Fuelling poverty through import ban

The federal government recently announced that it plans to close Nigeria’s border with Benin Republic to tackle the menace of rice smuggling into the country.  The minister of Agriculture, who announced the move, said shutting the borders had become necessary to encourage local production and sustain the economy of the country.

The federal government and even the president had been claiming that Nigeria was on its way to self-sufficiency in rice production as the country’s rice import was down by 90 percent. The president also boasts that rice import will be completely stopped later this year to encourage local production.

Well, rice importation through the ports have been technically banned since 2015 as a discouraging 70 percent tariff more or less effectively dissuaded importation through the ports, while it remained totally banned through the land borders.

 The reality though, as BusinessDay findings have shown is that, as legal importation to Nigeria drops drastically, neighbouring countries such as Benin, Cameroun, Niger and others have seen their parboiled rice imports increasing. Ironically, these countries mostly consume white rice (another variant of the staple), whereas they import more parboiled rice, which, consideration their population, can last them for a decade. However, they continue to import parboiled rice every year while legal imports continue to decline in Nigeria as smuggling increases exponentially.

Data by the Thai Rice Exporters Association shows that Benin Republic’s rice imports from Thailand from January to November 2017 stood at 1.64 million metric tonnes, a 32 percent increase from 1.24 million metric tonnes within the same period in 2016, and an increment of 104.45 percent from 805,765 metric tonnes exported to Benin republic in 2015. Cameroun also imported 663, 667 metric tonnes of parboiled rice from Thailand between January and November 2017, a 47.64 percent increase from 449, 513 within the same period in 2016, and 449, 297 metric tonnes in 2015. It is safe to say that most of the imports to these countries end up in the Nigerian market through smuggling.

An investigation carried out by BusinessDay some months ago also shows that smuggling is rife along the official border points and despite the fact that rice importation is banned through the borders, traders continue to import the commodity through official border points usually after settling customs officials.

What is more, the prices of the smuggled rice are way lower than those of locally produced rice. Consequently, poor Nigerians have continued to patronise the imported rice, which they feel is also of higher quality than locally produced rice.

Now that the reality has dawned on the government, it is planning to shut the border with Benin Republic and also use drones to monitor smuggling so as to prevent or stop them.  But we need to ask: does the government also plan to shut the borders with Niger Republic, Chad and Cameroon also? Does it plan to expel all the custom officials at the borders that connive with smugglers to bring in the rice?

We must stop chasing shadows. We cannot at one instance, be advocating for free trade and at the same time putting barriers to free trade all over. Secondly, the government cannot be stifling competition just so to support and protect some inefficient but big cartels of local rice producers. The government cannot be claiming to be interested in addressing poverty and at the same time encouraging or supporting monopolies that always results in higher prices. Imported rice have continued to appeal to Nigerians because they are way cheaper and of more quality than the local ones. Instead of fighting the wars of the local rice cartel, the government would do well to improve their operating environment to be able to compete favourably with imported rice.