Porous borders, poor farm yields, and difficulty in conducting business are just a few of the numerous factors that combine to make mockery of Nigeria’s ban on agricultural imports.
Nigeria, it appears, is glossing over its inadequacies and inefficiency in producing good quality agricultural goods at competitive prices by banning agricultural imports in a move the government sees as a protection of the local economy.
The government says it is resolved to “deal with smuggling and dumping of goods in Nigeria”. Godwin Emefiele, governor of the Central Bank (CBN), reportedly said Nigeria was very good at making brilliant economic policies “but we have identified smugglers and dumpers as those who sabotage these policies”.
However, despite various restrictions and ‘bans’, these ‘banned’ commodities continue to sell in Nigeria, even when prices are increased owing to the difficulties. This reflects the huge demand yet absolute lack of local capacity to meet up.
According to the World Trade Organisation (WTO), if a company exports a product at a price lower than the price it usually charges on its own home market, it is said to be “dumping” the product. But the WTO Agreement does not regulate the actions of companies engaged in “dumping”. Its focus is on how governments can or cannot react to dumping – it disciplines anti-dumping actions, and it is often called the “Anti-dumping Agreement”.
To say imported agricultural goods are being dumped in Nigeria is likely far from the truth, as it is yet to be established that any of the imports is sold below prices of their home countries. The main challenge, however, is that production in Nigeria is not competitive. The problem, it appears, is here at home and not with those countries that lowered barriers to productivity, a factor policymakers in Nigeria are either oblivious of or deliberately ignore.
“Many of the countries where these things are coming from have built an infrastructure that makes it a lot cheaper (to produce). The cost of doing business in those countries is far lower,” said Emmanuel Ijewere, vice president, Nigeria Agribusiness Group (NABG), in a phone interview. “They have electricity, good roads and so on, so they already have an advantage over us.”
Nigeria has a deficit across every type of food produce. In fact, the Agriculture Promotion Policy released in 2016 showed a 20.14 million metric-tonne deficit across 13 major crops and 60 million poultry bird deficit. Three years later, with the rapidly growing population, this deficit would have increased substantially.
Bridging the deficit in local demand and supply has got some boost in recent times, with the increasing interest in agriculture, necessitated partly by the need for people to secure new forms of economic empowerment. However, the challenges of producing in the right quantities and competitive prices remain the same.
Considering the difficulties in conducting business in Nigeria, Ijewere said “our own people cannot compete, and will never be able to compete”. He, however, thinks the ban on importation of agricultural goods is not entirely a bad idea.
“The government is thinking that this is one way of helping. If they force people to buy the local ones, increase demand, and (hope) people can improve,” he said.
David Hundeyin, in a recent article in BusinessDay, urged Nigerian politicians to “create regulations to make it easier for Nigerian businesses to produce palm oil, instead of imposing a simple-minded ban on palm oil imports that is guaranteed to have no effect other than raising palm oil prices”.
Palm oil is the most recent inclusion to the growing list of the CBN’s prohibition list. Despite a 40 percent decline in importation (owing to FX restriction), palm oil is said to amount to $500 million in annual import as at 2017.
Before palm oil, rice was the centre of attention, with importation through the land borders banned and imports through the port subjected to 70 percent duty, according to government.
But “self-sufficiency (in rice production) will take between 5 to 7 years if the right things are done”, a senior executive in one of Nigeria’s biggest rice producing companies said in an emailed note last year. He pleaded anonymity, sharing the fear others also have of victimisation for “not giving unconditional support to ill thought-out policies”.
Rotimi Williams, CEO, Kereskuk rice farm, which is said to cover 45,000 hectares in Nasarawa State, also doubted the sincerity and practicality of achieving sufficiency in rice production, considering current realities.
“Do we even know what our consumption is? If we keep pretending like smuggling is not part of our consumption, then we will never really address this issue,” said Williams. “From a figures perspective, we have already got it wrong.”
According to him, the fact that rice is not even being allowed through the borders, thinking we are protecting the rice industry, “we have again got it wrong because that creates a market for smuggling”.
“We have a problem of very corrupt people in the enforcement agencies, particularly the Nigerian Customs Service. Every such ban is a business for these people,” Ijewere said. “Once in a while, you see Customs on TV saying we have seized goods, but the average Nigerian will tell you it is just a show.”
Banning might be a good solution on a temporary basis, Ijewere said, but it is never good in the end because it will never allow local people to compete and move to a higher level.
“But at the same time, we need that kind of protection,” he said.
Conversely, Williams thinks the government needs to reduce the import duty back to 30 percent, and allow rice come in legally to earn money from duty and tariffs, then create a fund off the back of that tariff to fund the rice sector.
He said the government needs to “stop all this rubbish intervention”.
“Since they’ve been doing intervention, particularly the Anchor Borrowers’ Programme, has the price of rice dropped? That is a reflection of the effectiveness of the policy,” he said.
Even though one side of the debate thinks the ban is a good temporary solution, there is consensus that banning agricultural imports in Nigeria will only encourage complacency, smuggling, price inflations, and fail to spur local producers to improved productivity and globally competitive pricing.
In the end, Nigeria is perhaps not an import-dependent country as erroneously thought, at least according to Lanre Rufai, a finance and strategy analyst.
“Nigeria has one of the lowest import-to-GDP ratios in the world at 13 percent, even behind countries like Pakistan (18 percent), and Ethiopia (19 percent). In fact, the total value of goods imported into Nigeria in 2018 was $36.5 billion, which translates into about $200 for every Nigerian citizen,” Rufai said.
