Jun
2
Update to the Blog
Filed Under News, Trade | 2 Comments
Apr
7
Age Limit for Imported Buses and Trucks
Filed Under Trade | 7 Comments
The first thing that came to mind: Tell those importers in Cotonou that business just got better.
Apr
2
But then…
…when I googled the only information I got about any MoU was from the Oil and Gas Insights website. The report said that the Nigerian government sought to terminate the MoU that governs the production of onshore oil in Nigeria. The MoU ensured that a minimum profit of $2.50 per barrel was paid to the government, no matter how low the prices of oil get. There was no maximum cap, but future explorations were assured of a tax rate of 65.75%, lower than the 85% for projects that were already in production. Under the Petroleum Profits Tax Act, the tax rate is 85% on all chargeable income; the MoU was supposed to serve as a tax incentive. A letter was written to Shell about this, telling the company that the MoU was going to be replaced with a standard tax plan.
The website also reported that the NNPC said, in January, that it was going to renegotiate the details of its joint ventures, ventures like SPDC in which the NNPC owns 55% and Shell 30%.
So?
So I still don’t understand the structure of the Nigerian oil industry, and it doesn’t seem like the chair of the House committee on the upstream oil industry, Mr Tam Brisibe, does. The fact that these two reports - one from a Nigerian newspaper quoting Mr Brisibe, and another from an industry magazine/website - are conflicting makes it even more confusing. I hope that the investigation of the House committee will help throw some light on the issues, and make the most volatile, but yet most lucrative, industry in the country a little bit more accessible to curious members of the public. I will try to follow the story.
Ref:
Oilandgasinsight
BusinessDay
Mar
13
Mr Jaiyeola Olanrewaju, the Director-General of the Nigerian Textile Manufacturers Association told the Punch Newspapers that the original amount was 50 billion naira, but that the government was convinced that the textile industry needed raw materials so 20 billion naira was added for the cotton industry
What does this mean, really?
Well, we have a history of the use of import prohibition as a trade policy instrument. Just take a look at the list of prohibited items and you will understand what I mean. However, the main complaint made by textile manufacturers is that cheap Chinese products are pricing them out of the market. Most people don’t really know, but the importation of textile products is banned in Nigeria, but most of the textile materials you find in Nigeria are foreign products- the DG of the Nigerian Textile Manufacturers Association says it is 80%; he even goes on to say that 90% of that 80% are Chinese products. It is due to the socio-economic practice formally known as smuggling. I really don’t know what to make of this as yet, but my impression is that there is no way to stop the smuggling of textile products into Nigeria. And this is not because Nigerians love foreign made products - a lot of the cheap Chinese-made textile are of really poor quality so I don’t think it would count in the ‘good foreign products’ book - but because they are cheap and affordable. If the local industry can match the prices of the Chinese made products I am sure that Nigerians will buy them. The other thing is that people want to have the right to choose what they wear, and the imposition of ban on the importation of what would constitute a choice for them would simply not be welcome.
Getting realistic
I understand the point of import prohibition for the protection of the local industry, but at the same time it is apparent that the local industry is so small that it is unable to cater to the needs of the populace. I think that the way to go is to actually accept the fact that the cheap Chinese products are in the market, and that they will remain a viable competition for the local textile industry. This acceptance should be factored into the ongoing restructuring of the textile industry.
