There is something instructive about the protest that erupted on Monday at the Lagos International Trade Fair Complex along the Lagos-Badagry Expressway.
Some Nigerian traders at the complex took to the streets over what they described as the increasing involvement of Chinese merchants in retail trading within the market. Their concern, as reported, was that Chinese merchants were moving beyond their traditional wholesale activities to sell directly to consumers, thereby putting Nigerian retailers under pressure. The protest was eventually called off following the intervention of the leadership of the traders’ association, local government officials and the police.
Ordinarily, such a development could be dismissed as another disagreement between traders and market operators. But there is a bigger issue underneath it that Nigeria needs to confront.
Given the foregoing perspective, it is therefore pertinent to ask: “How does the country protect the legitimate economic interests of its citizens while remaining open to foreign investment and international trade?”. That should be the central question driving the conversation. The issue should not be reduced to a contest between Nigerians and Chinese nationals, nor should it be allowed to degenerate into xenophobia. Rather, it should compel the Federal Government to examine whether Nigerian traders are operating in a marketplace in which everybody plays by the same rules. This is important because Nigeria is not the only African country grappling with the question of foreign participation in its small-business sector.
Kenya, for instance, has recently taken steps to regulate foreign nationals engaged in small-scale and informal trading, with the government explaining the measures in terms of protecting local livelihoods while ensuring that foreign traders operate within the country’s regulatory framework.
South Africa has also, over the years, witnessed intense debates over the participation of foreign nationals in informal businesses. Nigerians, unfortunately, have sometimes found themselves at the receiving end of xenophobic attacks and hostility in that country.
Yet Nigeria remains one of Africa’s most open commercial environments. That openness is valuable. It has attracted foreign investors, created business relationships and given Nigerian consumers access to a wide variety of products. But openness should not mean the absence of rules.
There is nothing wrong with Nigeria welcoming foreign manufacturers, investors and businesses. There is also nothing inherently wrong with foreign nationals operating legitimate businesses in Nigeria where the law permits them to do so. The problem arises when questions of documentation, business permits, tax compliance, immigration status, sectoral restrictions or fair competition are ignored. That is where the government must draw the line.
The allegation made by the Lagos traders that some Chinese merchants are bypassing Nigerian middlemen by selling directly to consumers at wholesale prices deserves proper investigation. If the allegation is correct, the implication is significant. This is as Nigeria’s trading system has traditionally depended heavily on a chain involving importers, wholesalers, distributors and retailers. Each level creates an avenue for somebody to make a living. But when the wholesaler effectively becomes the retailer, that chain is broken.
The Nigerian retailer who buys from the wholesaler, pays transportation costs, pays shop rent, pays employees and then adds a margin to sell to consumers suddenly finds himself competing with the very person from whom he is expected to source his goods. And if the wholesaler can sell directly to the final consumer at a price below what the retailer can offer, the Nigerian retailer is placed at an obvious disadvantage. This is not simply a Chinese issue.
As the Lagos traders themselves reportedly pointed out, there are other foreign nationals operating various small businesses in Nigeria, some of whom may not have the appropriate documentation or permits. The question, therefore, should be broader: “what is Nigeria’s policy on foreign participation in small-scale retail and informal commerce?” The answer should be clear.
Where Nigerian law permits foreign participation, foreigners should be allowed to operate legally. Where the law imposes restrictions, those restrictions should be enforced. Where permits are required, they should be obtained. Where taxes are payable, they should be paid. Where particular categories of small-scale businesses are reserved for Nigerians, those provisions should mean something beyond what is written on paper. This is not hostility towards foreigners. It is what responsible economic regulation looks like.
Indeed, Nigeria already has mechanisms regulating foreign participation in its economy. The Nigerian Investment Promotion Commission framework, for example, recognizes the need for business permits and other regulatory requirements for foreign investors and expatriates. The problem is often not the absence of laws but the weakness of enforcement. And this is where Nigeria needs to become more deliberate.
A country that wants to build a strong small-business sector cannot be casual about the conditions under which businesses compete. Small and medium-sized enterprises are not merely statistics in government reports. They are the roadside shop owner, the market woman, the distributor, the spare-parts dealer, the fashion retailer, the electronics merchant and the young Nigerian who has borrowed money to open a shop. For many Nigerians, small business is not a second choice. It is their employment. It is their pension. It is how they feed their families. It is how they pay school fees. It is how they survive.
Consequently, when the operating environment changes in a manner that threatens their ability to compete, government has a responsibility to understand what is happening. But there is another side to this argument. Nigerian traders cannot demand protection from every form of competition. Competition is part of commerce.
If another business can offer consumers better prices, better quality or better service, Nigerian businesses must also be prepared to improve. Government protection should not become a licence for inefficiency. The objective should be a “fair marketplace”, not a closed marketplace. This distinction is crucial.
Nigeria needs foreign capital, technology, manufacturing partnerships and international commerce. Chinese companies, like businesses from other countries, can contribute to Nigeria’s economic development.
Nonetheless foreign investment should complement domestic enterprise rather than unintentionally suffocate it. If a foreign company establishes a manufacturing plant in Nigeria, employs Nigerians, pays taxes and produces goods locally, that is one thing. If a foreign business legally operates as a wholesaler, that is another. But if a foreign trader enters an area of commerce that is legally reserved for Nigerian citizens, or operates outside the conditions of its permit, government should enforce the law. That is the difference between protectionism and regulation.
Correspondingly, it is not ill-advisable that Nigeria should take seriously the principle of reciprocity in international relations. Nigerians doing business in other African countries have sometimes encountered restrictions, hostility or barriers. Where another country adopts lawful measures limiting economic opportunities available to Nigerians, Nigeria is entitled to examine its own policies toward nationals of that country.
This is where the international-law concept of “retorsion” becomes relevant. Retorsion does not mean an unlawful attack or arbitrary punishment. In international law, it generally refers to a lawful but unfriendly measure adopted by one state in response to another state’s unfriendly conduct. In practical terms, Nigeria can pursue reciprocity through lawful diplomatic and economic measures. If another country restricts Nigerian participation in certain categories of small business, Nigeria can review whether reciprocal restrictions are appropriate. If another country insists that foreign traders comply with documentation and licensing requirements, Nigeria can enforce its own requirements with equal seriousness. If another country protects certain areas of its domestic informal economy for its citizens, Nigeria can examine whether similar measures are appropriate and legally sustainable here. There is nothing inherently wrong with such diplomacy. What would be wrong is for Nigeria to respond to xenophobia with xenophobia. That is not the answer.
Nigeria should not harass foreign nationals simply because they are foreigners. Neither should it permit Nigerian traders to use legitimate concerns about competition as justification for attacking foreigners. The answer is a rules-based marketplace.
The government should know who is doing business in Nigeria, what business they are doing, whether they are legally entitled to do it, whether they are paying the appropriate taxes and whether they are complying with the conditions attached to their operations. The same rules should apply to Nigerians. And consumers should remain protected throughout the process.
After all, consumers benefit when businesses compete on price, quality and service. Any attempt to protect local businesses that ultimately leaves consumers with fewer choices and higher prices must be carefully considered. That is why the issue requires balance.
In fact, Nigeria should neither close its doors to legitimate foreign investment nor leave its domestic traders without protection from unlawful or unfair competition.
Without a doubt, the Lagos protest therefore presents an opportunity. Rather than seeing it simply as another market disturbance, the Federal Government should use it to examine the country’s small-business environment. It should ask difficult questions. How many foreign nationals are engaged in small-scale retail businesses? How many are properly documented? What categories of business are they permitted to operate? Are existing laws being enforced?
Are Nigerian traders being crowded out of business sectors that should remain accessible to them? Are there reciprocal arrangements governing Nigerian traders operating in other African countries? And perhaps most importantly, “what is Nigeria’s strategy for protecting the millions of Nigerians whose only economic asset is a small business?” These questions deserve answers.
Kenya has demonstrated that a government can look at foreign participation in its small-business sector through the prism of local economic interests.
South Africa has repeatedly wrestled with the consequences of foreign participation in informal commerce, even if some of the responses have sometimes spilled into unacceptable xenophobic violence.
Therefore, Nigeria should learn from both the successes and failures of other countries. We can protect our citizens without hating foreigners. We can regulate foreign businesses without closing our economy. We can insist on reciprocity without abandoning diplomacy. And we can demand that Nigerian traders become more competitive while ensuring that they are not forced to compete against businesses operating outside the law.
In fact, the Nigerian trader deserves a fair marketplace. Not a marketplace reserved exclusively for Nigerians. Not a marketplace where foreigners are automatically favoured. Just a marketplace where the rules are clear, the rules are enforced and everyone knows the rules before the competition begins. That should not be too much to ask.
