Africa news

How the border closure in Nigeria affects rice prices

Nigeria, one of the African economic powers, closed its land borders two months ago to fight smuggling but this measure affects trade in the region. The effects: with the closure of borders, goods are rotting, and lines of trucks are waiting at checkpoints in the hope of seeing the roads reopen.

The closures were imposed without warning on August 21, angering Nigeria’s neighbors. But it seems that Nigeria has had enough of contempt for its ban on importing rice beyond its land borders. Smugglers importing rice from Benin seemed to make big profits. The largest smuggling route was between Cotonou, Benin’s largest city, and Lagos, Nigeria’s commercial hub, which is only a few hours drive away.

According to the World Bank reports, Benin’s economy is highly dependent on informal re-export and transit trade with Nigeria, which accounts for about 20 percent of its GDP. About 80% of Benin’s imports are destined for Nigeria, says the bank though Nigeria banned the import of rice from Benin in 2004 and all its neighbors in 2016, that did not stop the trade.

Why is rice so lucrative?

Nigeria allows entry of foreign rice only through its ports, where it has imposed a 70% tax since 2013. The goal is not only to increase revenues but also to encourage local rice production. But smugglers take advantage of the fact that it is cheaper to import rice into Nigeria’s neighboring countries to grow their business.

According to the Nigerian Ships and Ports website, in 2014, Benin lowered its tariffs on rice imports from 35% to 7%, and Cameroon completely erased them by 10%. Neighboring Benin then saw an astronomical rise in imports from Thailand, the world’s second-largest producer. At its peak, each of the 11.5 million Beninese should have consumed at least 150 kg of rice from Thailand alone. It, therefore, seems reasonably clear that rice was making its way to Nigeria to fill the local production gap in a country of nearly 200 million people. And the appetite of Nigerians for rice is almost insatiable in a country where this cereal is a staple.

However, there was a time when rice was considered an elitist meal consumed only on Sundays. But today, its affordable price and love of jollof rice have made it a national dish.

Is it just a question of rice?

The decisions of the Nigerian authorities don’t only concern rice from Benin. This neighboring country is also an essential corridor for used cars to Nigeria, where the import of vehicles older than 15 years is prohibited. Official figures are difficult to obtain, but the Luxembourg company BIM e-solutions reports that an average of 10,000 cars arrives each month at the port of Cotonou from Europe.

According to Nigerian customs, many of them are smuggled at the border. The authorities also want to tackle smugglers who go the other way. Many sell cheap subsidized Nigerian gasoline to neighboring countries. In July, the head of Nigeria’s national oil company, Maikanti Baru, said that smugglers of gasoline were smuggling about 10 million liters (two million gallons) each day.

West Africa affected

Many goods enter through the port of Lagos and are transported by road throughout the region by hundreds of thousands of trucks. The immediate neighbors of Nigeria, Benin, Niger, Chad, Cameroon as well as Ghana and Togo have been affected by the crisis. Ghana’s Minister of Foreign Affairs, Shirley Ayorkor Botchwey, said the country’s traders had suffered huge losses because their goods had been withheld for weeks on the border between Nigeria and Benin.

Advised the Nigerian government to “find ways to isolate the problems and countries with which it has problems so that Ghana’s exports can enter the Nigerian market without being assimilated to all these problems that have arisen”.

The Beninese Minister of Agriculture, Gaston Dossouhoui, described it as a “painful spectacle” when he visited the markets of the city of Grand Popo. “It’s very difficult for our producers, it’s a disaster,” he told AFP. In an effort to appease its powerful neighbor, Niger has since imposed its ban on rice exports to Nigeria. But it is the border communities, where traders often furrow markets during market days, who suffer.

Illegal

The closure of the border runs counter to an agreement that guarantees free movement between the 15 member states of ECOWAS, the West African Regional Free Trade Area. However, it is legal for a member state of ECOWAS to restrict the import of particular food and agricultural products. In 2004, Benin and Nigeria agreed to ban the import of 29 foreign products into Nigeria. Yet, Nigeria’s actions challenge its commitment to the landmark Free Trade Agreement it signed in July that lays the groundwork for the creation of the largest free trade area and aims to boost trade between African countries.

Some describe the protectionist attitude of Nigerian President Muhammadu Buhari as “Trumpian”. But Kalu Aja, a financial analyst in Lagos, says the very fact that Buhari signed the ZLECA agreement, an African continental free trade zone, is proof that he is different from his US counterpart Donald Trump. “Buhari is not protectionist, but he seeks to protect the gains of local agriculture, especially in rice,” he told the BBC.

Nigerians affected

In Rivers State, in the south of the country, some traders from the Rice Depot section of the Mile 1 Market in Port Harcourt packed their bags and returned home. They say that the dramatic closing of the borders did not give them time to make reservations. And prices have also gone up. Foreign rice is now 60% more expensive, while locally produced rice has increased by almost 100%, but there was a good side of things.

Nigeria’s chief of customs, Hameed Ali, recently told parliamentarians that tax revenues had increased as goods destined for Benin arrived at Nigerian ports. “After the border closed and since then, we have maintained an average of about 4.7 to 5.8 billion naira a day, which is much more than before.”

How long

Nobody knows it. Nigeria has not said how long it will keep the borders closed to commercial traffic. In August, Beninese President Patrice Talon pleaded with Buhari, on the sidelines of a summit in Japan, in favor of this reopening: “Our people are suffering.” But Nigeria’s customs chief has said the borders would remain closed, blaming neighboring countries for doing more to eradicate smuggling. Some refer to corruption at border crossings as the main culprit for trafficking, which involves Nigerian officials as much as those of their neighbors.

Tags

Nzegwu

Nzegwu I. from Nigeria, I am a content writer and freelancer. A graduate of Anambra State University, with a B.Eng. and other certs in different fields. I love group discussion, travelling and making friends. You can find my contents here. Feel free to mail me. Email: nzegwu@afrinik.com Call: +2349056016522

Related Articles

One Comment

  1. This rice business of a thing is mainly done in Oron in Akwa Ibom state. Why the hell will the FG close the border and the now mark rice to be a contraband goods?

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button