Charles Okonji in this report examines major factors responsible for the rising menace of rice smuggling and why it may persist
Despite concerted efforts by the federal government over the years to curb the menace of rice smuggling, imported rice finds its way into the Nigerian market through over 4000 routes across the country’s border as it seems to be one of the most thriving businesses in recent times.
In defiance of seizures and confiscation of impounded consignments of rice by the customs the nefarious activities of these economic saboteurs have continued unabated given the feeling that law enforcement agencies are overwhelmed.
Speaking with a cross section of experts, they attributed to a constellation of factors chief among which is the result of incurably defective and but failed government policies, wrong trade agreements, poor enforcement and conspiracy of some of the law enforcement agencies with smugglers amongst others.
Firing the first salvo, according to the United Nations Industrial Development Organisation (UNIDO) consultant, who was the former Director General of Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture NACCIMA, Dr. John Isemede, rice smuggling, he emphasised will continue as long as Nigeria share common boundaries with its neighbouring countries, since some of these boundaries are not well demarcated, which makes it porous.
He noted that it is easier for countries like Madagascar, Japan, Equatorial Guinea or Cape-Verde, which are island that can only be accessed by air or by sea to curtail or to check smuggling.
He admitted that smuggling is done world-wide, explaining that in an attempt to curtail smuggling in Europe, duty shops were introduced.
“Smuggling starts as a legitimate business but ends up as an illegitimate business. Smuggling is between importation and exportation. When you are sending 5000 goods to Nigeria and you declare 500 to reduce the amount of duty payable, that is an act of smuggling.
“In West Africa, we call it smuggling, it is known as commodity shunting. This is a situation whereby people load their goods and begin to have handshake with security agencies at every check points. That is why there is high rate of bribery; this is commodity shunting as there is no proper documentation of the actual transaction. People just load their goods in the vehicle either from Benin Republic to Nigeria or otherwise.
“The rice we are talking about is all over the border, just like the time we were talking about turkey and chicken being smuggled into Nigeria. Who are those responsible for this business? They are the multinational corporations and they are the producers. They put distributors at the borders, and they provide these products at very cheap rates to entice people to buy,” Isemede stressed.
He pointed out that one of the reasons why smuggling is thriving is that the culture of importation has not allowed Nigeria to develop forex.
In his words, “When you get to the bank for loans, nobody would look at you talk less of granting you loans if you want to go into manufacturing. We are well prepared for import, which is why it is on a single window. So you can see why there is a big problem.”
He lamented that the government end up using the wrong people to manage sensitive places in Nigeria, adding that they go about collecting money from the government signing agreements, without knowing what is in the agreement they are signing.
The UNIDO consultant said, l“When you talk of Common External Tariff, Customs Union, and trade agreements, professors of economics, experts and OPS are not consulted. West Africa is just a Sub-Region, not a Customs area, because there are tax differentials. This compounds the problem because we pay different tariff in Nigeria while the neighbouring countries pay different tariff.
“VAT is 5% in Nigeria while that of Benin Republic is 18%. For this reason, we cannot take that advantage in Nigeria because it takes about 20 days for ship to turn around in Nigeria and about three weeks to get your goods out of the port, while that of Benin Republic is just about 24 hours. So if you think about all the delays and the demurrage in the Nigerian port, people tend to go into smuggling.
“Even when they have the opportunity of using the Apapa port, how accessible is the road? What has happened to Cocoa port, what has happened to Burutu port, what has happened to Sapele port, Focados port or even Calabar port? That is one reason that smuggling is on the increase.”
The former NACCIMA boss regretted that that there is no support to the OPS that are doing business in Nigeria, saying that the banks are always looking at the areas of importation.
He said that lack of funds to support the exporters and non-functional the railway system was among the cartelising factors that fuel smuggling.
“Again, a lot of vehicles move from Nigeria to Ghana, Benin Republic and others on the daily bases and these people are allowed to carry one or two bags which is said not to be at commercial value, but if you have 50 people in a bus that carry one or two bags each and declare as personal effects, don’t you know that it has turned commercial quantity already. What about the border markets in Bornu State which 50 % of it is in Cameroun and the other 50% is in Nigeria. This is a fertile ground for smuggling.
“However, the policies of CBN are killing export. It only supports oil companies that can transfer dollar to themselves. At present I cannot send dollar to anybody that has a domiciliary account. If I am doing legitimate export and I want to collect my money, I have to collect at 350 to the US$, but if I want to pay shipping companies, I have to buy dollar from the neighbouring countries because a lot of Nigerian exporters have carried their domiciliary accounts to the neighbouring countries. Just like what happened in 1993 when we had dual exchange rates of N22 to the dollar and N40 to the dollar. So what the embassies in Lagos as at that time did was to move their exchange to the nearby countries.
“So, if the CBN can understand balance of trade and balance of payment, that as we are giving, we are taking and we don’t have series of exchange rates, smuggling would stop. This is because most of the people use their money to buy rice since they cannot bring in their foreign currencies. So, it is the policies that are being put in place by people who are not into business that is causing problems for Nigeria. If we have single exchange rate and anyone can transfer dollar to the shipping company, and to anyone else, smuggling would stop.”
Isemede stressed that most Nigerian exporters move their commodities such as cocoa, yam, cashew nuts and others the neighbouring countries for export as the agencies responsible for inspection and standardisation do not have the right specification to avoid rejection.
“So when Nigerians have the opportunity of carrying cashew nut, share butter and other commodities to export, they buy rice to come and sell in Nigeria since it is cheaper in those nearby countries.
“This is to say that the smugglers do not just wake up to say I want to be a smuggler. So, it is the policies on ground that is making people to go into smuggling. It is quite unfortunate that the customs are busy looking for smugglers but they have not done anything to make good policies that would make business flourish.
“The issue is that the government is not monitoring what is happening in the economy. Government policies on trade ought to be reviewed with the representatives of the OPS. Sadly, most of these people would go about organising trade fair and trade missions, signing agreements that they do not understand, thereby killing the economy. Also, all the goods you see at trade fairs are imported. So industrialisation is next to zero in Nigeria. Everybody wants to import and sell,” he lamented.
Echoing similar sentiments, the Director General of the Lagos Chamber of Commerce and Industry, LCCI, Mda Yusuf, smuggling became a booming business when the government practically imposed ban on importation of rice.
He noted that the huge difference in the price sold in Nigeria and the neighbouring countries, stimulated greatly smuggling of the commodity through the country’s massive porous borders.
“Before now, we have been told that importation of rice has dropped by 90% and that local rice production has increased to almost six million metric tons. I do not believe in those statistics, I believe that there is still a big gap between domestic production and domestic demand. So that is a major issue. This is because we have not been able to build the capacity of local production. Many of the rice farmers and value chain are still cultivating through the traditional means. The level of mechanisation is still very low, and productivity is still very low, so we need to address these key issues. Until we are able to close the gap between domestic production and domestic demand smuggling will not stop. This is because the demand is in excess of 7 million metric tons and the local production is not up to 4 million metric tons,” he further noted.
Equally responsible for the growing menace of smuggling, he maintained, is the cost of domestic rice which is higher than the imported one. “High cost is another factor that is aiding smuggling, which ideally, the locally produced rice ought to have been cheaper. This is so because the average man is looking at how to feed his family with a very low budget, so he goes to the market and look for what is cheap to buy.”
Yusuf however noted that it’s high time that the government comes to terms with the realities on ground, and do less of propaganda, urging government to stop saying that the country shall be self-sufficient in rice production in 2019, whereas the market situation is not saying so.
“The government should work out possibilities on how to enhance productivity in rice production so that they can go fully mechanised and bring down their cost. If the price is low, it is easier to defeat smuggling because people would buy what is cheap,” he maintained.
Nigeria rice capacity sufficient
Meanwhile, the President, Rice Farmers Association of Nigeria, Aminu Goronyo, says annual rice production in Nigeria has increased from 5.5 million tonnes in 2015 to 5.8 million tonnes in 2017.
Goronyo disclosed this recently in an interview with News Agency of Nigeria in Abuja.
He said that in 2015, Nigerians spent not less than N1bn on rice consumption, adding that while spending had drastically reduced, consumption had increased because of increased local production of the commodity.“The consumption rate now is 7.9 million tonnes and the production rate has increased to 5.8 tonnes per annum,’’ Goronyo said.
The RIFAN president said the increase was as a result of the CBN’s Anchor Borrowers Programme with a total of 12 million rice producers and four million hectares of FADAMA rice land.
Goronyo said that the programme since inception had created economic linkage between Small Holder Farmers and reputable large-scale processors, thereby increasing agricultural outputs and significantly improving capacity utilisation of processors.
The ABP was launched by President Muhammadu Buhari on November 17, 2015 in Kebbi, aimed at creating a linkage between anchor companies involved in the processing and SHFs of the required key agricultural commodities.
The fund was provided from the N220 billion micro, small and medium enterprises development fund.
ABP evolved from the consultations with stakeholders comprising federal ministry of agriculture and rural development, state governors, millers of agricultural produce, and smallholder farmers to boost agricultural production.
Goronyo said under the ABP, RIFAN in the next 24 months would commence rice importation to West African countries as the necessary arrangements had been put in place.
“For self sufficiency, adequate and enough paddy for production ABP, which started in Kebbi state has been extended to 26 states.
“As a step further, RIFAN is in collaboration with some agencies to replicate the CBN APB programme in some states to increase production,’’ he said.
He said that RIFAN had moved a step ahead not to be caught in the web as production was being complemented by adequate provision of farm implements and inputs.
He said that RIFAN was set on capturing the West African rice market by properly harnessing its resources.
According to him, the country has huge human resources, favourable climate and potential to undergo a steady transformation in terms of techniques and marketing.
Goronyo said that even the Asian countries with similar weather conditions had successfully developed their rice production output and processing for global export.
He, however, noted that some influential Nigerians with their foreign collaborators were trying to frustrate the efforts of government on making the country to be self sufficient in rice production.
Way forward
It would be recalled that Kebbi State governor, Senator Atiku Bagudu in an interview recently had xplained how Nigeria can stop smuggling of foreign parboiled rice from Benin Republic and other parts of the world.
According to him, the best thing the government can do is to forge a synergy of cooperation with her neighbouring countries.
“If we are smart as a country we should be treating other West Africa countries as part of Nigeria. We should make Benin Republic as the 37th state of Nigeria. We should encourage their farmers so that they can also become rice farmers and I am sure their production is so small that it cannot threaten Nigeria’s production and by so doing, they would participate in helping Nigeria fight smuggling.”
He was however quick to add that even countries being used as smuggling base are also victims. “Sometimes they are also as much a victim as we are because this smuggling is perpetrated by economic saboteurs that sometimes are transnational in nature. There are foreigners of different nationalities mostly Asians who exploit countries but that is not to say that the national authorities of Benin Republic cannot do something to help, they can and President Buhari has been very critical about it.
“Some week ago, the President of Benin Republic rushed to Nigeria because Nigeria has been rightly so expressing its anger at the situation. It is not only rice but poultry too are smuggled into the country. Nigeria’s poultry is being threatened by smuggling from Benin Republic.”
On whether the government should wield the big stick as it has done in recent times by closing down the borders, the governor said such action was in order.
“Ihave called for that before because this will show them that allowing smuggling is a threat to our economic interest and it is even a threat to the ECOWAS protocol because if we cannot support each other to produce domestically, then one of the major objectives of ECOWAS protocol has been defeated. The closure of the border is a yes, if it’s the only thing that can send the right signals. But more than that is for us Nigerians to relate to this country as provided for in the protocol as if they were part of Nigeria because it would help us to also help them boost their domestic trade. If it is the only thing that will draw attention and make other West Africa countries know that we mean business because we do mean business. We want Nigeria and indeed West Africa to be productive because we are competitive. We should be selling to the world, not the other way round.”