Granting waivers to a few favoured friends and denying a large number of people who can contribute significantly to the economy is a lesson on how not to develop.
By Thompson Ayodele
For Immediate Release: African think tanks urge G20 Leaders to break down trade barriers
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April 1, 2009 (Lagos, Nigeria and Accra, Ghana): Leaders of G20 meeting in London tomorrow? have been urged to be committed to an open global economy and the rules-based multilateral trading system. Underlying this call is the growing economic pressures in developed and developing countries which is engendering erroneous policy demand for protectionism.
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The Initiative for Public Policy Analysis (IPPA Nigeria) and IMANI Center for Policy and Education, (IMANI Ghana), have called on leaders of the G20 to prevent short term inward-looking policies and promote integration of developing countries into the global trade regime.
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Whilst G20 members have previously committed to deepening trade integration, this has not been translated into action.? According to IPPA Nigeria and IMANI Ghana, in the second half of the year 2008, 17 out of the G20 countries implemented 47 measures that actually restricted cross border trade.
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IPPA Nigeria and IMANI Ghana contend that already, trade barriers erected in developed countries have reduced Africa’s trade volumes by over 30%. They maintain that current calls for protecting one’s turf in favour of creating local champions will further depress trade volumes and further push millions on the continent whose livelihoods depend on food exports into deep poverty.
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“Protectionism is a fire-brigade approach to address this recession. The best it will achieve is to create a conducive atmosphere to be hijacked by vested interests and cronies while increasing prices for everyone, reducing choice and inviting retaliation from other nations,” said Thompson Ayodele Executive director of IPPA Nigeria and Franklin Cudjoe, executive director of IMANI Ghana.
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Trade not Aid
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As capital markets falter, with decrease investments in emerging markets and trade flows wither, Africa faces real challenges. Already there are indications that African leaders will be asking G20 leaders to honour their aid commitments to Africa and further request more financial assistance. This is capable of providing palliative measures in a short run.
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“It is a misnomer for African leaders to request additional aid given the fact that the Western countries that give aid are bearing the brunt of the recession.? The current recession should afford Africa the opportunity to assert herself with the African U nion calling on its members to build effective institutions that support growth and entrepreneurship.
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African governments must agree to deepen intra-regional trade and be innovative about internal revenue generation through sensible taxation policies that rope in the large informal economy.? African governments must also adopt austere fiscal measures, aimed at eliminating waste in the public sector. It is reprehensible to continue creating and maintaining bloated and inefficient regional and national bureaucracies.
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“Ghana’s expected rise in public sector expenditure from 65% in 2008 to nearly 70 percent of tax revenues and 12 percent of GDP in 2009 is clearly not a bold belt-tightening measure, nor is the rampant cases of grand corruption in Nigeria an encouragement for decentralizing power and resources,”? Thompson Ayodele and Franklin Cudjoe said.
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Thompson and Franklin say one of the routes out of the recession is for the G20 leaders to muster courage and commit to opening trade.? Else, as the wave of protectionism continues to surge, it will reverse the gains made through the multilateral trading regime, undermine growth and deepen poverty. Saying no to protectionism should be priority number one on the G20’s menu list, instead of the current fifth place it currently occupies.
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* IPPA (www.ippanigeria.org) and IMANI (www.imanighana.com) were this year named among Africa’s 25 most influential think tanks by Foreign Policy Magazine.? *
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For media enquiries, please contact Thompson Ayodele on +234 80 2302 5079 or thompson-at-ippanigeria.org Franklin Cudjoe on +233 244 638 178 or? franklin-at-imanighana.com and? (Replace –at- with @)
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Following an op-ed (Blind Optimism Over Intervention in Banks)? authored by two IPPA fellows publishedl ast week? in three major Nigerian newspapers, Kenyan Business Daily and Zimbabwe Telegraph on why government needs not intervene in banks because previous efforts were wasteful and besides banks have perpetually claimed profitability in their annual statements of accounts.
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The Central Bank of Nigeria in an apparent reaction to issues raised in the op-ed is effecting policy changes to unravel whether the profit being declared by banks are genuine or not.?
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In today’s the Guardian newspaper “ the apex bank has dispatched set of its officials known as Income Auditors to all banks in the country to examine banks transactions and match findings with the profits being declared by banks to ensure that no bank is declaring bogus profit”.
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Full story:
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IPPA had in the article raised the argument that if Nigerian banks are in excellent health and profitable as they claimed, why are the CEOs calling for government re-investment and intervention considering their financial statements and claims of profitability churned out annually by the banks.
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It was also argued that the call for government re-investment and intervention banks is economic folly and negates the CBN earlier claim that Nigerian bank are safe as such efforts would merely re-ignite internal squabbles and board room politics and consequently undermined the gains of reforms in the financial sector.?
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Full article is available @:
http://allafrica.com/stories/200902090459.html
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http://www.bdafrica.com/index.php?option=com_content&task;=view&id;=12892&Itemid;=5821
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http://www.zimtelegraph.com/news_article.php?cat=22&id;=184
Executive Director
Initiative of Public Policy Analysis
P.O Box 6434
Shomolu-Lagos
Nigeria
Website:www.ippanigeria.org
Tel: 01-791-0959
Cell:080-2302-5079
IPPA Among Top-To Go Think-Tank Globally
Think tanks maybe affiliated, independent institutions or structured as permanent bodies. They often act as a bridge between the academic and policymaking communities.
Global Meltdown: Africa Needs Stable Exports
By Olusegun Sotola*
There is also the prospect of reduced private capital flow. Capital outflows have been reported in some emerging markets and IPO worth $30 billion has been cancelled in emerging market in 2008.? Similarly, reversals of capital flows will lead to equity sell-offs and also put an upward pressure on the exchange rate.
Prices of shares have been plummeting, as foreign investors are withdrawing in order to escape with minimal loss. For instance, in Nigeria, the All Share Index (ASI) and the market capitalization have declined inexorably for months now.
African economy being monolithic and largely dependent on extractive resources is a sure bet to suffer. Prices of nature-sourced resources are dwindling amidst decreasing demand. Oil prices, for instance have plunged below $40 and still falling, from a record $147 months ago.
All these will collectively create domino effect throughout the continent.
(Naira) has continued its free-fall in foreign exchange market.
Besides, governments are bad in resources allocations. Apart from corruption and systemic leakages, government considers extraneous factors in determining who gets what.
Government will do well by removing prohibitive taxes and regulations that distorts this signals.
Thompson Ayodele
Director
Initiative for Public Policy Analysis
P.O.Box 6434
Shomolu,Lagos
Nigeria
Email:thompson@ippanigeria.org
Backup: thompsondele@onebox.com
Website: www.ippanigeria.org
Tel:01-791-0959
Cell:080 2302 5079
*****Good Public Policy is Sound Politics**********
Smuggling: Driven by Policies that Stifle Entrepreneurial Initiatives
Being the Welcome Remarks by Thompson Ayodele, Executive Director, Initiative for Public Policy Analysis (IPPA) during the workshop on Economic Costs of Illicit Trade and Trade Concessions organised by Initiative for Public Policy Analysis (IPPA) and Commerce and Industry Correspondents Association of Nigeria (CICAN).
Today, effective trade either with our neighboring countries or outside the continent still remains a critical way to re-position Nigeria in terms of creating wealth and achieving economic prosperity. This is because trade has brought about unprecedented improvement in the lives of the people particularly in poor countries across the world. Poor countries that are connected to other countries through trade and investment stand the chance of experiencing growth.
The economic impact of smuggling is huge: Local industries suffer huge economic loss as they lose a tremendous percentage of market shares to smuggled products. Government also suffers because smugglers naturally evade tax.? Border security competes for financial allocation with other social services. Workers face job loss and legitimate manufacturers face huge economic disincentives.
to import items which did not contribute to economic development.??
Sadly, most of the items imported through concessions and waivers contributed little or nothing to Nigeria economic development. In actual fact, it created a disincentive to local manufacturers and government was short-changed in the whole deal.
Smuggling survives on negative incentives created by prohibitive tariffs and unfavorable business environment which kill industries. Efforts made by regulatory agencies will achieve little if the business climate still stifles genuine manufacturers.
Director
Initiative for Public Policy Analysis
P.O.Box 6434
Shomolu,Lagos
Nigeria
Email:thompson@ippanigeria.org
Backup: thompsondele@onebox.com
Website: www.ippanigeria.org
*****Good Public Policy is Sound Politics**********
Tel:01-791-0959
Cell:080 2302 5079
Importation Of Cement: A Solution? (1)
The news filtered around recently that the Federal Government in consultation with the industry operators has lifted the ban on importation of bagged cement. As usual, the major reasons adduced include bridging the huge demand-supply gap, enhancing greater market competition, encouraging new investments, and stemming the continuous increase in cement prices. The familiar tunes!
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The latest move is an implicit acceptance of the gross failure of the 2001 policy of national self-sufficiency in cement production. The policy failed because it provided perverse incentives to the industry operators. The government banned importation of bagged cement, only to grant quota-based importation licences for eight metric tonnes of bulk cement.
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However, the major beneficiaries of the import licenses were the existing cement companies. Largely because these were largely the companies with idle production capacities, they merely substitute bagging bulk cement for local production. By 2007, nothing has changed as the shortage of cement persisted with attendant high prices.
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The Nigerian cement industry has potentials to contribute to the Economy in various ways. As a major input provider, it provides linkages to other sectors of the economy, especially building and construction. Such linkages enhance physical and infrastructural development. The cement industry is a major regional employer of labour and contributes significantly to the country’s Gross Domestic Product (GDP).
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During (1981-1997), for example, about 27 per cent of the total contribution of the manufacturing sector to the GDP was attributed to the cement industry, and this increased at a rate of 2 per cent on average per year, compared to only 1 per cent by the entire manufacturing sector.
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The above potentials had been far from obvious in recent years. The privatisation exercise which affected most of the cement firms in Nigeria has not had the desired effects, despite the huge concessions made by The government to the new private investors. It is now obvious that the promises of ‘new investments’ are nothing other than expansion exercises to facilitate cement packaging. For example, the total industry installed capacity increased by only 3 per cent (5.0m to 5.15m). One of the buyers actually turned a production plant into a warehouse for packaging imported bulk cement.
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In effect, local production has remained at less than 50 per cent of total installed capacity, which largely concentrates in just two plants. The result has been output restriction and collusive pricing. The price of cement has increased by more than 300% since 1999. At present, the demand-supply gap is estimated at 11.5m tonnes. Is lifting the ban on imported bagged cement the solution to these problems?
Since commencement of local production of cement in Nigeria in 1957, local production has never been able to meet demand, even in the mid-1980s when demand for cement was declining. Demand for cement is closely associated with variations in a country’s economy.
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The modest but continuous growth in the Nigerian economy in recent years is a prospect for the cement plants to increase local production, other things being equal. However, the extent to which they can do so efficiently depends largely on the incentives underlying government policies as they affect local production, distribution and pricing.
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Firstly, access to funds is important for the cement industry. Cement production requires long-term capital and efficient operation requires continuous investment in maintenance. High cost of capital exemplified by high interest rates on loans constrains their ability to secure funding. Only a couple of the cement firms listed on the stock exchange are able to raise funds from the public, but then such funds are often insufficient to meet the level of investments needed. The result is that most of the plants are still producing (if at all), using obsolete, inefficient technologies installed over three decades ago.
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Secondly, because cement production is energy intensive, the extent to which a cement plant can operate efficiently depends critically on uninterrupted supply of energy. The Bureau of Public Enterprises estimates that the manufacturing sector alone loses about US$440m annually due to inadequate energy supply. A marginal change in energy costs has a significant impact on production costs or cost efficiency. However, these very important inputs are persistently in short supply to the Nigerian cement industry.
The Cement Manufacturing Association of Nigeria estimates that operating cement Kilns, the major equipment cement production, require 36 tankers of fuel to maintain production at about 50 per cent capacity utilisation. Due to shortage of fuel, the average daily supply to the industry is seven tankers, representing only 21 per cent of the daily total fuel requirement.
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Technically, cement Kilns need to run non-stop except for cleaning. Power outages damage Kilns. Each power outage necessitates rekindling the Kiln. Frequent rekindling causes damage to Kiln linings, which require relining. Overtime, frequent relining requires a complete overhaul of the entire Kiln system. In the presence of highly erratic electricity supply, cement firms have to expend additional capital in self-generation of power in order to keep the plants running. Nevertheless, the power generators also rely heavily on fuel to run. These additional costs are effectively passed on to the consumer in the form of high prices.
http://www.independentngonline.com/?c=125&a;=10191
05 Feb 2008
Thirdly, efficiency in the cement supply chain depends critically on the presence of a well functional national infrastructural network (e.g. transportation). Cement is a bulky product. The efficient level of inland transportation is limited to 200-300 Kilometers , depending on the road
condition.
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Thus, the bulky nature of the cement is a source of high distribution costs. This makes the rail system the most efficient distribution system to transport cement. However, what can be considered a functioning rail system in Nigeria today is cheer imagination.
?
In effect, cement companies have had to seek alternative, but highly inefficient methods of allocation of cement to distributors. In addition to passing such high costs onto the customer, the nature of the cement product also creates non-competitive regional markets and generates collusive pricing.
?
There is little incentive for competition as huge distribution costs encourages regional monopolies. Each cement company has a monopoly of its area of location. Consequently, the price of cement from other regions and/or imports is reached in tacit or explicit collusion with regional monopolies.
?
As in the failed 2001 policy, the new policy may actually work against itself. Theoretically import penetration should provide a competitive environment where local producers compete with importers. However, a quota-based cement importation (bagged or bulk) is inconsistent with
competition. This is because restriction by licensing does not provide a free trade, therefore can not be expected to provide appropriate pricing signal in the market.
?
Given the inefficiencies associated with energy costs, one might expect that imported cement should be relatively cheaper than locally produced cement. However, there is little incentive for price differentials since both incur similar inefficient distribution costs, which are passed on to the consumer. Also, because the main beneficiaries of the import licenses are largely the local producers, there is little incentive to compete and lower prices. Rather, they have greater incentive to jointly maximize profits through tacit collusion. This takes the form of restricting local output that implicitly substitutes imports for local production. Output restriction will require more import licences, just as it happened under the 2001 policy.
?
The brief exposition above shows what may happen when government policies affecting an industry are inappropriate and inconsistent with underlying problems. High opportunity costs of capital will crowd out new investments. The government policy incentives for funding the manufacturing sector are unknown. That these cement firms now operate in the private sector post-privatisation does not imply that government cannot also assist them with funds. The difference is that the private sector is able to utilise such funds more efficiently. This is what public-private partnership is all about.
?
License-or quota-based importation in whatever form effectively limits the powers of the market to operate efficiently. It creates distortions and diverts resources allocation. Resources that could be used to enhance local output are diverted into political patronage to compete for import licenses. Lifting the ban on bagged cement is at best a short-term remedy, not a long-term measure that can potentially achieve competition and lower prices. Indeed, the history of cement importation in Nigeria suggests that the latest is a familiar tune to reward political patronage…not yet the solution.
?
The long-term solution lies in providing appropriate financial and infrastructural incentives that support efficient local production.
?
Without such incentives, there is a limit to which local producers could be compelled to increase production beyond the price that their supply curves indicate. If the government must maintain a policy of cement importation, then it should be a free trade. Free-trade guarantees competition and put a downward pressure on prices.
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•Dr. Olajide is a Fellow of Initiative of Public Policy Analysis based in Lagos
http://www.independentngonline.com/?c=125&a;=10236
This Article is published in today’s Nation. The URL is not up yet . It is only available in hard copy. All the same we would like to share it with you.
February 1, 2008
Perverse Incentives Cripple Local Production of Cement
By Damilola Olajide*
The news filter around recently that the Federal Government in consultation with the industry operators has lifted the ban on importation of bagged cement. As usual, the major reasons adduced including bridging the huge demand-supply gap, enhancing greater market competition, encouraging new investments, and stemming the continuous increase in cement prices. The familiar tunes!
The latest move is an implicit acceptance of the gross failure of the 2001 policy of national self-sufficiency in cement production. The policy failed because it provided perverse incentives to the industry operators. The government banned importation of bagged cement, only to and granted quota-based importation licenses for 8metric tonnes of bulk cement. However, the major beneficiaries of the import licenses were the existing cement companies. Largely because these were largely the companies with idle production capacities, they merely substitute bagging bulk cement for local production. By 2007, nothing has changed as the shortage of cement persisted with attendant high prices.
The Nigerian cement industry has potentials to contribute to the economy in various ways. As a major input provider, it provides linkages to other sectors of the economy, especially the building and construction.? Such linkages enhance the physical and infrastructural development. The cement industry is a major regional employer of labour and contributes significantly to the country’s Gross Domestic Product (GDP). During (1981-1997) for example, about 27% of the total contribution of the manufacturing sector to the GDP was attributed to the cement industry, and this increased at a rate of 2% on average per year, compared to only 1% by the entire manufacturing sector.
The above potentials had been far from obvious in recent years. The privatisation exercise which affected most of the cement firms in Nigeria has not had the desired effects, despite the huge concessions made by the government to the new private investors. It is now obvious that the promises of ‘new investments’ are nothing other than expansion exercises to facilitate cement packaging. For example, the total industry installed capacity increased by only 3% (5.0m to 5.15m). One of the buyers actually turned a production plant into a warehouse for packaging imported bulk cement.
In effect, local production has remained at less than 50% of total installed capacity, which largely concentrates in just two plants. The result has been output restriction and collusive pricing. The price of cement has increased by more than 300% since 1999. At present, the demand-supply gap is estimated at 11.5m tonnes. Is lifting the ban on imported bagged cement the solution to these problems??
Since commencement of local production of cement in Nigeria in 1957, local production has never been able to meet demand, even in the mid-1980s when demand for cement was declining. Demand for cement is closely associated with variations in a country’s economy. The modest but continuous growth in the Nigerian economy in recent years is a prospect for the cement plants to increase local production, other things being equal. However, the extent to which they can do so efficiently depends largely on the incentives underlying government policies as they affect local production, distribution and pricing.?
Firstly, access to funds is important for the cement industry. Cement production requires long-term capital and efficient operation requires continuous investment in maintenance. High cost of capital exemplified by high interest rates on loans constrains their ability to secure funding. Only a couple of the cement firms listed on the stock exchange is able to raise funds from the public, but then such funds are often insufficient to meet the level of investments needed. The result is that most of the plants are still producing (if at all), using obsolete, inefficient technologies installed over three decades ago.?
Secondly, because cement production is energy intensive, the extent to which a cement plant can operate efficiently depends critically on uninterrupted supply of energy. The Bureau of Public Enterprises estimates that the manufacturing sector alone loses about US$440m annually due to inadequate energy supply. A marginal change in energy costs has a significant impact on production costs or cost efficiency. However, these very important inputs are persistently in short supply to the Nigerian cement industry.
The Cement Manufacturing Association of Nigeria estimates that operating cement Kilns, the major equipment cement production, require 36 tankers of fuel to maintain production at about 50% capacity utilisation. Due to shortage of fuel, the average daily supply to the industry is seven tankers, representing only 21 % of the daily total fuel requirement.
Technically, cement Kilns need to run non-stop except for cleaning. Power outages damage Kilns. Each power outage necessitates rekindling the Kiln. Frequent rekindling causes damage to Kiln linings, which require relining. Overtime, frequent reclining requires a complete overhaul of the entire Kiln system. In the presence of highly erratic electricity supply, cement firms have to expend additional capital in self-generation of power in order to keep the plants running. Nevertheless, the power generators also rely heavily on fuel to run. These additional costs are effectively passed on to the consumer in the form of high prices.
Thirdly, efficiency in the cement supply chain depends critically on the presence of a well functional national infrastructural network (eg. transportation). Cement is a bulky product. The efficient level of inland transportation is limited to 200-300 Kilometers , depending on the road condition. Thus, the bulky nature of the cement is a source of high distribution costs. This makes the rail system the most efficient distribution system to transport cement. However, what can be considered a functioning rail system in Nigeria today is cheer imagination.
In effect, cement companies have had to seek alternative, but highly inefficient methods of allocation of cement to distributors. In addition to passing such high costs onto the customer, the nature of the cement product also creates non-competitive regional markets and generates collusive pricing. There is little incentive for competition as huge distribution costs encourages regional monopolies. Each cement company has a monopoly of its area of location. Consequently, the price of cement from other regions and/or imports is reached in tacit or explicit collusion with regional monopolies.?
As in the failed 2001 policy, the new policy may actually work against itself. Theoretically import penetration should provide a competitive environment where local producers compete with importers. However, a quota-based cement importation (bagged or bulk) is inconsistent with competition. This is because restriction by licensing does not provide a free trade, therefore can not be expected to provide appropriate pricing signal in the market.
Given the inefficiencies associated with energy costs, one might expect that imported cement should be relatively cheaper than locally produced cement. However, there is little incentive for price differentials since both incur similar inefficient distribution costs, which are passed on to the consumer. Also, because the main beneficiaries of the import licenses are largely the local producers, there is little incentive to compete and lower prices. Rather, they have greater incentive to jointly maximise profits through tacit collusion. This takes the form of restricting local output that implicitly substitutes imports for local production. Output restriction will require more import licences, just as it happened under the 2001 policy.
The brief exposition above shows what may happen when government policies affecting an industry are inappropriate and inconsistent with underlying problems. High opportunity costs of capital will crowd out new investments. The government policy incentives for funding the manufacturing sector are unknown. That these cement firms now operate in the private sector post-privatisation does not imply that government cannot also assist them with funds. The difference is that the private sector is able to utilise such funds more efficiently. This is what public-private partnership is all about.
License-or quota-based importation in whatever form effectively limits the powers of the market to operate efficiently. It creates distortions and diverts resources allocation. Resources that could be used to enhance local output are diverted into political patronage to compete for import licenses. Lifting the ban on bagged cement is at best a short-term remedy, not a long-term measure that can potentially achieve competition and lower prices. Indeed, the history of cement importation in Nigeria suggests that the latest is a familiar tune to reward political patronage…not yet the solution.
The long-term solution lies in providing appropriate financial and infrastructural incentives that support efficient local production. Without such incentives, there is a limit to which local producers could be compelled to increase production beyond the price that their supply curves indicate. If the government must maintain a policy of cement importation, then it should be a free trade. Free-trade guarantees competition and put a downward pressure on prices.
?
Dr.Damilola Olajide is a Fellow of Initiative of Public Policy Analysis based in Lagos
Thompson Ayodele
Executive Director
Initiative of Public Policy Analysis
P.O Box 6434
Shomolu-Lagos
Nigeria
Website:www.ippanigeria.org
Tel: 01-791-0959
Cell:080-2302-5079
By Thompson Ayodele
With more than 56 convictions on corruption, money laundering, oil pipeline vandalisms and related offences, assets well over $5 billion have been frozen and seized from corrupt officials, their agents and cronies. The fight against advance fee fraud (419) which has given many innocent Nigerians a bad name has been doggedly pursued, leading to the prosecution and conviction of kingpins, including the celebrated $242 million case involving a Brazilian bank. The EFCC also recovered and returned the sum of $4 million to a victim of advance fee fraud in Hong Kong and has seized and returned over $ 500,000 to sundry US citizens. These are no mean feat.
Rather than personifying the war of corruption, it is imperative to build effective institutions that would expose corrupt individuals and ensure that they do not escape justice.? The difference between a country where there is a low level of corruption and a country where corruption constitutes huge problem can be explained by the quality of the shared rules and the institutions which coordinate individuals. Some countries adhere to rules which engender trust among public office holders and provide the incentive to perform.?
Others have rules system that allow officials to milk public purse and further deprive their citizens the fruits of risk taking efforts. Human beings anywhere depend on the right kind of institutional system.
Part of the reasons the public are not comfortable with the proposed course for Ribadu is the fear that the commission’s power could be eroded. Of course, they have reasons for such fears. Aside from the reported underground moves to hedge out the EFCC boss, the open confrontation between the Attorney General of the Federation and the EFCC with respect to the latter seeking permission from the former before prosecuting indicted individuals is still fresh in mind. This is seen as an attempt to reduce the powers of the anti-graft commission.
The present administration needs to show strong commitment both in words and actions that the war on graft is waxing stronger. Should there be any indication that the administration is backing down, it would reverse whatever gains the nation has made in the anti-corruption war. It would further worsen the nation’s rating.
The truth remains that although Ribadu is widely seen as a hero in the anti-corruption war, it does not mean that he is the only one who can prosecute the war on corruption with the zeal with which it is being done. There are several Nigerians who can do the same. But the present administration should be mindful of the fact that if Ribadu is removed the power of the commission must be strengthened. This would re-assure everyone that the anti-corruption campaign is alive and kicking. To do otherwise would further attract local and international opprobrium.
Economic Follies of Duty Waivers
01.13.2008
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According to Aliko Dangote, President of Dangote Group, import waivers granted by the previous administration were used to import items sell and not for? projects for which they were specifically meant.
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It is not enough for the present administration to simply order the suspension of the duties waiver, in as much as those who benefited from the concession do not contribute meaningfully to the economy, they would be treated as economic saboteurs and be made to refund the revenue they illegally siphoned out of the national purse.
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The urgent item that needs critical attention is the need to ensure that? deteriorating infrastructure are fixed in all the local industries across the land.? On the long run, this will give them room to showcase their capabilities of propelling the economy to a sustainable height.
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However, as long as local industries pay for their security, water supply and power generation, no amount of protection or concession can enable them to compete favourably with their foreign counterparts, in terms of producing cheap and quality products and services.
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Granting waivers to a few favoured friends and denying a large number of people who can contribute significantly to the economy is a lesson on how not to develop. Obviously, this should not be the habit of a country like Nigeria, which aspires to meet the MDGs. The long-term implication is that it would further distort economic performance. Many companies, rather than being innovative and alert to other economic opportunities,? prefered one form of protection and other inward looking policies.?
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*Thompson Ayodele is the Executive Director of the Initiative for? Public Policy
Thompson Ayodele
Executive Director
Initiative of Public Policy Analysis
P.O Box 6434
Shomolu-Lagos
Nigeria
Website:www.ippanigeria.org
Tel: 01-791-0959
Cell:080-2302-5079
