Rice smuggling: Border closure not solution, LCCI tells FG
The Lagos Chamber of Commerce and Industry (LCCI) has described the proposed closure of the nation’s border by the Federal Government over rice smuggling as too simplistic a solution to deal with the problem, urging the government not to take measures that will further impoverish Nigerians.
Speaking in a chat with SHIPS & PORTS DAILY in Lagos on Tuesday, Director General of LCCI, Muda Yusuf, advised that rather than close the border, the government should support local farmers to boost rice production to address the price differential of foreign and locally produced rice.
He also advised the government to consider a down ward review of the tariff on rice, noting that if government adjust its policy to allow legitimate people do the business that will help reduce smuggling and help get the needed revenue to support the rice industry.
He said, “The solution to the problem is not about closing the border. What we are seeing in terms of smuggling is a symptom of a problem and if you want to solve a problem, you don’t start fighting the symptom, you deal with the causes of the problem.
“One big issue is the productivity in our agricultural sector. If we want to promote self sufficiency and protect ourselves against influx of import, we must ramp up productivity. Our production capacity in the area of rice is still very weak and there is still a big gap between domestic capacity and the domestic demand of all most two million metric tonnes of rice.
“Government has been doing quite a lot in areas of anchor borrower and others but the rice millers are still complaining about the cost of paddy. That is why if you go to the market, local rice is more expensive than imported rice. It is good to protect domestic industries and farmers but you have to do it within a policy frame work that is sustainable. It is the same problem we have with vehicle. The high tariff is so high that smugglers are having a field day and government is losing revenue and losing jobs to neighbouring countries.“So if we have that kind of gap, then you are already creating room for smuggling especially when there is a big difference of almost 50 percent in difference in price of rice locally and that of the neighbouring countries. The thing to do is to see how we can bring down the cost of production of rice, and improve the productivity of rice here.
“The tariff is also high. If you have a high tariff over a product which you don’t have enough capacity to do and there is high demand, then you are creating problem on smuggling. Then you create a problem where even decent people cannot go into the business. So the government loses revenue, business, create more problems for customs and create a lot of room for corruption.”
Yusuf noted that although the government has taken steps to boost agriculture and rice production, the demand, however exceeds the supply.
“If you have something in short supply, and there is huge demand for it, and there is a big price difference between the neighbouring countries, then you have to adjust the tariff in a way that legitimate business people will be able to do business and they will pay tax and use the revenue to support the rice industry but if we raise it so high, we will not get any revenue from them and yet the goods will be coming in,” he added.
He added, “If we have a policy, we need solid institutions to implement the policy. There is still a lot of compromise existing along the border by customs and other security agencies. There is a lot of compromise and that also constitutes to the problem. The solution is not to go and close the border but to fix and make sure your institution do what they are suppose to do because rice is not the only business people do across the border
“We have a country with less than 1400 illegal routes across the country, how do you police that? It is not only rice that is coming through the border, there are other economic activities taking place across the border. A lot of export is taking place through the border, if they close the borders what happen to those people? The economic is not just about rice, there is more to the economy than rice, a lot of manufactured goods are going through the border,”
On Monday, the Minister of Agriculture and Rural Development, Audu Ogbeh announced that the government was closing the nation’s border, in order to curb rice smuggling.
Ogbeh who did not mention the particular country and border, said that shutting the borders had become necessary to encourage local production and sustain the economy of the country.
The minister said that a neighbouring country was bent on destroying the economy of the country and discouraging local production of rice, hence the need to shut down the border.