By Nonso Obikili
The policy circus continues. The Federal Government has announced the launch of yet another special policy, this time targeting the tomato industry. The structure is the same as others. A couple of intermediary imports have been banned, and tariffs raised on others, to stimulate local production, with some incentives tacked on.
The government has effectively banned the importation of tomato paste, powder, or concentrate for retail sales, as well as of preserved tomatoes. It has increased tariffs for tomato concentrate, presumably for commercial use, to 50% plus a further $1,500 per metric tonne. It has also restricted importation of said concentrate to the sea ports. Finally, it has added tomato production or processing to its list of industries for incentives administered by the NIPC. Will these set of policies “work”?
We already know that things like human capital and infrastructure are really important. One thing which is often overlooked however, is reliable and consistent access to high quality raw materials. It has been demonstrated time and time again that without it, industries don’t grow. For any given industry, it does not really matter where the raw materials come from, just that they come in a predictable and reliable manner, and that they are of high quality. Most of the time, only imported raw materials fulfil these requirements. This is true all over the world and in Nigeria too. Our manufacturing industry might be small, but with most of them, the key raw materials are imported. From flour, to sugar, and from chemicals, to cars, a look at the fundamentals show that imported raw materials are a common theme.
The policy places the final tomato paste manufacturers at a disadvantage by restricting their access to imported concentrate, and forcing them to use local concentrate. Local concentrate that currently cannot compete in terms of reliability and quality, with imported concentrate. The implication is that the local tomato paste will be more expensive, and of lower quality than the imported tomato paste, which will be waiting at the border, ready to be smuggled in.
Then there are the farmers who have to be convinced to grow tomatoes. The tomato harvest disaster last year probably won’t serve as encouragement to many. Should farmers grow tomatoes or should they try to grow the most valuable thing they can and then buy tomatoes? The answer is always to grow the most valuable thing, which may not be tomatoes. Convincing them to grow tomatoes in that instance would probably make the farmers poorer than they would have been.