Examining the role of NCS in rice importation

The rice sub-sector has in recent times been in the forefront of a raging controversy. It also brought to fore the role of Nigerian Customs Service (NCS) as the main enforcer of government trade policies, embargoes and tariff regulations in the rice market. Understandably, the NCS has a vital role in the promotion of exportation through its establishment of incentives.

Recently, a hot debate on rice importation brought even more attention to the Nigerian Customs Service, after it promised to prosecute seven rice importers who it said brought in excess quotas of the product at concessionary rates. During the crisis, NCS put forward its perspective, and expressed that it was acting on government’s directives. There were, however, various allegations of corruption against NCS and its double standards in the implementation of government regulations. There are also claims that smuggling has thrived in the rice business because Customs has a deep involvement in the nefarious activity.

A 2013 Investment Climate Statement expressed that one reason smuggling succeeds in Nigeria is because of “the high frequency of corruption among customs and port officials”. Also, the Global Enabling Trade Report of 2012 states that “Business executives give the pervasiveness of irregular payments in exports and imports (pervasiveness of undocumented extra payments or bribes connected with imports and exports) in Nigeria a score of 2.5 on a 7-point scale (1 being ‘common’ and 7 ‘never occurs’).”

Looking back at the rice importation crisis which rocked the nation, a reliable source mentioned that despite the claims of NCS and its show of “transparency”, some rice importers were allowed to use the same 10 percent tariff to dispatch their products at a time tariff was still 110 percent. This was before government offered the 10 percent tariff incentive to 26 companies. It would be important to know why preference was given to these companies. While some politicians and friends of high government officials may wish to influence penalties or beg for waivers from the Customs, it is not in the place of NCS to help grant avenues to companies or individuals who circumvent regulations and deny government its revenue.

As the Buhari-led government continues to emphasise its commitment to ending corruption, this might indeed be the time to examine the role of NCS in rice importation business in a way that does not open local and foreign investors to a difficult business environment. It is also vital for government to stop using high tariffs to ward off importations. It should find other measures. High tariff, as it is, and unfair exemptions open up channels of corruption for Customs officers.

Understandably, the Customs Service itself knows that it has some bad eggs and was reported in the media to have dismissed about 29 officers on account of corruption. Many of these officers aid and abet smuggling goods into the country through paths they know are not manned by their colleagues. It therefore does not behove the NCS to create “victims” to launder its already soiled image which it is desperate to clean.

In the 2014 quota allocation crisis, the NCS made a show of propagating foreign investors as villains. One such company, Olam, continued to show evidence of a waiver it received from the Ministry of Agriculture because of its investment in the local industry. Olam, which has been in the forefront of local rice milling and production, showed a letter offering a 10-percent duty and 20-percent levy waiver allocation to the company as regards its investment in local rice production and milling in Nigeria. Olam is easily the largest sole existing investor in the sub-sector over the last two years, with an investment of over $120 million. And media reports say the company has never faulted in past payment of its tariffs.

Going back to claims that some NCS officers may be responsible for smuggling or connected to smugglers, the former minister of agriculture, Akinwunmi Adesina, at the two-day hearing on The New Rice Duty Regime which was organised by the House of Representatives Committee on Customs and Excise to put an end to the crisis, had expressed that over 1.9 million metric tonnes of rice was smuggled into the country last year. It is difficult to believe that this could have been possible without the influence or support of Customs. The minister expressed that the NCS was acting like an accomplice when he said, “Is rice being smuggled by ghosts? Do those smuggling have the power to disappear? Do they put the rice on their heads and walk across border?” He further stressed that “the Customs must do its job. My job is not to police the border”.

The allegation was, of course, quickly rebuffed by NCS with a press release stating thus: “Despite the challenge of our porous borders, the reinvigorated anti-smuggling operations in the last one year (March 2013-February 2014) resulted in the seizure of 220,177 (two hundred and twenty thousand, one hundred and seventy-seven) bags of rice across the country. It is instructive to note that this huge seizure of rice is an aggregation of all smuggled rice. Some of these are ferried in ones and twos on motorcycles, donkeys, some concealed among bags of millets and other forms. This is in view of the fact that the extant law on rice importation prohibits its entry through the land borders. To therefore suggest that rice is being smuggled in trucks and trailers across the border in broad daylight is misleading.”

It is rather incongruous that the NCS would go at length to explain the various means rice is smuggled into the country without proffering a solution to stopping it. While it is becoming increasingly evident that the Nigeria Customs may be a retrogressive wheel sabotaging the self-sufficiency plan of the Federal Government, it is even more important that the government does not impede its own efforts to encourage foreign investments in Nigeria while dissuading the efforts of the local ones.

The 220,177 bags of rice claimed as seized by the NCS are not even up to 1 percent of the quantity of rice alleged to have been smuggled, as stated by the former minister. Therefore, the NCS owes the public a fuller explanation on the issue.

Richard Obi