Dike Onwuamaeze
The Centre for the Promotion of Private Enterprise (CPPE) has raised concern about the growing participation of foreign nationals, particularly Chinese traders, in Nigeria’s retail and distributive trade sector.
The CPPE emphasised that Nigeria needs foreign investment, “but it also needs to protect the entrepreneurial space that sustains millions of domestic businesses and livelihoods.”
It added: “A situation where overseas manufacturers or major suppliers sell products to Nigerian importers and distributors, and subsequently establish operations that compete directly with those same businesses at the retail end of the market, creates legitimate concerns about market structure and fair competition.”
The CPPE raised this concern yesterday in a press statement over “growing foreign incursion into Nigeria’s retail trade.
Commenting on the growing incursion of foreigners into Nigeria’s retail trade, the Chief Executive Officer of CPPE, Dr. Muda Yusuf, said that “the trend raises important issues around employment protection, fair competition, investment policy and the integrity of the country’s immigration and business-permit regime.”
Yusuf argued that the increasing penetration of foreign traders into the retail segment deserved urgent policy attention.
He said: “Nigeria’s distributive trade sector is a major source of employment and livelihoods, particularly for micro, small and medium enterprises.
“Millions of Nigerians depend on wholesale and retail trade across textiles and fabrics, ICT products and accessories, automobile spare parts and tyres, electrical products, plumbing materials, household goods and numerous other consumer and industrial products.
“The sector employs an estimated 27.5 per cent of Nigeria’s workforce.”
The CPPE acknowledged that China has remained one of Nigeria’s most important trading partners and the leading source of the country’s imports that have supported the supply of machinery, industrial inputs, consumer goods, technology products and numerous other products to the Nigerian economy.
The CPPE, therefore, “stresses that the concern is not about Chinese investment or Nigeria’s economic relationship with China.
“The issue is the increasing movement of some foreign suppliers and traders downstream into segments of retail trade in which Nigerians already possess substantial capacity.”
Yusuf said that the incursion of foreigners into the retail trade section is a threat to MSMEs and employment in Nigeria.
He warned that “at a time when the economy is grappling with unemployment, poverty, weak consumer purchasing power, high financing costs and considerable pressure on small businesses, policy should be particularly sensitive to developments capable of displacing domestic enterprises from sectors in which Nigerians have demonstrated adequate capacity.
“Reports from operators suggest that concerns about foreign participation are emerging across several segments, including textiles and fabrics, computers and telephone accessories, automobile spare parts, tyres and plumbing materials.
“There have also been protests and complaints by traders in some major commercial markets. These developments should not be ignored.”
The CPPE, therefore, called for a comprehensive review of business permits, expatriate quotas and regulatory framework governing foreign participation in Nigeria’s retail economy.
It said that expatriate quotas should principally facilitate the entry of skills, expertise and capabilities that are scarce or unavailable locally.
“They should not become instruments for displacing Nigerians from economic activities where substantial domestic competence already exists.
“For clarity, the CPPE is not calling for arbitrary restrictions or hostility towards foreign investors but a consistent and credible enforcement of existing laws, transparent rules and a clearly defined investment policy.
Nigeria should remain open to foreign investment, but openness should not mean an absence of strategic boundaries.
“Foreign investment should be particularly encouraged in manufacturing, infrastructure, technology, agro-processing, mining, energy and other sectors where Nigeria requires substantial capital and technical capabilities.
“There should be clearer boundaries between productive foreign investment and participation in basic retail activities where domestic capacity is already abundant.
“The objective should not be protectionism for its own sake. It should be fair competition, regulatory integrity, employment protection and strategic investment policy.
“The government should urgently review the regulatory framework governing foreign participation in retail trade and ensure that business permits, immigration approvals and expatriate quotas are being used strictly for their intended purposes.
“Nigeria’s investment policy must remain open, but it must also be calibrated to the country’s employment, enterprise-development and industrialisation priorities,” Yusuf said.