By Denna Bowman
The Nigerian government has approved the upward review of tariffs on all tyres imported in to the country by 30 per cent.
The move is a reversal of the review of the duties by the federal government in 2007, which devastated the domestic tyres industry and led to more than 30,000 job losses.
President Umaru Musa Yar’Adua has approved the upward review of tariffs on all tyre imports into Nigeria to 40 per cent from the current rate of 10 per cent, according to a report in the Leadership newspaper.
A statement issued yesterday by the Communication Coordinator of the Presidential Committee on the Global Economic Crisis, Aisha Yolah, said that the directive has since been conveyed to the Minister of Finance “for compliance and immediate implementation”.
The government hopes that the measure would revitalise activities in the tyre manufacturing sub-sector, increase employment as well stem the exodus of many tyre industries to neighbouring countries.
Official sources said that local production of tyres was 2.25million units while imports accounted for about 0.75 million units before the 2007 policy reversals.
The recent action by the federal government is also informed by its conviction that the 2007 reversal was “anathema to the growth of local tyre manufacturers in Nigeria”.
Furthermore, the CEA had regretted the receding fortunes of the only remaining tyre manufacturing company in the country, Dunlop, which witnessed a sizeable decline in turnover from N5l.8Billion in 2001 to N3.4billion in 2008, and recorded net loss in excess of N2billion in 2007.
According to government officials the lead factor that forced the industry to be in the present state is the tariff policy reversal that penalises local production, while encouraging imports.
The Chief Economic Adviser also holds the opinion that the policy has had a negative impact on the nation’s economy, including loss of employment in excess of 30,000 people in Delta, Edo and Ogun States; loss of foreign exchange in the region of $650million on importing and smuggling of over N2.5millioin units of tyres at an average of $250 per unit.