Tomato Paste Ban and Import Tariffs

By Olu Harrison

If ThisDay’s slightly unclear report of an impending ban on the importation of tomato paste, powder or concentrate and a related tariff on the importation of concentrate is true, surely this is a good for reviving the domestic Tomato processing sector?

But wait, remember the first law of Nigerian Government; “The business of government is business”

In most other countries the news would clearly be a statement of intent by the government to featherbed the domestic tomato processing industry and protect a less efficient domestic industry from more efficient (and therefore cheaper) foreign competition.

But “the business of government is business”

In this case it is not hard to imagine who may benefit.

In most of Nigeria’s importation markets where there are tariffs, waivers are handed out by government officials to cronies.

This immediately creates a monopolistic advantage as the person(s) holding the waiver are the only ones who can import at a competitive price.

They can undercut other importers (as they do not have to pay the tariff) and, as they are importing cheap foreign produced goods, they can also undercut the domestic producers.

This is not even business…it is a government sponsored licence to print money.

Secondly, the timing is suspicious.

Does this entice Erisco back to producing domestically, or allow cronies to take over the space left by the vacating company (if they ever really left)?

Perhaps Dangote has managed yet another state aided monopoly? Similar positions in concrete and rice worked out surprisingly well for the group.

The proof is in the pudding folks.

If ThisDay’s report is correct we will only have to watch for a couple of months before the crooked beneficiaries become apparent,

Meanwhile small scale and entrepreneurial processors are likely to suffer further death of a thousand cuts.

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