used to ferry these items.

It was gathered that the dumping of goods into the country goes on , on a 24-hour basis as vehicles are on the move all the time. Some of the commodities commonly ferried across the border include tissue paper, biscuits, and beverages of all kinds, various brands of vegetable oil, even palm oil, spirit and rum; fruit juices, banned second-hand clothes and textile materials, and all kinds of fruits.

Financial Vanguard further gathered that the only people that pay import duty based on their imports are the big time importers who move in commodities in large trucks.

A Customs officer, names withheld, told Financial Vanguard while inspecting a truck of nylon bags that there in nothing anybody can do about what obtains in Seme, adding that as long as the border remains open, all kinds of goods will keep coming including banned items.

The influx of these low quality goods into Nigeria will keep coming in unless the government makes an effort to implement fully some of its policies with a view to stopping Nigeria from becoming a dumping ground and saving local manufacturers from total collapse.

Fake goods from China being offloaded for destruction

The popular Computer village in Ikeja, is almost like a Chinese colony. Computer accessories and mobile phones from China have become the stock in trade. Chinedu Okoro, a trader, said Nigerians increasingly prefer Chinese products. “Their phones have many features and come very, very cheap,” he stated.

Manufacturers’ reactions
Reacting to the development, Chairman, Manufacturers Association of Nigeria (MAN), Apapa Branch, Mr. John Aluya, noted that the multiplier effect of dumping products on local industries range from low capacity utilisation to an average of 40 per cent; low and declining contribution to national output to an average of 4 per cent; negative real growth rates, low value addition due to high import dependence for inputs, to accumulation of large inventories of unsold finished products, among others.

He lamented the lack of strong and efficient institutional framework to curb the menace of massive dumping of products that are smuggled into Nigeria.

In his own response, Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said that dumping of products in the country is one of the inhibiting factors undermining competiveness of Nigerian products.  “It has done (and is still doing) serious harm to manufacturers,” he said.

According to him, the Chamber used the theme of last year’s Lagos International Trade Fair, Increasing Competitiveness of Nigerian Products in the Global Market, to draw government’s attention to the problem. “The theme was chosen to underscore the critical importance of business competitiveness in the acceleration of economic progress of the country.

For a developing economy like ours, protection of our industries and firms is good and desirable, but making them domestically and globally competitive is crucial and fundamental. This is the surest path to sustainable economic growth and private sector prosperity,” he stated.

On his part, Chief Kola Jamodu, President, Manufacturers Association of Nigeria (MAN), says MAN wants the Federal Government to promulgate new laws against dumping and smuggling of products with stiffer penalties.

Addressing MAN Anti-Counterfeiting and Brand Protection Stakeholders’ Forum recently, he said that the menace of counterfeiting, faking and smuggling with its associated crimes have contributed immensely to the problems of Nigeria’s real sector with devastating effects on the nation’s social structure resulting in unemployment.

He appealed to members of the National Assembly to expedite action on the passage of the bill against Counterfeit and Fake Drugs and Unwholesome Processed Foods.

Similarly, Dr. Simon Chukwuemeka Okolo, former NACCIMA President, asserted that local industries are merely struggling. He noted that the ceaseless dumping of foreign manufactured goods in Nigerian markets is a major problem facing the sector.

He said other problems include collapse of infrastructure, especially public power supply; poor state of our roads and high cost of and access to funds, etc.

Government‘s intervention
Meanwhile, Minister of Trade and Investment, Dr. Olusegun Aganga, says government is about to set up the Doing Business Competitiveness Council in collaboration with the Organised Private Sector (OPS) to remove the barriers which hinders the industrial sector from fully maximizing its productive and installed capacities.

some of the made in Nigeria goods

He also hinted that government is also working out modalities to introduce a  credit guarantee scheme to support the purchase of made- in-Nigeria  products  as part of deliberate plans to boost the demand and supply of locally made products. “No meaningful economic progress can be made in terms of wealth creation and poverty alleviation without a robust manufacturing sector,” he noted.

The minister further hinted that the Federal Government is proposing a Local Patronage Bill to protect Nigerian manufacturers. He said that the lack of patronage of products produced locally is one of the reasons for the low capacity utilisation and low contribution to GDP.

“We will work with the industries to enhance their productivity, improve the quality of their products and ensure that we significantly reduce the importation of substandard products as we work towards achieving zero- tolerance in this area.

“We are already working on a Local Patronage Bill that will ensure that made-in-Nigeria goods are patronised. We are going to help enhance the production capacity of the industries so that they will be able to satisfy local consumption and also export,” he added.

In a related development, Director-General, Standards Organisation of Nigeria (SON), Dr Joseph Odumodu, in a recent interactive session with journalists, alluded to the challenge of product dumping from Asia.

“The Asian countries are interested in exports, so if you are able to produce anything, they will give you as much as 20 per cent export grant, so you can actually sell at your cost price. But Nigeria has an anti-dumping policy, but has never applied it because we do not have any institution that protects a particular policy, then it is nobody’s business and nobody thinks about it. As a result, those things just keep happening.”

According to him, SON is seeking ways to ensure that we improve the competitiveness of the Nigerian manufacturers’ products. SON is committed to ensuring that Nigerian manufactured products receive as much opportunity in international market as their foreign counterparts.

But to be able to achieve this, the first thing that we are doing now is to remove substandard products from our system. Nigerian products have three major disadvantages. One, they are operating in a disadvantaged infrastructural environment, so naturally, their costs are higher than those of their colleagues abroad.

But even more importantly is that they are competing with substandard products and also they are competing with dumping. Like I said, every nation must protect its industries such that others will not come and bring products and sell below the normal price that such a product should go for in terms of looking at all the cost.

“The Honourable Minister of Trade and Investment is currently pursuing a new bill at the National Assembly called the Local Patronage Bill. That bill when passed will make it mandatory for every government – state, local, and federal – every time there is a purchase decision, to make sure that the first consideration is a Nigeria-made product. It’s only when that product is not available or does not meet the standards that anybody could go elsewhere to buy,” he remarked.

The Customs Area Controller (CAC) of Tin-can Island Command of the Nigeria Customs Service (NCS), Isa Nuhu, told Financial Vanguard that indeed, goods from China and the Far East flood the Nigerian market because they are cheap.

He said “We have two types of products, I don’t want to use the word fake and genuine but I will rather say higher and lower quality. If you put the two in the market today, being a Nigerian as I know, the one with the lower quality that is cheaper tends to go faster in terms of selling it than the more reliable and qualitative one. And for that reason, most of our traders decide to go to the market where they get it cheaper.”

On the importation of banned goods through the port, Nuhu said, “I should not be the person to answer you. You should have asked the stakeholders, if in the last two months there has been any change in Tin-can. Then you will be able to know but you are asking me to assess myself. The only way to assess myself is by the number of seizure that I have made.

That should be able to show you that something is changing, I believe. I actually know that if you ask people what was happening in Tin-can before and what is happening now, I am sure they will tell you there are lots of changes for the better.”

“I know that the so-called syndicate that operated based maybe on corruption, trying to cut corners, even if they are there, they are not finding it easy like before because that is our daily fight. I mean you can ask the officer in charge of Enforcement, I don’t think since he has come (to Tin-can) he has slept very well but then, that is the weight and responsibility that we have found on our heads, we have to carry it. I actually intend to leave this place (to be) a place where port users will say yes, this is a port, ” he concluded.

However, National President of the Association of Nigeria Licensed Customs Agents (ANLCA), Prince (Fwdr.) Olayiwola Shittu, blamed the dumping of goods in Nigeria on some Nigerians who connive with foreigners to ship in such consignments because of profit.

Shittu explained that most of the persons involved do this without considering the effect it has on the nation’s economy. He also blamed the countries from where such goods are imported; stressing that a country like China also exports their products to United States of America (USA) and the quality of those exports is the very best.

The ANLCA boss faulted them for deliberately “ruining” our economy while building theirs. He further noted that it is the duty of the Standards Organisation of Nigeria (SON) to ensure that the practice stops.

According to him, SON should seek the help of the international community responsible to stop the importation and shipment of such goods to Nigeria. He further noted that ISO can help in this regard by ensuring and enforcing the non-shipment of sub-standard goods to Nigeria.

A commercial driver who plies the eastern route told Financial Vanguard that he travels every other day to deliver container full of clothes, housing utensils and cosmetics imported from China.

Another is assigned to moving shoes, belts and antiquities from China to different parts of Nigeria. They also disclosed that there is sales boom. “What we supply cannot but sell. They are what people need every day. As long as you live, you must wear clothes and use shoes,” one of them volunteered.

Many made-in-China products have been found to be substandard. Traders who spoke with Financial Vanguard in China Town and Computer village alleged that those goods are only cheap but inferior. “Truth is, they don’t last that much,” a mobile phone seller said of made-in-China phones. Same is true of many other Chinese products.

Efforts to get Chinese authorities to comment on these allegations proved abortive. The Nigeria-Chinese Chamber of Commerce and Industry office listed online at Adeniran Ogunsanya, Surulere could not be located at the address.

Attempts to speak with the Chinese Consulate in Lagos also failed. When contacted by phone, a respondent at the Protocol and Press Affairs directed Financial Vanguard to the Commercial and Trade Office, who also directed us to call another number from where there was no response.