Dr. Ousman Gajigo, Economist formerly with ADB
Dr. Ousman Gajigo
Mr. Baboucarr Ousmaila Joof, the Minister of Trade, Industry and Regional Integration, recently made an appearance at the National Assembly where he answered questions about the government’s decision to impose excise tax on small-scaleGambian importers of bagged cement from Senegal. Minister Joof might as well declare himself to be the Minister of Misinformation, because his responses to National Assembly members showed a cavalier attitude to truth.
In his response to Honorable Jammeh, Minister Joof stated that the excise tax is needed to protect a local industry. This is blatantly false. Imposition of a tax on imported cement isjustifiable for that purpose in principle if the country had domestic cement manufacturing to begin with. But as everyone should know by now, we do not have cement manufacturing in The Gambia. Every cement consumed in the country is manufactured outside and imported. This is information that a Minister of Industry and Trade should know about his country. Either Minister Joof knew this and he was deliberately misinforming the National Assembly, or that he is ignorant about it and therefore inadvertently revealing his lack of qualification for his ministerial.
The reality is that the government is imposing excise tax on bagged cement for political reasons rather than being motivated by any industrial development goals. Why is the government imposing tax on bagged cement but not bulk cement? The reason is simple. The government is protecting one politically-connected importer of cement, which is Jah Oil. Neither Jah Oil nor any other company engages in cement manufacturing in the Gambia. So how does this reality square with Minister Joof’sclaim that the excise tax is designed to protect a local industry?
Beyond this specific point, Minister Joof’s responses werehighly notable for their general incoherence. For instance, heeven linked this cement issue with the general issue of the country’s trade deficit as if to imply that its imposition was needed to reduce the deficit. Cement would have to be imported from either Senegal or another country. Indeed, the bulk cement that Jah Oil brings sometimes comes from outside of the continent. The reality is that one cannot address the country’s trade deficit with any policy instrument on cement because local manufacturing of the product is impossible due to the absence of large-scale deposit of limestone. Even if a company imports clinker, it would still need to import gypsum in order to produce cement. So, linking this issue with trade deficit shows that Mr. Joof was either clueless or trying to sidetrack the issue.
To address the country’s trade deficit by restricting the importation of some goods, the government would need to focus on items that we have the capacity to produce locally and to improve business enabling environment in the country so as to encourage their production. Such goods are not difficult to identify. For instance, one of our largest imports is rice, which is something we can produce locally to reduce our trade deficit if the government were serious and capable. Other items such as vegetable oil and numerous other imported food products canalso be produced locally if the government is serious about industrial development by addressing important constraints such as reliable and affordable energy. After all, The Gambia’s energy cost is unbearably high and its supply is unreliable and therefore a major impediment to local manufacturers and foreign investors.
When Honourable Jammeh asked about plans by the government to support local businesses affected by this unfair excise tax on bagged cement, Minister Joof indicated that the government is planning to link them up with “local producers”. This is clearly false and it exposes the government’s ultimate goal, which has nothing to do with helping those businesses or Gambian consumers. First, the response to meant to falsely imply that there are local producers of cement, when in reality there is no local producer of cement. Secondly, it exposes the government’s real plan which is to remove small-scale businesses from cement importation so that there would be no competitors to Jah Oil.
At the risk of over-repeating, there is not a single producer of cement in the country. The bulk importers are Jah Oil, Salam and Gacem, and only thing that differentiate them from small-scale importers is size. Only Salam imports clinker and carries out final finishing but even that firm cannot be considered a manufacturer because by the time one reaches clinker stage, most of the work in cement manufacturing is done. For example, 90% of the energy use in cement production is done by the time one reaches clinker production.
The goal of the Adama Barrow’s government in this cement issue is to simply make Jah Oil the sole cement importer in the country. This administration is determined to achieve this goal even if it means unfairly putting other Gambian importers out of business. It is important to emphasize that the victims in this ill-conceived plan are not only those small-scale importers whose vehicles continue to be stuck at the border. The ultimate victimsare Gambian consumers who currently face unnecessarily high cement prices and will eventually be at the mercy of a single business that would be free to squeeze them once it no longer faces competition.
Mr. Joof also made the disingenuous point that this excise tariff is not targeted at Senegal. This is laughably false. Most ofbagged cement in The Gambia comes from Senegal. This has been the reality for years, and everyone associated with the sector knows this. Cement that is sourced from farther locations is transported in bulk because that is the most efficient way to move it due to smaller storage cost. Therefore, the excise tax on bagged cement is a deliberate targeting of Senegalese cement because it is the source most accessible to small-scale Gambianimporters, who are the competitors to Jah Oil. And due to Senegal’s proximity and correspondingly lower transportation cost, Jah Oil cannot compete with these small-scale importers. After all, most of the bulk cement that Jah Oil brings comes from Europe where it would face higher transportation cost. By targeting bagged cement with excise tax, the government is specifically targeting Senegalese cement, if not by intent but by effect
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Minister Joof demonstrated a lot of the unfortunate tendencies of our incompetent cabinet ministers under Adama Barrow. When given the opportunity to address important sectoral issues, they are highly voluble and skilled at regurgitating the usual laundry list of the problems. But they have no coherent understanding of the sectoral issues to be addressed. As I always end with this sort of criticisms of the ministers, the ultimate responsibility and leadership failure emanates from the head of state himself, Adama Barrow. After all, he appointed Mr. Baboucarr Joof. The fact that he considers Mr. Joof the most qualified person for this position shows how unfit Adama Barrow is to lead the country.