Economy

Rice smugglers and the economy

by Editor

March 4, 2013 | 10:47 am
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Rice occupies an important place, being the staple food of Nigerians. According to government statistics, yearly consumption of rice is about 5.5 million tonnes. It is also a known fact that local production accounts for about 1.8 million tonnes, thus necessitating the need for importation to bridge the gap. Unfortunately, 50 percent of these imports are smuggled into the country! This is why the nation cringes under the effect of any negative or adverse development that affects the agricultural sector.

We at Rice Millers, Importers and Distributors Association of Nigeria (RIMIDAN) have complained several times in the recent past about the activities of smugglers of rice and their devastating effect on the Nigerian economy. From records available to us, the total loss of revenue to the government from this unwholesome activity for the period commencing January 2012 till date is over $200 million (about N32 billion).

The truth is that the unscrupulous persons behind this unwholesome business are not only unrelenting, but are daily intensifying and refining their activities thereby undermining government’s policies and programmes directed at boosting local food production. It is disheartening to note that these persons connive with some bad elements in our security services to perpetrate their illicit acts. As an association and also as stakeholders in the Nigerian economy, this is of great concern to us.

No sector or professional group which makes as much commitment as we have enunciated above would keep quiet and not fight determinedly for the survival of this critical sector of the Nigerian economy. Incidentally and in truth, these commitments and potentials of the rice sector are being daily put at risk by the activities of these smugglers and their collaborators.

The problem of smuggling is much more serious than many people appreciate; it is something which is greatly affecting the food security plans of the Federal Government as well as the economic agenda of President Goodluck Jonathan. By their actions, these smugglers also threaten the means of livelihood of genuine investors in the rice business, denying the government of tax due them. Smugglers, of course, do not pay tax, so they milk the genuine processors and millers the same way they exploit the government and the economy.

Whilst the government is trying to encourage local production of rice, thereby creating employment, income and value chain, some other people are rubbishing these noble efforts by smuggling the product into the country. RIMIDAN is once again raising the alarm for the Federal Government to save the Nigerian rice sector by curbing the activities of these smugglers.

In July 2012, the Federal Government introduced 20 percent and 25 percent increased levies on imported polished rice and husked brown rice, respectively, with the aim of encouraging home-grown rice and discouraging importation. The government had also placed a complete ban on the importation of rice through land borders. This was to ensure that the expected gains from the increase in levy and the subsequent investment in the development of Nigerian grown rice are not eroded by the activities of land border importers (smugglers).

The quantum of rice being smuggled through land from the Republic of Benin is increasing daily. An estimated 30,000 metric tonnes of rice is being smuggled on a monthly basis into Nigeria. When RIMIDAN raised these issues with the authorities, we alerted them that over 140,000 metric tonnes of parboiled rice was scheduled to arrive at the ports of the neighboring country.

The implication of this is that huge amounts of money invested into rice by genuine entrepreneurs would go down the drain and investment in the sector will become uninteresting because there are no measures to protect investors’ interest. In addition, the intention of the Federal Government regarding empowerment of local producers will be in jeopardy. No economy grows with this kind of counter-action by unscrupulous elements.

We also worked out the simple summation: 30,000 metric tonnes every month as smuggled commodity means that the Nigerian government would be losing over N1.7 billion worth of revenue every month. This is in addition to the problems it is causing for the local development initiatives of the Federal Government. What the smugglers are riding on is the increase in levy on imported rice and also the porous land borders. Thus, we are faced with a situation whereby thousands of bags of rice are being smuggled into the country on a regular basis, especially through the rivers linking Nigeria with the Republic of Benin, while genuine processors are left in a lurch.

As an association, part of what we have been doing is to partner the Federal Government to ensure the availability of rice in the country and at very competitive prices. This will receive a big boost once the borders are effectively policed. It would be a big incentive for us as local farmers to produce more, and subsequently meet the local demand for rice.

Our call is for the Federal Government to strengthen its mechanisms for policing the land borders, especially the Seme Border flank, as well as other related areas, where much of these acts are being perpetrated. Countries faced with this kind of challenge just go all out to increase land borders’ monitoring so as to curb the activities of smugglers.

President Jonathan and his lieutenants no doubt have a good heart concerning growing the economy through the empowerment of its key components. But their efforts are regularly being threatened by a selfish few, including the said rice smugglers who are entrenched in the system. They may be sophisticated and determined, but certainly they cannot match the willpower of the Federal Government.

 

TUNJI OWOEYE

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by Editor

March 4, 2013 | 10:47 am
  |     |     |   Start Conversation

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