By Stephen Ubanna
Those who think that President Muhammadu Buhari, a retired Army General, should be blamed over the poor state of the economy or persistent devaluation of the naira by the Central Bank of Nigeria may have to do a rethink. This is because ‘’it is a collective responsibility’’, former Nigerian President had said.
He may have alluded to the fact that the foundation for the nation’s crumbled economy had been laid over the years. This may not be unconnected to the fact that Nigeria had stopped producing and competing with other countries in the export market after 1981 but had resorted to importation of various brand o foreign goods, including vehicles. The fallout was that Nigeria lost the market to the Asian countries of China and India, in the west coast and Central African sub-region.
Until the Nigerian economy turned from bad to worse between 1981 and now, the country was productive was in 1980, during the Administration of former President Shehu Shagari, now deceased, when the exchange rate was N0.78 to one dollar.
Economic experts had attributed the collapse of the nation’s economy to the fact that the country which was a net exporter of refined Petroleum products, particular, Premium Motor Spirit, PMS, popular, petrol, as it had dominated the West coast and Central African sub-regional markets and suddenly became a net importer of petroleum products with the near collapse of its refineries located in Kaduna, PortHarcourt and Warri. The total refining capacity of the three refineries which are working in bits and fits is 445,000b/d. This may have informed why past and present government have resorted to subsidizing the importation of Petroleum products to make it affordable in the country.
Take for instance this year alone, the Katsina born Nigerian President had requested the National Assembly to approve n4 trillion, to subsise the importation of PMS, into the country after criticizing former Goodluck Jonathan for doing so.
The Nigerian National Petroleum Corporation, NNPC, baptised Nigerian National Petroleum Development Company Limited, NNPC, with the passage of the Nigerian Petroleum Industry Act, in 2019 by the National Assembly and which had been assented into Law by the Katsina state born Nigerian President, had reported that the nation consumes 90million litres of petrol daily which could not be handled alone in the hands of the marketers to import because of the high exchange rate. This may have informed why the Katsina state born Nigerian President Has requested the National Assembly to approve N4 trillion, the highest in the last 111 years to subsidise petrol imports.
It is instructive to note that as at 1980, Nigerians rode locally assembled cars, buses and trucks. Peugeot car assembling plant based in Kaduna, Capital of the north western state of Kaduna, now a haven for Bandits Group, and Volkswagen car Company in Lagos, the nation’s Commercial nerve centre were meeting up the need of the local market and even for export to the west coast and Central African sub-regional market.
It was reported that Leyland based in Ibadan, Capital of the south west state of Oyo and ANAMCO, in Enugu, south east Nigeria, assembled the Buses and trucks in their respective manufacturing plants. Steyr in the north east state of Bauchi, a region that has become the home state of the Islamic Fundamentalist Group, BokoHaram, and the Islamic state of West African Province, ISWAP, produced the Agricultural tractors. Informed sources told The Value News that the Multinational Company was not just assembling the Agricultural tractors but also producing many of the components.
A source disclosed that that another Multi-national Company, Vono products in Lagos, produced the vehicle seats, Exide in Ibadan,produced the car batteries, not just for the Nigerian market but for the entire west coast and the central African sub-region. IsoGlass and TSG, Ibadan, were said to have produced the windshields while Ferrodo, produced the brake pads and discs.
Dunlop, also a multi-national company, based in Lagos and Mitchelin in PortHarcourt, Rivers state, were said to have produced the tyres, using the raw materials from rubber plantations located in Ogun, former President Olusegun Obasanjo home state, Rivers state and then then Bendel state, now split into two states, Edo and Delta.
Recall that Nigerians were listening ‘’to radios and watching television sets assembled in Ibadan by Sanyo. Even Nigerians were also using refrigerators, freezers and air condioners produced by Termocol and Debo.
John Ukachukwu told The Magazine, that Nigerians were putting on clothes produced in UNTL Textile Mills in Kaduna and Chellarams in Lagos. There is no gain saying the fact that ‘’the textiles were produced not from imported cotton but from cotton grown in Nigeria’’.
Note also that the public water works was running through pipes produced by Kwalipipe in Kano and Duraplat in Lagos, while toilets were fitted with WC, produced in Kano and Abeokuta. Nigerians were said to be using liquefied Petroleum Gas, LPG, stored in Gas cylinders produced at the Nigerian Gas Company, NGC, in Ibadan, and the then National Electricity Power Authority, NEPA, which had been balkanized was used cables produced by the Nigeria Wire and Cable company , Ibadan, NONACO, Kaduna and Kablemetal, in Lagos and PortHarcourt.
There was equally Bata and Lennards stores producing he shoes, not from imported leather but from locally tanned leather in Kaduna. Even most of the food eaten in the country were grown and produced locally. Between 1999 and now, most of the companies have been liquidated or relocated their factories to other countries in the African continent, particular, Ghana, Cote d’ivore, and South Africa but Nigeria still remain their biggest market.
A Suffice it to say that as at today, the Nigerians virtually import everything used in the country from China. This may have informed why the increased the demand for foreign exchange made in the country that amount of forex made available by the Godwin Emefiele led -CBN, for sale at the foreign exchange market are not always enough as most Companies resort to and the black market to source for forex at the high exchange rate.Take for instance as at March 2022, the exchange rate of the naira to the United Kingdom, UK, pound sterling was N783.00, Euro, N670 and to the North American country of the United States, US, dollar, N560.
Given the high exchange rate of the naira to the dollar may have informed why the Nigerian President between 2017 and now, had made several efforts to rejig the economy. One of such efforts was the adoption of the Economic Community of West African States, ECOWAS, Common External Tariff, CET, which had slammed a 20% duty and 15% levy on imported used and new vehicles.
The Federal ministry of Finance, Budget and National Planning under the close watch of Hajia Zainab Ahmed, may have bowed to pressure from industry stakeholders to slash the duty on Pick up vans to 10% without payment of the controversial National Automotive Council levy of 15% as contained in the revised ECOWAS CET of 2022-2026.
The minister may have dampened the enthusiasm of the vehicle importers in a circular, dated March March 1st, 2022, when she stated that in ‘’pursuance of the National Automotive Industry Development Plan, AIDP, vehicles of Heading 87.03 with the migration to the ECOWAS CET, 2022-2026, shall continue to remain at 35%’’.
The Nigerian government may have targeted the domestic fiscal policy on importation of vehicles through the Tincan Island port and Port Multi-national services Terminal limited, PTML, which have RORO facilities, at growing the nation’s auto sector.
As a prelude to discouraging the importation of vehicles and encourage increased patronage of locally assembled vehicles, Hamed Ali, a retired Army Colonel and Comptroller General of the Nigerian Customs Service, NCS, at the instance of the Nigerian President had activated chapters 98 and 99 of the ECOWAS CET, based on the recommendations of the World Customs Organistation, WCO, for national use, by the contracting parties.
The chapter 98 of the ECOWAS CET, according to Timi Bomodi, a Deputy Comptroller and Customs spokesperson, indicates that bonafide assemblers of vehicles importing Completely Knocked Down, CKD, and semi Knocked Down, SKD, are like COSCHARIS, and others, are now to enjoy a concession of 0% and 10%respectively while within the ECOWAS sub-region, the duty rate for such items are to be between 5%and 10% respectively.
Another policy measure of the present Administration aimed at shaping the economy was the Anchor Borrowers Programme, ABP. Emefiele, the CBN, governor had said that ‘’the programme had catalyzed the rural economy and has built a sustainable framework for financing smallholders farmers in Nigeria’’. He had said that that as at December 2021, the banks had financed 489,786 farmers in Nigeria that cultivated 5,300,411 hectares of land for rice production across 21 states of the Federation and Abuja, the Federal Capital Territory, FCT.
He had said that the 23, participating banks and financial Institutions. In the ABP, have been able to encourage rice production in the country for local use and export. This may have informed why the number of standard Rice Mills in the country had grown from 15 to 50 as at 2022, and more are still springing up in different parts of the country.
Until the Buhari led- APC, government took the bold initiative to stop foreign rice importation into the country on January 1, 2017, the country’s rice imports from Asian country of Thailand in 2016, had already dropped to 58 metric tons. There are indications that in 2021, only 2,160 metric tons was exported into Nigeria by the Asian country of Thailand Rice farmers through unapproved routes as much of it were said to have fallen into the waiting hands of the NCS, anti-smuggling, officers on the road.
But Afe Babalola, a Senior Advocate of Nigeria, SAN, would not agree that Buhari Administration has anything good to fix the economy which have grown from bad to worse. He had lambasted Buhari recently, over the poor management of the economy between 2015 and now. The Ekiti born legal luminary had said that under former President Goodluck Jonathan, the exchange rate was N199.00 to a dollar but had reached the roof top of N560.00 to a dollar and may still depreciate more.
He noted that the country’s external debt was $10.7 billion in 2015, when he took over the reins of governance from Jonathan, but regretted that ‘’it is now over 38 billion and the government is still borrowing more, spending more but earning less revenue both from the oil and non –oil sectors of the economy’’.
The aggrieved Lawyer who could not hide his feelings averred that ‘’the worse thing about the Buhari Administration is that ‘’the debt servicing is rising’’. Buhari may have gotten the message clear which may have forced him and his economic Management Team and the CBN, officials, to go back to the drawing board to finally reset the economy, ahead of the 2023, general elections.
He may have taken another bold initiative to reduce the dependence on foreign goods and conserve the nation’s foreign reserves as well as reflate the naira with ‘’the Import Adjustment Tax, IAT, list with additional taxes and levy on 172 dutiable goods in line with the provisions of the ECOWAS CET’’ . The Customs Area Controllers at the seaports, airports and Land border areas, were aid to have started implementing the new fiscal policy as at April 1, 2022.
Bukola Saraki, a former governor of Kwara state and a one -time Senate President and one of the Opposition People’s Democratic Party, PDP, Presidential aspirants, who had been shortlisted by the Northern Elders Forum, NEF, alongside Bala Mohammed, as the north oncensus Candidates, for the 2023, general elections, had said that ‘’the country needed a President after Buhari who ‘’understands the economy’’, and is’’ bold, energetic, courageous and dynamic to be able to rejig the economy’’.