How imported fruit juices shortchange local manufacturers

 JILL OKEKE

THE announcement by the Central Bank of Nigeria (CBN) on the restriction of importation of select consumer items is commendable. This move has raised the confidence of local manufacturers that the Federal Government is paying attention to and focusing on local production of consumer goods.

A similar decision was taken seventeen years ago in 2003 when the Olusegun Obasanjo-led government banned the importation of ready-to-drink fruit juices into Nigeria.

The then Minister of Information, Prof. Jerry Gana, in a well-publicised news statement stated that fruit juices could only be imported into Nigeria in concentrate form and not as finished products or in ready-to-drink packs.

Explaining the reason for the ban, he stated that anyone who wanted to import fruit juices must import juice concentrate in large containers or drums so that the final product could be reconstituted and packed in Nigeria. The new policy at that time was deliberately developed to create employment for Nigerian citizens and generate additional revenue for the country. Subsequently, product HS Codes 2009.11.0012 – 2009.11.0013 – 2009.9000.99 were added to the Nigeria Customs Service (NCS) list of prohibited products.

With this policy still in effect almost 17 years later, fruit juices remains number eight on the prohibition list on the NCS website. However, it is disheartening to note that a different reality exists today. Despite efforts by the CBN and other arms of government to encourage local juice production by placing restriction on import, there is free-flow and uninterrupted importation of ready-to-drink fruit juices into Nigeria with no consideration on its impact on the locally manufactured fruit juice products. Most of these products are imported from United States of America, Europe, Asia, and even South Africa.

The resulting effect is the intense competition between locally produced fruit juices and the imported ready-to-drink juice products. This situation is unfair to the huge investments made by the local companies who have invested heavily to set up factories in a bid to complying with the Nigerian government’s directives.

To continue allowing companies and individuals import ready-to-drink fruit juices into the country is counterproductive to the Nigerian economy and its defined policies, and insensitive to the local industries who struggle to operate in an unfair market.

Some of the effects of sustained smuggling of ready-to-drink juices includes but are not limited to the following:

• Closure/shutdown of the local industries leading to job loss for millions of Nigerians who would have been gainfully employed directly and indirectly by the local industries.
• Job loss leading to high rate of unemployment and the attendant risk of increase in crime and suicide cases by the affected individuals.
• Scarcity of much needed foreign exchange which leads to depreciation in the value of Naira.
• Unfavourable terms of trade and trade policies for the country.
• Reduced foreign investments from potential investors who would not view Nigeria as a viable location for business.

Import substitution is a trade and economic policy which advocates adoption of a strategy to reduce a county’s dependence on foreign markets through the local production of goods. Import substitution is not new in Nigeria as several past administrations have attempted various import substitution strategies. The 1972 Indigenization Decree led to expansion of the petrochemical plants, iron, steel, textile, breweries, agriculture, and cottage industries, and the establishment of assembly plants that used imported processed raw materials as production inputs for the automobile and cement industries.

The cement industry is a good example of the import substitution policy and the actualisation of the full benefits. With the enabling policies developed and enforced, the Nigerian cement companies have been able to fully meet local demand for cement products and also create additional revenue through exports to neighbouring African countries.

The Nigerian government through the National Orientation Agency must promote made-in-Nigeria products. There is an urgent need for attitudinal and cultural change among Nigerians to begin to accept and take pride in Nigerian-made products.

The Nigeria Industrial Revolution Plan (NIRP) was rolled out to enhance local production of goods that were previously imported as well as chart a comprehensive course for turning Nigeria from a country that only exports crude oil to one that has a manufacturing culture across multiple sectors.

However, a lack of strict enforcement of import substitution policy and non-compliance of the ban of restricted products conveys a nonchalant attitude of government towards the support of local industries in the country. Allowing the free-flow of smuggled ready-to-drink fruit juices is not only unpatriotic but a great disservice to local manufacturers of fruit juices.

As demonstrated by the cement industry, adopting import substitution has the benefit of increasing domestic employment, enhancing resilience against global economic, political, and social shocks, conserving foreign exchange, and protecting domestic infant industries across multiple sectors.

If the Federal Government’s avowal is that the restriction on importation of ready-to-drink juices (as contained in item eight of the NCS prohibited product list) is aimed at boosting local juice production and job creation, then the expectation is that the Federal Government and its relevant agencies must walk the talk by taking necessary steps to restrict the continued importation of packaged fruit juice products.

At this time when the government is faced with the challenge of employment for an ever increasing population of unemployed young women and men, it is only wise to encourage local manufacturing entities to expand their operations and create more jobs. If this problem is not tackled now, the devastating and disastrous ripple effects on the nation’s economy can only be imagined.