Business & Economy

Nigeria’s rice policy in disarray

NIGERIA’S Customs has lifted the ban on rice imports via land borders in a bid to control rampant smuggling, causing further confusion over the government’s backward integration plan for the rice sector.

The order from the Comptroller-General of Customs has reinstated import tariffs, ranging from 30 percent for millers (comprising a 20 percent levy and 10 percent duty) and 70 percent tariff for importers (a 60 percent levy and 10 percent duty). The order is a reversal of a 2011 restriction on all rice imports to Nigeria’s seaports, which was intended to ensure quality and duty collection, but which inadvertently led to a surge in smuggling from Benin and Togo where the tariffs on rice imports are extremely low.

The National Rice Millers Association of Nigeria (NRMAN) has criticised the U-turn from Customs, claiming that the measure will do little to stop smuggling and in the process will hurt efforts to develop local rice production. The Senate has echoed these concerns, questioning whether Customs has the authority to overturn a presidential decree.

However, both the Senate and Customs have intensified their demands for rice importers to pay NGN23.6bn ($117.4 million) in back taxes on rice imports which they allegedly owe the government after exceeding their import quotas at the preferential tariff rate of 30 percent. The alleged non-payment—which rice importers vehemently deny—prompted Customs to forcibly close importers’ warehouses, preventing them from discharging rice stocks onto the market. Coupled with the central bank’s decision to block rice importers’ access to FX on the interbank market, this has paralysed the rice trade, in the process giving further incentive to smugglers. Recognising its error, the Nigerian government has pledged to focus on achieving self-sufficiency in rice production before imposing limits on imports.

‘This reflects the reality that Nigeria’s limited production of rice, which totals around 1million tonnes per year, cannot keep pace with galloping demand estimated at 3million tonnes per year,’ Ecobank said in a research note. Constraints on local supply have been exacerbated by floods in the Northwest in recent months, which destroyed an estimated 626,250 tonnes of paddy rice, equal to around 11 percent of total consumption. ‘Given the conflicting interests of industry players, the policy framework for the rice sector is in disarray, undermining the development of the sector. This makes it highly unlikely that the Nigerian government will achieve its goal of self-sufficiency in rice production by 2017,’ it added.

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