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How Smuggling, Insecurity Threaten Steel Development



It is saddening and worrisome that increased smuggling of steel products into the country is inhibiting the efforts of the federal government to grow the economy.

Smuggling could be a factor contributing to the growing insecurity as it has made many companies to liquidate and millions of jobs lost, thereby increasing the vulnerability of the jobless to take to crime as a means of survival.

Smuggling of steel products has led to over three million direct  and about seven million indirect job losses.

Addressing journalists during a media interaction convened by the Galvanised Iron and Steel Manufacturers Association (GISMA) in Abuja, the association’s director, public affairs and media, Bello Mohammed, decried the high rate of smuggling of steel products, saying the smuggled substandard steel products compete neck to neck with locally produced qualitative steel products, adding that smuggled substandard steel products are freely traded in  the markets.

“GISMA as a body under the Manufacturers Association of Nigeria (MAN) which has been battling for some time with this dismal economic sabotage which may lead to the collapse of up to 60 per cent of manufacturing in the production of galvanized iron and steel manufacturing companies in Nigeria. If unchecked, it may also result to a mass lay-off of additional more than 50,000 direct employees and crystallization of numerous associated systemic risks in the Nigerian steel industry in a country where unemployment is already on the high side,” he said.

He said government was loosing N52billion annually to a cartel of economic saboteurs who smuggle substandard iron and steel into the country due to absence of pre-inspection suspended in 2006 to give way to destination inspection.

“There is a cartel of economic saboteurs who import huge volume of containers every week valued at about USD5million which were never captured under the current HS code 7210.30.00.00 – 7210.50.00.00 of Nigerian Customs Service portal, making the federal government of Nigeria to lose an estimated revenue of about N1 billion on weekly basis (N52bn annually)  on these smuggled items due to the neglect of pre-inspection of any container coming into the country which was hitherto the practice in Nigeria.

“Abandonment of pre-inspection of goods at the point of entry has created leeway for smugglers to flood the Nigerian markets with substandard products, including steel products. It has also made the nation’s borders and seaports porous, leading to influx of illegal arms and explosives into the country. Such a development is inimical to national economic development and national security,” he said.

He contended that government, security and revenue generating agencies had either been overwhelmed or were  ignorant of the nefarious activities of the smugglers, pointing out that the World Trade Organization was of the view that “pre-shipment inspection is very important because it will help to safeguard national financial interest as it will prevent customs duty evasion, capital flight, and commercial fraud.”

Mohammed said the association had demonstrated its trust in the government’s policy of Economic Growth and Recovery Plan (EGRP) via investments in various projects to enable import substitution for products, saying, however, that despite all the efforts of GISMA to ensure full achievement of government’s EGRP with key focus on global competitive economy, employment generation, youth empowerment and improved human capital development, the market is continually recording free flow of smuggled substandard steel products and other allied products.

While disclosing that the  group conducted a comprehensive study into the menace of smuggling and its economic deficit to our country, the spokesman said they found out that importers opened the Form M with wrong classification HS code and product description. “Mostly, the description is stated as used machinery and shoe parts which attracts zero duty and valid for foreign exchange. The smugglers by this act successfully sabotage the economy with non-payment of the prescribed 45 per cent import duty on items of steel products being smuggled into Nigeria.

“It was also discovered that imported steel products are shipped in containers and put on fast track and non-inspection category and escorted to their various warehouses around the country.  Upon arrival of vessels in Port Harcourt, Onne and Calabar ports, sources claimed that no container examination is carried out from any of our reputable regulatory agencies,” he stated.

He urged government to immediately direct all relevant MDAs such as the Nigeria Customs Service, Standards Organisation of Nigeria, Presidential Committee on Trade Malpractices and Department of State Services etc to immediately enforce all investors protective policy which he said would put a stop to the activities of economic saboteurs.

Mohammed who spoke through the GISMA consultant, Obiorah Ifoh, also called on government through the office of the vice president to quickly set up special anti-smuggling task force saddled with the  responsibility to put a final stop to the smuggling of roofing sheets into the country, saying it was the only way the steel manufacturing companies could survive and Nigerians gainfully employed.

“GISMA has presently lost more than one million tons of her production capacities to the smugglers with its associated effects on employees’ lay off, unpaid bank debts, unsold volume of finished goods etc. Now is the time for the Federal Government to do the needful without further delay as it is only the federal government that can put a final stop to this economic sabotage that is fast killing steel manufacturing companies in Nigeria,” he added.

Reacting to the development, the chairman, Presidential Committee on Trade Malpractices, Dahiru Ado-Kurawa, said the issue of smuggling iron and steel into the country was not new, pointing out, however, that the committee commenced investigation into the importation of galvanised roofing sheets into the country.

“We are very sympathetic to the manufacturers of these products because their major investments are involved. Anybody that is going to make anything steel requires a lot of money and they deserve the response of government, they deserve to be protected, rather than protecting the unscrupulous importers.

“We have started collecting data for all the imports of galvanised roofing sheets along with other products. We still remain passionate about executing our mandate. One of our terms of references is to ensure that Nigerian companies remain competitive,

“The only way we as a country can expand our economy, provide job for our children and make ourselves relevant is when we start targeting those industries that have been around for 100 years, that the technology is nothing new, that we have the capacity and capability, we remove the negatives, the negatives being maybe an industries being killed by smuggling, or some policy that is wrong because once in a while you may have to tweak some government policies to be in tune with what entails all over the world today,” he added.