Center Seeks Review of Foreign Traders in Nigeria’s Retail Sector

The Centre for the Promotion of Private Enterprise (CPPE) has called for a review of foreign participation in Nigeria’s retail and distributive trade sector, citing concerns over competition, employment and the enforcement of business and immigration regulations.

The CPPE raised the concerns in a statement issued on Sunday, September 20, by its Chief Executive Officer, Muda Yusuf.

The organisation said the growing participation of foreign nationals, particularly Chinese traders, in retail trade required closer policy attention because of the sector’s role in employment and small business activity.

Nigeria’s distributive trade sector employs an estimated 27.5 per cent of the country’s workforce, according to the CPPE.

Millions of Nigerians depend on wholesale and retail businesses that supply textiles and fabrics, information and communications technology products and accessories, automobile spare parts and tyres, electrical products, plumbing materials, household goods, and other consumer and industrial products.

The CPPE said the issue was not Chinese investment or Nigeria’s wider trade relationship with China, which remains one of the country’s most important trading partners and its leading source of imports.

It noted that Nigerian businesses have longstanding relationships with Chinese manufacturers, exporters, and major distributors that supply machinery, industrial inputs, consumer goods, and technology products.

“The CPPE therefore stresses that the concern is not about Chinese investment or Nigeria’s economic relationship with China,” the statement said.

It said foreign investment remained important where it brought capital, technology, industrial capacity, employment, exports and new capabilities into the Nigerian economy.

The concern, according to the organisation, is the movement of some foreign suppliers and traders into retail activities where Nigerian businesses already operate.

Pinnacle Daily reports that some traders at the Lagos International Trade Fair Complex along the Lagos-Badagry Motorway protested recently over an alleged expansion of Chinese merchants into retail trading in the market, claiming the development could threaten local businesses and displace Nigerian traders.

The protest was, however, suspended following interventions by the Traders Association leadership, local government officials and the police.

Raises SME employment concerns

The organisation said foreign manufacturers or major suppliers that move from supplying Nigerian importers and distributors into direct retail competition could affect the structure of the market.

Retail trade has relatively low barriers to entry and supports SMEs, family businesses and self-employed Nigerians, the CPPE said.

SMEs are small and medium-sized businesses, while retail refers to the direct sale of goods to consumers.

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The organisation said reports from business operators indicated concerns across several segments, including textiles and fabrics, computers and telephone accessories, automobile spare parts, tyres and plumbing materials.

It also referred to protests and complaints by traders in some major commercial markets.

“At a time when the economy is grappling with unemployment, poverty, weak consumer purchasing power, high financing costs and considerable pressure on small businesses, policy should be particularly sensitive to developments capable of displacing domestic enterprises from sectors in which Nigerians have demonstrated adequate capacity,” the CPPE said.

The organisation said the concerns should be considered alongside the employment importance of retail trade and the conditions facing small businesses.

Review permits, expatriate quotas

The CPPE called for a comprehensive review of the rules governing foreign participation in Nigeria’s retail economy.

It specifically asked relevant government agencies to examine business permits, expatriate quotas, immigration approvals and other authorisations issued to foreign nationals operating in the country.

An expatriate quota is government approval allowing a company to employ foreign workers in specified positions.

The CPPE said such approvals should primarily support the entry of skills and expertise that are scarce or unavailable in Nigeria.

“Expatriate quotas should principally facilitate the entry of skills, expertise and capabilities that are scarce or unavailable locally,” the organisation said.

It added that retail trading was generally not a specialised activity requiring scarce foreign expertise and called for closer examination of the presence of non-Nigerians in such businesses.

The organisation, however, said it was 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.

Seeks different rules for retail

The organisation said Nigeria should remain open to foreign investment while applying different considerations to sectors based on their contribution to economic development.

It said foreign investment should be particularly encouraged in manufacturing, infrastructure, technology, agro-processing, mining, energy and other areas requiring substantial capital and technical capabilities.

Agro-processing refers to turning agricultural products into processed goods, while export-orientated production involves producing goods for sale in foreign markets.

The CPPE said retail required a different policy approach because of its importance to employment, entrepreneurship and small business development.

“Investment policy must distinguish between activities where foreign participation brings additional capital, technology, skills, productive capacity and exports, and activities where unrestricted foreign participation could unnecessarily displace domestic enterprises and employment,” it said.

The organisation said Nigeria should also establish clearer rules defining the extent of permissible foreign participation across the retail and distributive trade value chain.

The value chain refers to the different stages through which goods move, from production and supply to distribution and final sale.

The CPPE said Chinese investors and investors from other countries could contribute to Nigeria’s industrialisation through manufacturing, infrastructure, technology transfer, local sourcing and export-orientated production.

It said clearer boundaries were needed between such productive investment and direct participation in basic retail activities where domestic capacity was already established.

The organisation also called for stronger coordination among immigration, investment, trade and labour authorities and investigations into complaints from Nigerian traders about direct foreign competition at the retail level.

It further called for expatriate quotas to be linked to identifiable skills gaps and specialised competencies.

The CPPE said foreign businesses should be encouraged to invest upstream in manufacturing, processing, technology and logistics rather than compete directly with indigenous businesses at the retail end.

“Nigeria needs foreign investment, but it also needs to protect the entrepreneurial space that sustains millions of domestic businesses and livelihoods,” the organisation said.

It added that the objective should be “fair competition, regulatory integrity, employment protection and strategic investment policy”.

The CPPE urged the government to review the regulatory framework governing foreign participation in retail trade and ensure that business permits, immigration approvals and expatriate quotas were used for their stated purposes.

It maintained that Nigeria’s investment policy should remain open while reflecting the country’s employment, enterprise-development and industrialisation priorities.