BAGS OF RICE
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A quiet agitation in the rice sub-sector of the Nigerian economy is gradually turning into an open groaning. LAYI ADELOYE writes on the concerns of stakeholders for the nation’s economy, as smuggling becomes more brazen
Although Nigerians consume about 5.5 million tonnes of rice annually, the country only produces about 3.5 million tonnes, according to statistics obtained from the International Rice Centre.
The shortfall is much, which has warranted unavoidable importation of the commodity over years. But dubious businessmen have continued to capitalise on the supply gap to frustrate genuine efforts aimed at boosting local production.
Stakeholders believe that if the flanks through which the product is smuggled are closed, it would be a big incentive for the local farmers to produce more, and subsequently meet local demand for rice.
On the other hand, the situation would bring more revenue to the coffers of the Federal Government in terms of duties paid by genuine importers, who would import to bridge the demand gap. But smuggling has remained the bane of the industry, according to recent declarations by importers, distributors, farmers and other stakeholders in the rice value chain in Nigeria.
In Nigeria, in addition to its value addition to the economy, rice business is said to be offering direct employment to not less than four million people nationwide. However, if the current situation in the sub-sector is anything to go by, these jobs face a huge threat. Investigations show that the threat is posed by smugglers, who have been capitalising on porous Nigerian borders to flood the country with rice, while genuine importers are paying as much as 50 per cent duty.
The stakeholders in the rice value chain, under the aegis of Rice Millers, Importers and Distributors Association of Nigeria, recently alerted the Federal Government to the colossal losses in accruable revenue the country had been suffering as a result of the activities of rice smugglers.
According to RIMIDAN, Nigeria loses N36.7bn yearly to rice smuggling into the country through illegal evasion of duties and waste suffered by investments in rice local processing.
The President of RIMIDAN, Mr. Tunji Owoeye, he said the figures came as a result of a careful monitoring and analysis of developments in the rice sector, which revealed worsening revenue generation from imported rice and declining performance by local processing firms.
According to Owoeye, the group arrived at the figure based on the simple summation that 30, 000 metric tonnes of rice were smuggled into the country every month, indicating that the Nigerian government would be losing over N1.7bn worth of revenue every month.
“This is in addition to the problems it is causing for the local development initiatives of the Federal Government of Nigeria,” he said.
On smuggling and through duties evasion, he said a sum of N20.4bn was being lost yearly, while N16.3bn got lost yearly due to unpaid taxes by local processors, whose investments had been crumbled by smuggling.
He said, “What the smugglers are riding on is the increase per tonne of rice and 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 gloomy.”
Owoeye said as an association, part of what the body had been doing was to partner the Federal Government to endure the availability of rice in the country at very competitive prices.
According to him, this will receive a big boost once the borders are effectively policed. Besides, he said it would be a big incentive for the local farmers to produce more, and subsequently meet the local demand for rice.
The body, therefore, urged the government to check the activities of smugglers and encourage local investment.
The association’s members are said to be contributing up to 84 per cent of the 1.8 million metric tonnes of rice produced in the country, with investments in plants, machinery and equipment put at N200bn as at July 2012. All these, they said, had come under threat.
A rice farmer, Mr. Segun Atho, who is the Chairman of the Lagos State Chapter of Rice Farmers Association, had described the smuggling trend as disturbing and unfortunate.
“Unfortunately, 50 per cent of these imports are smuggled into the country. This is the reason the nation cringes under the effect of any negative or adverse development that affects the agricultural sector,” he said.
He added, “The truth is that the unscrupulous elements 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 perpetuate their illicit acts. As an association and also as stakeholders in the Nigerian economy, this is of great concern to us.”
The stakeholders generally believed that the recent increase effected by the government in the duty on imported rice from 20 per cent to 40 per cent might have fuelled smuggling more than before. However, they said that a computation of this with other charges, like ECOWAS Trade Liberalisation Scheme charge of 0.5 per cent and FOB charge of one per cent, had brought the total duty and levies from 32.5 per cent to 50.5 per cent. This, they said, had not left positive impact on the rice trade.
According to Owoeye, the obvious problem with the additional charges is that it would likely encourage smuggling. The only antidote to this, in their view, would be for the Federal Government to seriously monitor the unscrupulous import of rice through its water borders to achieve its desired policy ideals.
The operators’ worry was coming amidst reports that over 8,000 bags of rice were being smuggled into the country daily, with the calculation that lost revenue runs into several billions of naira.
While acknowledging efforts and initiatives by the Federal Government to boost agriculture, which had also encouraged a lot of genuine investors to pump money into the sector, the operators, however, expressed worry that such investments were being threatened by the activities of the smugglers.
He said what the smuggler are capitalising on is the porous land borders, especially the flank linking the country with Benin Republic, adding that RIMIDAN was ready to partner the Federal Government to ensure that the availability of rice at reasonable prices in the country.
“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 mechanism for policing the land borders especially the Seme Border flank as well as other related areas where much of these acts are being perpetrated.”
Commercial dealers in rice, under the auspices of the Rice Importers and Distributors Association of Nigeria, had earlier raised the alarm over the high rate of smuggling in rice perpetrated at the country’s borders.
According to the group, if the unbridled smuggling is not checked, the practice would spell doom for the economy and as well as leave harsh consequences on its revenue generating capacity.
Its Vice President, Mr. Boniface Nwodo, had recently stated during a press briefing on the smuggling trend that the duty per tonne of rice imported into the country had increased from $227 to $367 or about N58, 000 currently, adding that the increase would likely trigger increased smuggling of rice.
According to him, this obviously would hamper efforts to boost local farmers.
Nwodo said, “Our call is for the Federal Government to strengthen its mechanisms for policing the land borders especially, the Benin flank, where most of these acts is 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 Goodluck Jonathan and his lieutenants, no doubt, have a good heart concerning the growing of the economy through the empowerment of its key components. However, their efforts are regularly being threatened by a selfish few, among who are the smugglers. These smugglers may be entrenched in the system; they may be sophisticated and determined, but certainly they cannot match the will power of the Federal Government.
“As an association, we feel that the time to roll out federal might against the smugglers is now, before they do even graver damage to the Federal Government’s economic plans, and the livelihood of millions of other Nigerians. This is the crux of our call,” he added.
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