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The Centre for the Promotion of Private Enterprise (CPPE) has raised concerns over how foreign traders, particularly Chinese nationals, are expanding their presence in Nigeria’s retail and distributive trade.
The concerns was contained in a policy brief issued on Sunday by the Chief Executive Officer of CPPE, Dr. Muda Yusuf who stated that the growing participation of foreign nationals in retail could put pressure on Nigerian-owned businesses in areas including textiles, phone and computer accessories, automobile spare parts, tyres, plumbing materials and household goods.
The concerns come as Nigerian businesses face weak consumer demand, high financing costs and rising operating expenses. The CPPE said greater foreign participation in retail could increase competitive pressure on domestic businesses at a time when many are already struggling with higher costs.
What they are saying
“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% of Nigeria’s workforce. Yusuf stated”
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However, the CPPE said its concerns are not directed at Chinese investment or Nigeria’s broader trade relationship with China.
China is one of Nigeria’s biggest trading partners and a major source of imports, supplying machinery, industrial inputs, consumer goods, technology products and other merchandise to Nigerian businesses. The issue, according to the group, is the movement of some foreign manufacturers and suppliers further down the distribution chain.
It said a supplier that sells goods to Nigerian importers and distributors and later establishes retail operations to sell directly to consumers could end up competing with the businesses that previously formed part of its customer base.
The CPPE said complaints from traders have emerged across several product categories and that protests in some major commercial markets warrant government attention.
A review of expatriate quotas and clearer investment rules
The group called for a comprehensive review of the regulatory framework governing foreign participation in Nigeria’s retail economy.
It wants government agencies to examine business permits, expatriate quotas, immigration approvals and other authorisations granted to foreign nationals operating in the country.
The CPPE said expatriate quotas should primarily facilitate the entry of skills and expertise that are scarce or unavailable locally.
“Retail trading is generally not a specialised activity requiring scarce foreign expertise,” it said.
The organisation therefore questioned the effectiveness of the existing regulatory and immigration framework where foreign nationals participate in basic retail activities.
However, the CPPE said it is not calling for arbitrary restrictions on foreign investors.
“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,” it said.
The CPPE said Nigeria should remain open to foreign investment but argued that liberalisation should be aligned with the country’s economic priorities.
It recommended stronger incentives for foreign investment in manufacturing, infrastructure, technology, agro-processing, mining, energy and other sectors where Nigeria requires capital and technical expertise.
Get up to speed
Nigeria has continued to deepen its economic and capital-market relationship with China, with the Nigerian Exchange Group (NGX Group) stepping up efforts to attract Chinese and Hong Kong investors.
Earlier in August, Nairametrics reported that the NGX was encouraging Chinese companies with significant operations in Nigeria to consider dual listings on the Nigerian Exchange.
The push followed engagements led by NGX Group Chairman Umaru Kwairanga during a visit to Hong Kong, where the delegation met with institutions including InvestHK, Bank of China International (BOCI) and Hong Kong Exchanges and Clearing (HKEX).
What you should know
The Federal Government has also been reviewing a proposal by China Hyway Group Limited to develop 10,000 housing units across Nigeria within 30 months.
The Federal Ministry of Housing and Urban Development disclosed in July that the proposed project would use prefabricated construction technology under an Engineering, Procurement, Construction and Financing (EPC+F) model.
The housing units are expected to be distributed across Nigeria’s six geopolitical zones if the proposal is approved.
The proposal was presented to the Minister of Housing and Urban Development, Muttaqha Rabe Darma, by a delegation from China Hyway Group led by its Chief Engineer, Lewis Chima.
Following the presentation, the minister directed the formation of a committee of relevant ministry officials to review the proposal and recommend the next steps.
He explained that the proposal aligns with the government’s Renewed Hope Housing Programme and its objective of expanding access to affordable and sustainable housing through public-private partnerships.
