The debate on the ban on importation of cars has to be more rigorous

The Senate has unanimously condemned the federal government’s ban on the importation of cars through land borders, which took effect on January 1, 2017. It argues that the ban is unpopular.

The Cable NG     One would have thought that an APC-controlled Senate would take sides with an APC-led government at the centre. Instead, they are diametrically opposed to each other.

As trivial as this disagreement might look, this is another example where the APC government –at the executive and legislative level —has shown a lack of coherence in terms of economic policy

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The Senate claims it has taken sides with the ‘masses’. (The Senate has been accused, on many occasions, of not been on the side of the ‘masses, but this time it seems they have repented. One commentator mischievously suspects that lobbyists are at work here.)

But public policies would best serve public interest if conclusions are reached through rigorous debates.

With the level of porosity at the borders – which has defied every measure to check it – and the inefficiency at our seaports, every car dealer would prefer using land borders. Lower duties are paid at the borders.

And the public has been made to believe that with the ban on importation through land borders, cars would become more expensive. It could if the government doesn’t put on its thinking cap. It is not that simplistic.

The Chairman, National Council for the Regulation of Freight Forwarding, Hon Iju Tony Nwabunike, summarizes the whole scenario: ‘‘some of the customs officers are not sincere. Ordinarily, there is nothing wrong importing cars if appropriate duties are paid. For instance, in Prado Jeep, they will tell you to pay between N10 million and N15 million in Apapa and Tin Can Ports, but you find out the same Prado Jeep, if it is coming through the border, you can pay N1 million duty and give them N1million bribe and they will let you go’’.

With the scenario painted by Nwabunike, it is evident that the real import duties go to neighbouring countries where these cars are legally imported to, when they come through the borders to Nigeria. And no serious government would take this lightly.

But the Association of Motor Dealers of Nigeria (AMDON), which imports over 15,000 used cars quarterly, argues otherwise. They argue this ban would result in increased hardship and job losses.

Used-cars, they say, are affordable when they come from the borders.

But they missed the point. If used-cars enter the country through seaports alone, government could have greater control over the number of vehicles entering into the country, enforce standards and track its revenue.

And when there is control over the number of vehicles entering the country, the nation can start thinking of implementing its Auto Policy.

But the efficiency at the seaports would have to be improve for these to be achievable. Also, corruption at seaports would have to be checked, as well.

The real question the Senate ought to ask is this: how can government make cars affordable and increase government revenues when cars are imported through seaports?

Since, Nigeria doesn’t not have a competitive advantage in car manufacturing, it makes sense to moderate the duties paid on cars at the seaports. (More concessions should be given to companies who assemble cars locally.)

The country would be better off if import duties that went to neighbouring countries and the bribes that went to corrupt custom officers at the borders started entering government coffers. That’s assuming government decides to keep the import duties at seaports to be equal to the amount corruptly paid to custom officers at the border.

The 70 percent tariff and levies on new cars, which took effect in 2015, is not working, the Shippers Council insist. Instead, government is losing revenue. These huge levies have increased importation to neighbouring countries and subsequent smuggling into Nigeria.

These are the kind of policies the Senate should look into. It is the duty of senate to educate the populace and advice the government on how to make policies better. Many good things can come from this ban.