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How rice smugglers enrich Benin, Togo Republics

The illegal way of moving goods across borders is eating deep into Nigeria, crippling the country’s economy. Last year alone, the country was said to…

The illegal way of moving goods across borders is eating deep into Nigeria, crippling the country’s economy. Last year alone, the country was said to have lost a whopping N16.3billion to the nefarious activities of smugglers whose population is increasing.

Besides, observers say the federal government’s loss owing to unlawful importation of rice through the nation’s land borders may peak at N50 billion in the near future should the status quo remain.

Recently, the Rice Importers and Distributors Association of Nigeria (RIDAN), expressed worry about the disturbing spate of rice smuggling into the country and appealed to the federal government to do something drastic about it.

Rice is indisputably a staple food in Nigerian. In fact, the country is one of the highest consumers of rice in the world. It is estimated that Nigeria imports about 1.7million tonnes of rice annually.

According to Prof. Tunji Akande, Director, Agriculture and Rural Development Department, the Nigerian Institute of Social and Economic Research (NISER), since the mid-1970s, rice consumption in Nigeria has risen tremendously, at about 10 percent per annum due to changing consumer preferences, stressing that per capita consumption of rice during the 1980’s averaged 18kg and reached 22kg in 1995-1999.

He said domestic production has never been able to meet the demand, leading to considerable imports which stand at about one million metric tonnes yearly.

He said the imports are procured on the world market with Nigeria spending annually over US$300 million on rice import alone.

It was said that high duty at the ports created incentive for tariff avoidance and smuggling. It was gathered that rice import to Benin Republic attracts only 35 per cent duty, which, as at 2008, represents about $200 per tonne price advantage over imports to Nigerian ports. Nigerian importers simply land their goods in Benin and then smuggle them into the country.

Perhaps, the most notorious route of smuggled rice into the country is the Seme and Idiroko borders.

At these borders, it was gathered that big-time smugglers call the shots and  now have endless queues of specially built trailers to carry 72 tonnes of goods, mostly rice as against the 32-tonne trailer.

Besides, even small time smugglers at the Seme and Iiroko border posts have grown in weight and become lawless as they turn  to circumvent the law and smuggle products into the country. This has caused an increasing dump of smuggled rice in the nooks and crannies of the country.

An investigation conducted by Sunday Trust on various rice markets in Lagos metropolis revealed that licensed rice importers are gnashing their teeth over the illegal activities of smugglers.

For instance, the main rice market in Daleko, Ebute Ero and Iddo markets in Lagos, among others, are over saturated with smuggled rice of various brands.

An importer of rice in one of the markets lamented that, “at the moment, things have gone awry. In the last few months in the country, no importer of rice has sold the staple food in the open market. The smugglers have sent us packing with a maximum of N150 profit margin per bag. It is terrible. So where those of us that import into the country through the sea ports pay duties amounting to 32 percent of the value of a bag of rice, the powerful cartel of rice smugglers, who are not challenged by the added cost of duties, merely wait for us to fix price and thereafter rip a percentage sum, and with that our market is gone.”

According to another importer who identified himself as King Joseph, the federal government keeps losing billions of naira in revenue to the rice smuggling cartel.

He explained, “The landing cost of a tonne of rice at the port is about $670, that is cost and freight. By the time you add the 32 per cent duty, it comes to $885. Divided into the 20 bags that make a tonne of rice, it comes to $44.25; this is about N6,681.75 per bag of rice. You can round thisup at N6,700 after adding cost of intra-city transport and other petty expenses. Most importers offer a bag of rice to the wholesale market at a price between N6,800 and N6,700. This provides a profit margin of between N100 and N200. This is indicative of how low the profit margin to importers is.”

Mr Phillip Akintayo, an importer of rice said any increase in duty, tariff, levies and benchmark always causes increase of importation of such products to the Republic of Benin and Togo ports.

He said such government inconsistency in policy breeds fraud and enables security agencies to take undue advantage of the situation.

 “It makes security agencies to connive with smugglers to evade taxes and flood the Nigerian markets with such products. Most of the security agencies use all means of influence to remain at the lucrative border posts. Even when they are posted out, they wangle their ways back within the shortest possible time,” he explained.

Mr Isaac Adebambo, a nutritionist, said since rice is a staple food in Nigeria, the Nigeria Customs Service (NCS) seems to be paying lip service to smuggling activities because the end cost of rice is borne by the common person.

According to him, the ugly aspect of the issue is that many Nigerians are on the line because some of the smuggled rice is unwholesome and not good for human consumption. He lamented that despite this, all imported rice into the country is certified by the National Agency for Foods, Drug Administration and Control (NAFDAC) as fit for consumption.

 But the act of smuggling is not always a smooth sail as it sometimes claims the lives of the smugglers. For instance, a failed bid to smuggle a bus ladden with rice into Nigeria recently left seven people dead even as two customs officers were set ablaze with petrol.

It was reported that two patrol officers along the Northern border with Niger Republic were burnt to death by a rampaging mob awaiting the contraband after five smugglers died in a car accident as they followed the impounded goods at Kongolam village in Katsina State.

RIDAN, therefore insists that smuggling must stop, saying that smugglers have almost driven the importers out of existence. The president of the association, Mr Mufutau Gbadamosi, conveyed his members’ concern recently at a media forum in Lagos.

He said, “You know that the margin on a bag of rice is quite small, a maximum of N150 per bag. For those of us who import into the country through sea ports pay duties, levies and pay wages. One would see that the smugglers are sabotaging the economy.

 “Beside the smuggling activities, the federal government has increased the value per tonne of rice to $640 from $590 while duty on it has increased to 32 per cent in accordance with international benchmark.”

He stated that the situation is so bad now, adding that it is out of sheer patriotism and the need to contribute to the revenue of government that many importers still import.

“With these increases, importers now pay $205 as against $190 per tonne beside the benchmark of $640 and the cost of freight and other ports charges,” he lamented.

 The president noted that about 560,000 tonnes of parboiled rice imported into the Republic of Benin in 2009, found its way into the Nigerian market, resulting in a loss of N16.3 billion to the economy. “We all know that the Beninoies do not eat parboiled rice,” he stressed.

Gbadamosi who said increase in the quantity of rice smuggled into the country started five years ago, lamented that this could frustrate the federal government’s proposed plan to establish 17 rice mill plants in some states.

He noted that apart from the huge revenue loss and the hazard such products pose to Nigerians, the excessively loaded trailers damage the nation’s roads further creating huge maintenance costs to be borne by government.

He expressed worry over the recent increase in the bench mark for imported rice. “With these increases, importers now pay $205 (N30,750) as against $190 (N28,500) per tonne beside the benchmark of $640 (N96,000) while the cost of freight and other ports charges have increased,” he stated.

Also speaking, Secretary-General of RIDAN, Mr Shuaibu Mohammed, said in the past, the smuggling of the staple food into the country was not a serious threat to importers, but currently, with smuggling assuming a much more frightening dimension, the challenges have gone higher.

He said mighty trailers, which can carry between 60,000 and 72,000 tonnes of rice are now used to haul smuggled rice into the country from the ports in the Republic of Benin.

About 70 of such articulated trucks bring rice into Lagos alone on a daily basis, he said, stressing that  the smugglers have taken over rice business in the country.

According to him, smugglers  are leveraged to continue in the business to the detriment of Nigerian rice importers because of the low duty they pay at the Republic of Benin port, which amounts to mere peanuts compared to the amount paid at Nigerian ports by genuine rice importers.

Speaking on how smuggling can be checked, the president of RIDAN urged the federal government to harmonise the duty on rice with the neighbouring countries to discourage smuggling.

 “You observed that any increase in duty, tariff, levies and benchmark always causes increase in importation of such products to the Republic of Benin and Togo ports with the intention of smuggling such products into Nigeria, markets,” he said.

 According to him, such inconsistency in policy creates room for fraud and gives opportunity for security agencies to take undue advantage of the situation to enrich themselves.

 Mr Anuforo Samuel, an importer of rice, suggested that the Economic and Financial Crimes Commission (EFCC), should monitor and investigate NCS officers for “their ill-gotten wealth.”

In his words, “they should start to prosecute and jail such officers to serve as a deterrent to others. Nigeria cannot achieve 48-hour cargo clearance without proper reforms and sanitization of the customs.”

Efforts to get the reaction of the Comptroller-General of Customs, Mallam Abdullahi Dikko, proved abortive as he could not be reached on his phone. A source close to the Customs authorities, however, said the spate of smuggling of rice into the country should not be hinged on the organization alone.

He stated that the organization is doing its best to curtail the growing rate of rice smuggling into the country but was limited in its efforts to tackle smugglers due to the fact that they had, over the years, devised various ways to beat the men at the borders to their own game.

Similarly, the Public Relations Officer (PRO) of the NCS, Seme border, Mr Ernest Olota, said it is not true that Customs men usually connive with smugglers to bring rice into Nigeria. He maintained that 49 percent of the N482,407,180,43 the border generated in the month of February this year was through rice importation and was legitimate.

He said 49 trailers loaded with rice paid their duties, dismissing claims by rice importers as campaign of calumny. He promised that men of the Customs will step up action against smugglers. The National PRO of the Customs Service, Mr Wale Adeniyi, could not be reached.

Observers however, believe that the menace of smuggling can be tackled through a multi-institutional approach and extensive campaigns against the practice. Such efforts will go a long way to give bite to the federal government’s efforts to encourage the private sector to go into rice procurement.

It is not only rice that is smuggled into Nigeria from the neighbouring countries in large quantities. Cars and clothes are equally brought in. All these for the reason that import duty in Nigeria is too high.

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