For a country adjudged to be the poverty capital of the world with an estimate of 90 million people living in extreme poverty, the government should be more worried about ameliorating the sufferings of the poor, ensuring food and basic necessities are affordable and growing the economy to bring out more people from poverty rather than shutting down borders in support of local rice cartels, who will then increase the price of the commodity.
On August 19, the federal government, citing incessant smuggling, especially of rice, and without recourse to the Economic Community of West African State (ECOWAS) protocol that guarantees free movement of goods and peoples across the region, shut the western border with Benin Republic indefinitely. “We cannot allow smuggling of the product at such alarming proportions to continue,” says President Buhari who was quoted in a statement issued by his spokesman.
Since coming to power in 2015, the president has promised to revive the agricultural sector. One key area where progress is being made and the president has never failed to emphasise is in the area of local rice production. The country has ramped up local production of the commodity and, according to authorities, has saved huge sums of foreign exchange which would otherwise have been expended on importing rice.
To indicate success, the president, in his 2018 new year day address, said the country will totally stop the importation of rice in 2019 to encourage local production. However, worried by the spate of rice smuggling into Nigeria from Benin Republic, the president ordered the closure of the border until such a time when the practice stops.
Immediately, the prices of rice and other commodities went up. A bag of rice that previously sold for between N13,000 and N15,000 now sells for between N20,000 and N21,000, more than a 40 percent increase. This is besides the severe dislocation to people’s lives and to trade, businesses and movements across the border; lost revenues and a generally sluggish economy hurting from the closure of the border. Nigeria depends on the border to import a lot of goods into the country.
It is surprising Nigeria didn’t consider its revenue crisis before shutting the border and denying itself all the revenues it could have got from the importation and trade across the borders. The interest of local rice producers, who have long advocated for such a closure to allow them raise prices, is paramount. It is not enough that the country does not waste scarce forex on rice importation anymore. Smugglers must be stopped even if it is at the expense of the poor, government revenues and the economy as a whole.
Suffice to say that closure of borders will not automatically lead to cessation of smuggling. Smugglers will look for new routes in our long and unpoliced borders to bring in their goods.
We cannot at one instance, be advocating free trade and be putting barriers to free trade all over. Secondly, the government cannot be stifling competition just so to support and protect some inefficient but big cartels of local rice producers. The government cannot claim to be interested in addressing poverty and at the same time encouraging or supporting monopolies that always results in higher prices.
Imported rice have continued to appeal to Nigerians because they are way cheaper and of more quality than the local ones. Instead of fighting the wars of the local rice cartel, the government would do well to improve their operating environment to be able to compete favourably with imported rice.
