Asian Investments In Nigeria: The Good, The Bad | Independent Newspapers Limited
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Asian Investments In Nigeria: The Good, The Bad

Posted: Jun 9, 2015 at 12:00 am   /   by   /   comments (0)

An estimated N15 billion is lost annually to fake or counterfeit products in terms of tax revenue to the government, income to local manufacturers and employment generation to Nigerians. Standards Organisation of Nigeria (SON) says that about 99 per cent of the fake products circulating in Nigerian markets came from China. Meanwhile, the high volume of counterfeit and sub-standard products in the domestic market is a threat to Nigeria’s economy, raising serious doubts on efforts by the federal government to resuscitate the real sector to contribute meaningfully to the gross domestic product (GDP). In continuation of this special report, Andrew Airahuobhor; Bamidele Ogunwusi; Oyeniran Apata, Nkasiobi Oluikpe, Akinwunmi King, examine both the positive and negative impact of Asian investments-particularly the Chinese-on Nigeria’s economy over the past decade and how the country can reappraise its bilateral relations with Asians, with a view to effecting some review that take the national interest into cognizance, which will ultimately revamp local industries that have gone comatose.

Counterfeit Products: Nigeria Loses About N15b Annually– SON

When the Standards Organisation of Nigeria (SON) hosted the staff and management of the Nigeria Institute of Policy and Strategic Studies (NIPSS), Kuru, who came on a study tour of the agency in Abuja recently, its director, Legal Services, Suleiman Kawo, disclosed that about 99 percent of the fake products circulating in Nigerian markets came from China. Nigeria is China’s second largest trading partner in Africa after South Africa, but China benefits more from this partnership.

He also disclosed that an estimated N15 billion is lost annually to fake or counterfeit products in terms of tax revenue to the government, income to local manufacturers and employment generation to Nigerians. The high volume of counterfeit and sub-standard products in the domestic market, according to Kawu, is a threat to Nigeria’s economy, raising serious doubts on current efforts by the federal government to resuscitate the real sector to contribute meaningfully to the gross domestic product (GDP).

He also said that SON had alerted the authorities in China about this problem but the government of the Asian nation was somewhat hesitant to enter into any binding agreement with the agency that would ensure that any product produced in that region for the Nigerian market, if found wanting, should not only be shipped back to its country of origin but that the companies responsible would be prosecuted.

He said the Chinese government was reluctant because some Nigerian entrepreneurs compel some Chinese companies to produce sub-standard goods and these companies consent because they do not want to lose good business.

“Unfortunately, what many Nigerians do not understand is that China manufactures for Europe and America. Before the emergence of China’s economy, South Korea and Japan were seen by Europe as a base for low-cost labour which offered low production cost. It all translated to low prices of goods. Note that low price is not the same as poor quality of, or cheap, goods. The price of a product is largely determined by the cost of producing the product.

Following the 1990s reforms in China, the country emerged to challenge the biggest economies of the world.

“It has come on top of such economies, given the availability of a large labour force, superior power supply, low taxation and favourable currency exchange rate. Major investors in Europe, America and even Asia now turn to China to produce goods which they could not produce in their respective countries,” Kawo said.

Like American and British investors, Nigerians have also turned to China to produce. But while American and British investor-vendors have respect for model and quality specifications in accordance with the prescriptions in their respective countries, their Nigerian counterparts prefer to cut corners to make ungodly profits.

“Worse still, the Chinese factories accept to produce whatever poor quality that is asked for by the Nigerian investor-vendors. The Nigerian investor goes to China with products for which they have no copyright for counterfeiting, without the Chinese factories asking questions or complying with the existing laws,” Kawo explained.


Interview: Alarming Verdict

The Director General of SON, Dr Joseph Odumodu, in a chat with our correspondent, said everything possible should be done by government to ensure that counterfeit products are not encouraged to enter the nation’s market.

His words: “The use of counterfeit products is very dangerous. Counterfeit destroys the economy. Counterfeit is like termite, it eats up the foundation of the house. Before one knows what is happening, the house is brought down to the foundation.

“The Standards Organisation of Nigeria, SON, does not have the statistics on the loss to the economy from counterfeit. But, taking the situation in the textile industry for example, over one million jobs were lost in the last 20 years due to counterfeiting.

”There was a time the textile industry was very strong. Suddenly, the country opened its borders and allowed sub-standard textile materials to flood the country from Asia and all other places. The immediate impact was that the local textile industry could not cope with the pressure from competition. Consequently, most of them had to close down. But there are other industries were the country lost over N100 billion. That’s the only statistics available. But it could be more.

He added that the regulatory agencies must not delay to take action against any agency found to have been involved in counterfeiting. For instance, counterfeiting has done a huge damage to the textile industry in Nigeria. He stressed that “We must find new innovative ways to tackle the problem”.

Weak Borders

Odumodu said the country has a very weak regulatory framework. “Our borders are porous. The level of ignorance among consumers is very high. The level of corruption too is very high. If all these things are considered, one must be a magician to make a success of regulation and enforcement in this environment. Sometimes the agencies may have to break the law to protect the industry.

“What the people and the government need to do is to say no to counterfeit. The challenge is that the average Nigerian is impoverished. So, even when people know that a product is a counterfeit, they still buy them.

“Therefore, we must communicate with consumers on the negative impact of counterfeit. There must be collaboration with regulatory agencies to ensure that people who do the wrong things are dealt with according to law to serve as a deterrent to others.

“We must build stronger coalitions. We must ensure that the consumers are sufficiently educated on the negative consequences of counterfeit. Communications is the key, because ignorance is a big problem. It is also the job of the media to ensure that the message passes to the target audience. The more people that are aware of the consequences, the more we would be able to tackle the problem.

“In America, there are one dollar shops and one pound shops in Europe where cheap products are sold. Anybody that goes there knows the quality of goods he is buying as well as what to expect.

“But, in Nigeria people go to Alaba market or Computer Village and buy all kinds of products without knowing the quality of what they are buying. Someone might be buying products that bear the label of the original without knowing he is buying a counterfeit product”.


Porous Seaports

The Director General, Standards Organisation of Nigeria, SON, Dr Joseph Odumodu, said that over 90 per cent of imported substandard products enter into the country through the border posts, sea and airports, with the three entry points sharing 30 per cent each.

Odumodu, who dropped the hint during a one-day shareholders forum on the maritime industry held in Lagos, said some unpatriotic importers connived with foreign countries to import the unwholesome products into the country.

While appreciating some patriotic Nigerian importers, who do not compromise such acts no matter the situation, he noted that many companies in Nigeria have closed down as they could not compete with substandard products in the country.

“We must build a robust economy. In doing this, we must make commitment to end importation of fake products into the country. We must make sincere commitments to bring in the right products into the country. We should ensure zero-tolerance to substandard products”, he said.

He noted with displeasure that locally produced products cannot enter into some advanced countries due to some undisclosed reasons while Nigerian importers would bring all manners of products, including fake ones into the country.


Employing Technology

On some products in the market that do not have names, only for the distributor to give it a brand name it fancies, he said: “Don’t forget, SON is no more at the ports. As a result, it has created an electronic data system for registering products. Today, SON is insisting that every consumer product it is regulating must have a code on it. If a product does not have a code, it means it is not genuine.

“Through that process, we are able to create a more robust database that would help us trace the fake product to its owners. Each time SON finds a bad product in the market, the problem has always been how to trace it to the retailer or agent who brought it into the country or to the manufacturer from anywhere in the world.

“Once that database is established, it is easy to blacklist companies who are agents or importers, so that they are no longer able to bring in these counterfeit products into the country again. That is the kind of thing SON is doing. We must employ technology to fight counterfeiting and strengthen enforcement through sanctions. We must look more at the activities of the authorized agencies.

“Most products brands record very high sales. But, the bulk of the sales are not by the brand owners themselves. It is their agents and representatives, who, ironically, are the major source of counterfeit products. Therefore, the dealers and brand owners have a responsibility to regularly check on activities of their appointed agents and representatives.

“The brand owners must work with the regulatory agencies to educate Nigerians about the negative impact of counterfeit of products. Government has a responsibility to save Nigerians from themselves. The responsibility is huge for the regulatory authorities.


Customs Brokers Thump Up for SON

Freight forwarders in the country have stated said the measures adopted by the Standards Organisation of Nigeria (SON) have impacted heavily on improving the standard and quality of some goods being imported into the country.

However, the customs brokers said this has brought hard times to both importers and freight forwarders who have been struggling to meet the required standard by SON.

Chairman of the Registered Freight Forwarders Forum, Chief Festus Ukwu   said that the measures introduced by the management of SON to check importation of substandard goods into the country have been a pain on the necks of importers and indeed their customs brokers.

He explained  that what this means is  that many importers in the effort to meet required standard and quality  have had to slow down in the turnaround time of importation, a development he said has also affected their customs brokers.

He also disclosed that importers who used to bring in goods into the country regularly have slowed down because they want to ensure that the products they import meet all the standard and quality needed by SON officials at the ports.

Ukwu whose forum has been one of the critics of SON admitted that the idea of insisting that imported goods must meet certain standard and quality was good as it will reduce the nightmare Nigerians suffer over inferior goods.

He said many Chinese manufacturers have become aware that the policies in Nigeria cannot accommodate   inferior products and have been the ones adjusting to meet the required quality and standard for Nigerian importers.

He commended the Director General of SON, Dr Joseph Odumodu and his management team for raising the standard and quality of products imported into the country.

Ukwu said:  “The yardstick with which we used to measure the barometer of the reduction and level of performance of substandard products and the DG’s performance respectively was determined by the drastic reduction in patronage by known and established importers of such products, the level of increase of standard products and the degree of general compliance of SON’s trade rules”.

He added: “We noticed the reduction in importation of fake and counterfeit products through imports. We have been a known critic of SON, we have to admit the good job that the DG is doing to check importation of fake products and substandard products into the country.”

Commending the SON chief executive for the good job he has done so far which he attributed to his private sector background, Ukwu   called on the management of the organisation not to relent in the efforts to do a good job of checking importation or production of substandard products.