Manufacturers oppose plans to review ‘prohibition list’

Having scaled up production and improved capacity utilisation for the manufacturing of soap and detergent, footwear, bags and suitcases, as well as used compressors, local manufacturers have kicked against assessed efforts by the Tariff Technical Committee (TTC) to remove the items from the prohibition list.

According to them, the proposal to remove the items from the prohibition list as spelt out in the Fiscal Policy Guideline Circular No: F17146/I33 of 29th November, 2017, undermines success recorded by manufacturers in the production of the items, considering the challenges of operating environment and dumping experienced by local manufacturers.

Already, there are concerns about the provision of a safeguard mechanism that will allow Nigerian manufacturers to be in business and contribute to Nigeria’s march towards industrialisation while competing with their counterparts globally if the tariff is lifted.

According to industry data, current installed capacity is estimated at 800,000 tonnes of detergent, while the current market demand is 400,000 tonnes, thus reflecting capacity of local industries meeting and surpassing the national demand.

For the footwear, bags and suitcases sector, operators express worry that despite the recent effort by the Federal and some States governments, particularly in the Eastern part of Nigeria, to resuscitate the Shoe Hubs and Footwear Industrial Cluster such Aba Hub, a proposal such as this is anti-industry against the development aspiration of this country.

The products’ HS codes include, Soap and Detergent HS Code 3401.11.1.00 – 3402.90.00.00 in retail packs; all types of footwear, bags and suitcases, HS Code 6401.10.90.00 – 6405.90.90.00 and 4202.11.90.00 – 4202.99.90.00 but excluding safety shoes used in oil industries, sports shoes, canvass shoes and all Completely Knocked Down (CKD), blanks and parts; used compressors HS Code 8414.30,90,00, Used Air Conditioners HS Code 8415.10.10.00 – 8415.90.90.00 and used Fridge/Freezers HS Code 8418.10.10.00 – 8418.69.00.00.

Already, local soap and detergent producers noted that implementing the action will drastically affect local industries and increase influx of substandard products to Nigeria.

Chief Executive Officer, PZ Cussons Nigeria Plc, Christos Giannopoulos was however optimistic that the Manufacturers Association of Nigeria (MAN) would frustrate such plan, stressing that the association would not take lightly the impact of the move on the sector.

“Government works closely with MAN and when it has ideas in term of increasing revenue, becoming more efficient it works together with MAN. In this particular instance, I believe that MAN has been heavily involved with the government and I do not believe that this resolution will go through,” he said.

Should the government insist on lifting the ban, Giannopoulos said the firm, being the biggest manufacturer of soaps in Nigeria would keep up with efforts to withstand any challenge.

He said: “We are the biggest manufacturer of soaps in Nigeria and therefore we are always being challenged. But we will become stronger and better to fight them.”

Industry reports show that the initial scarcity of foreign exchange has made many operators to seek alternative sources for their raw materials locally, which has encouraged backward integration and consequently opened up a lot of opportunities for economic growth in palm oil and its derivatives.

A small scale operator in the footwear industry who chose not to be named, noted that lifting the prohibition will undermine their capacity and put them out of business, considering that many operators have obtained several facilities from development finance institutions to scale up.

“The backward integration by detergent manufacturers into sulphonation plants and talc, calcium carbonate and other mining industry are testimonial today. These ancillary industries are creating more jobs and revenue for the country today which should not be ignored through the removal of the item from prohibition list.

“Even though the recent capacity of the footwear industry is estimated at about 25%, this is a huge achievement from the zero level which the industry was in the past 3 years. Added to this are the increased numbers of companies that are now operating in the industry which presently stands at 60 with an estimated 200,000 direct staff and combined investments of over N7.5 billion.

“Since the prohibition of these items, many foreign investors have established plants in Nigeria and more are still prospecting to come into the industry. As at today, massive quantity of Suit Cases and Bags produced in Nigeria are moved via informal market to West Africa and East/ Central African countries. It will be a great loss of investment if these items are allowed to come in into Nigeria as imports”, the report showed.