Over 20 shipping firms have exited Nigeria’s shores bemoaning the greater obstacles they face as a result of unfavourable government policies and the global economic crunch. The Dockworkers Union of Nigeria (DUN) lamented that over 3,000 workers have already been laid off by various shipping companies, terminal operators and logistic companies, owing to a lack of financing and the poor import policies of the Federal Government. The Union also blamed the massive retrenchment on the inability of the Federal Government to meet its joint venture obligation with the international oil companies, which are major partners with the marine logistic companies.
As reported by Guardian, the President, Dockworkers Union of Nigeria (DUN), Anthony Emmanuel Nted, explained that the volume of vehicles imported into the country through ports has fallen to an all-time-low, with the consequent loss of thousands of jobs in the industry. The reduction in imports were attributed to the implication of the new exchange rate for duty calculation, which has made the importation of cars and other items significantly more expensive. Mr. Nted argues that the sudden import ban on essential commodities like rice, wheat, machinery, etc. will harm the import-dependent country and bring about illicit activities including smuggling, diversion of ships to neighbouring countries, unemployment and general loss of revenue to government.
The assessment of the DUN president is difficult to refute but, if Nigeria is serious about its export promotion ambitions, the country has to brace itself for some inevitable losses in the import and trade sector. All things being equal, the costs to the economy in the import sector, in terms of employment and government revenue, is to be replaced by jobs and increased Federal Government revenue from sectors that will be allowed to develop as a result of import substitution. The fear, however, is that while jobs and lucrative revenue streams are lost in the import sector, they are not compensated for by the struggling sectors that fail to realise their latent advantage. Mr. Nted must have been alluding to this when he urged the Federal Government to review the ban on the importation of rice, wheat, vehicle spare parts and industrial machinery until the nation is able to produce for local consumption.
While import substitution strategies are enacted in foresight before the actual success of the local sector to replace imports, a complete ban on large number goods from diverse sectors is difficult to justify. The implicit imploration of the country to increase local production in order to replace imports in such a short period of time may not be feasible. Developing local capacity is a gradual process and complete bans on certain items may cause more harm than good, depending on the level of local capacity for the production of that item. A credible commitment to impose future import restrictions will provide similar incentives to local producers without the resulting hardship and side effects of a complete ban.
As the exit of the 20 shipping companies is not just as a result of import substitution government policies, but also as a result of the Federal Government failing to meet its obligations to international oil companies, the creative destruction reasoning does not fully justify the development. In any case, any serious drive towards greater local production and export promotion will come with economic casualties, as some sectors contract and others expand during the adjustment process. The process is akin to the ‘creative destruction’ concept coined by renowned Austrian-born economist Joseph Schumpeter. #BuyNaijaToGrowtheNaira will benefit Nigeria in the long run, if executed successfully, but will bring with it inevitable consequences possibly resulting in firms that once found operations in the country profitable, deciding to leave.
Some of the companies which have already left Nigeria as reported by Guardian include: Mitsui O.S.K Line, Nippon Yusen Kasha, Taiwan’s Evergreen Line, Messina Line, Hapag-Lloyd and Gold Star Line (GSL), among others. They were forced to withdraw from the West African route due to growing losses as a result of declining volumes.
