The Centre for the Promotion of Private Enterprise (CPPE) has raised concerns over the growing participation of foreign nationals, particularly Chinese traders, in Nigeria’s retail and distributive trade sector.
The organisation said the trend could have implications for employment, fair competition, investment policy and the enforcement of Nigeria’s immigration and business-permit regulations.
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This was disclosed in a policy brief released on Sunday and signed by CPPE Chief Executive Officer Muda Yusuf, who noted that Nigeria’s distributive trade sector remains a major source of employment and livelihoods for millions of Nigerians, particularly those operating micro, small, and medium enterprises.
CPPE’s call followed a protest by some auto spare parts traders at the Lagos International Trade Fair Complex against the alleged involvement of some Chinese nationals in retail trading.
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The protesters had called for Chinese businesses to leave the market, accusing them of selling directly to customers and competing with local retailers.
During a visit to the market following the protest, the traders told PREMIUM TIMES that they had not requested that the Chinese businesses leave Nigeria, but rather that they desist from engaging in retail activities around the market, as it affects their retailing activities.
According to CPPE, the distributive trade sector employs an estimated 27.5 per cent of Nigeria’s workforce and covers businesses dealing in textiles and fabrics, ICT products and accessories, automobile spare parts and tyres, electrical products, plumbing materials and household goods.
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“The increasing penetration of foreign traders into the retail segment therefore deserves urgent policy attention,” the advocacy group said.
CPPE clarified that its concerns were not directed at Chinese investment or Nigeria’s economic relationship with China, noting that China remains one of Nigeria’s most important trading partners and the leading source of the country’s imports.
The think tank said Nigerian businesses had longstanding relationships with Chinese manufacturers, exporters and major distributors, which had supported the supply of machinery, industrial inputs, consumer goods and technology products to the Nigerian economy.
“The CPPE therefore stresses that the concern is not about Chinese investment or Nigeria’s economic relationship with China.
“Foreign investment remains important to Nigeria’s development, particularly where it brings capital, technology, industrial capacity, employment, exports and new capabilities into the economy,” it said.
Retail segments
However, CPPE said the organisation was concerned about the movement of some foreign suppliers and traders downstream into retail segments where Nigerian businesses already have substantial capacity.
It said that the situation in which overseas manufacturers or major suppliers sell products to Nigerian importers and distributors, and later establish operations that compete directly with those businesses at the retail level, raises concerns about market structure and fair competition.
Threat to SMEs
CPPE said the issue was particularly important at a time when Nigerian businesses were facing unemployment, poverty, weak consumer purchasing power, high financing costs and other pressures.
The think tank said reports from market operators indicated that concerns about foreign participation were emerging in areas including textiles and fabrics, computers and telephone accessories, automobile spare parts, tyres and plumbing materials.
“There have also been protests and complaints by traders in some major commercial markets. These developments should not be ignored,” it said.
The organisation called for a comprehensive review of the regulatory framework governing foreign participation in Nigeria’s retail economy.
It urged relevant government agencies to examine the enforcement of business permits, expatriate quotas, immigration approvals and other authorisations granted to foreign nationals operating in the country.
“Expatriate quotas should principally facilitate the entry of skills, expertise and capabilities that are scarce or unavailable locally. They should not become instruments for displacing Nigerians from economic activities where substantial domestic competence already exists,” CPPE said.
It argued that retail trading was generally not a specialised activity requiring scarce foreign expertise, adding that the increasing presence of non-Nigerians in such activities raised questions about the effectiveness of the country’s regulatory and immigration framework.
Calibrated investment policy
CPPE said Nigeria should remain open to foreign investment, but ensure that strategic boundaries accompany such openness.
According to the organisation, investment policy should distinguish between activities in which foreign participation brings additional capital, technology, skills, productive capacity, and exports, and activities in which unrestricted foreign participation could displace domestic enterprises and employment.
It said foreign investment should be particularly encouraged in manufacturing, infrastructure, technology, agro-processing, mining, energy, and other sectors where Nigeria requires substantial capital and technical capabilities.
“The retail segment requires a different policy approach because of its strategic importance to employment, entrepreneurship and SME development,” the statement noted.
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The organisation said Nigeria should strengthen its investment relationship with China and other countries while encouraging foreign investors to contribute to industrialisation through manufacturing, infrastructure, technology transfer, local sourcing and export-oriented production.
However, it called for clearer boundaries between productive foreign investment and participation in basic retail activities where domestic capacity is already substantial.
CPPE urged the government to review foreign business permits and expatriate quotas in the retail and distributive trade, strengthen enforcement of immigration and investment regulations, and investigate complaints from Nigerian traders about direct foreign competition.
It also called for stronger coordination among immigration, investment, trade and labour authorities and clearer guidelines defining permissible foreign participation across the distributive trade value chain.
The organisation further urged the government to encourage foreign businesses to invest upstream in manufacturing, processing, technology, logistics and other productive activities rather than compete 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,” CPPE said.
The group said the objective should be “fair competition, regulatory integrity, employment protection and strategic investment policy,” rather than protectionism.
“Government should urgently review the regulatory framework governing foreign participation in retail trade and ensure that business permits, immigration approvals and expatriate quotas are being used strictly for their intended purposes,” he said.
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