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Unreasonable import restrictions

By Josef Omorotionmwan
IN most of the policies we dish out, we are only clever by half. A case in point is the recent Federal Government pronouncement on the partial restriction on the importation of many products into Nigeria. Henceforth, there are items that cannot come into the country through the land borders. Such can only be brought in through the seaports. Meanwhile, the authorities are silent on whether those commodities can come in through the airports.

Like Nigerians, South Africans like good cars, but unlike Nigeria, South Africa manufactures good cars. The cars manufactured in South Africa are affordable and available. It does not make economic sense for the South African to begin to import or smuggle cars from other lands – talk more the method of  importation, whether by land, by sea or by air.

On the contrary, cars – good or bad – are not manufactured in Nigeria. When the Nigerian needs a car, he must go the extra-mile to find how he  gets  a car. Meanwhile, the Nigerian authorities are fixated at the level of instant gratification – just grab the import duties and care less about the long-term idea of manufacturing!

Sadly, we pay mere lip service to everything. We agree in the abstraction that lack of electricity is the bane of the Nigerian economy. But look at how proudly we are parading the N69 billion capital allocations to the seven agencies in the energy sector in the 2017 appropriations.

How much of the N69 billion will be released? Is this not the same Nigeria whose capital budget performance hovers around the 19 percentage level? In the end, about N14 billion may be released, in which case, each agency will get an average of N2 billion. It is business as usual.  That is benign tokenism; and can that be what we require to pull us out of this recession?

See  what  is happening in Kenya, a smaller country with a population of 45 million; a country that has no history of electricity stagnation whatsoever. In fact, compared with Nigeria, Kenya’s electricity supply is as constant as the Northern star.

The Managing Director of Kenyan Power Company, Ben Chumo, has just unfolded a budget of $2.17 billion (Shillings 219.1 billion; about N1.2 trillion) to further boost the already near-perfect electricity supply.  Kenya is only being proactive with the present plan, which shoots for a minimum addition of 2,725 mega watts. It is a five-pronged approach: Infrastructure Development; Network Modernisation; Electricity loss reduction; Resource realignment; and improving supply and service to consumers. The project will be funded through internal borrowing from banks and multilateral lenders; while the World Bank is standing by with its own contribution. This is what we call an ambitions plan by serious-minded people!

The recent ban on the importation of goods through our land borders does not help the Nigerian situation. Governments are quick to make claims in favour of protectionism and these claims flourish because of their political attractiveness. In the particular case of Nigeria, the truth remains that you do not protect what you do not have. For example, while South Africa must protect her auto industry, Nigeria has nothing to protect. We must begin to think of how we can manufacture our own cars.  Only then can the protection of our manufactured cars have meaning.

Over the years, Judges have come to recognise that criminal law is a poor instrument for radical change.  Trade involves two parties – a willing seller and a willing buyer – with both of them getting what they want from the transaction. When you place a ban on a product, which the people need desperately, you merely succeeded in driving the economy underground.

The already bad smuggling industry will be further aggravated. People will go to any length to obtain anything that they truly desire. In doing this, they are prepared to break the law. At a point, you only succeed in securing a kind of monopoly interest for the entrepreneur who is willing to break the law. All that the smuggler is told is, “we shall create a barrier to entry into this line of trade by making it illegal and therefore very risky. As long as you are prepared to bear the risk, you will be protected from the competition of those who are unwilling to do so”.

Our border patrol officers will be smiling all the way, not to the bank, but to their ceiling. Recent experience has shown that ill-gotten wealth is not bankable. They can only expand the man-hole of their ceiling. What a country!

Because we are dealing with voluntary commerce in commodities whose buyers are willing to submit to any price increase; as we increase the risk on the commodities, we also put a corresponding increase on the potential gain to the seller. In essence, the harder we work to make the banned commodities risky, the higher we drive up the price that would make the risk worth taking. We remember Jeremy Bentham (1748-1832), “The calculus of pleasure and pain produces equilibrium at a higher price level. And at that point, the theory of deterrence breaks down completely”.

One major fault in Nigeria is the near-absence of enforcement of our laws. Evidence of this can be seen in the presence of the same banned products on our streets and markets. The moral message communicated by the laws is contradicted by the absence of enforcement. While the public sees the conducts condemned in words, it sees in the dramatic absence of enforcement, that they are not condemned in deed. This is undermining of fate in the system and, in the long run, it invariably breeds cynicism and indifference to the process of law, which augments tendencies towards disrespect for those who make and enforce the law.

What we need now is to devote our major attention to industrialisation. When the goods and services we need are readily available at affordable rates, there will be no need to resort to unnecessary importation and smuggling.



Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.