FG reviewing Ali’s counter-productive policy on rice imports

The Federal Government is reviewing the recent lifting of restrictions on rice importation by the Nigerian Customs Service, with a view to reversing the policy seen as counter productive to the economy and a disincentive to local production.

It was learnt that Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) who has been championing the push for increased local rice production and a check in the demand pressure on foreign exchange, is already in talks with Ahmed Ali, the Comptroller-General of Customs in this regard.

“Customs may reverse its new rice policy because we think it is counter-productive,” a presidency source knowledgeable on the ongoing talks to put back those restrictions, told BusinessDay.

Nigeria aims to be quickly self-sufficient in both rice and wheat production but reportedly spends as much as $2.6 billion per year importing rice, which it can conveniently produce to at least feed itself.

Just last month, President Buhari launched the ‘Anchor Borrowers’ Programme’ , a CBN programme for rice farmers in Kebbi state, to assist small scale farmers increase the production and supply of feedstock to agro-processors.

But Ali, the Comptroller-General of Customs had earlier in September lifted the restrictions on rice imports which aimed at checking the influx of poor quality rice into the country and encouraging local farmers, creating jobs and further pushing past government targets of getting the country to rice sufficiency in the near term.

Analysts have long faulted the lifting of those restrictions which do not seem to align with the present drive to diversify the economy, but Ali argues that lifting those restrictions and collecting more duties would help him meet customs’ N944 billion revenue target for 2015.

The Customs specifically said the removal was predicated on the large scale rice smuggling through the land borders, resulting in huge revenue loss and distortions in the price of the item in the local market.

Justifying this stance in a mailed statement in November, the Department of Customs said it generated revenue totaling N1.2 billion on rice imports through the land borders between October and November 2015.

But the quantity of rice imported through the land borders, including sub-standard ones totaled 17,596 metric tonnes within the period, according to figures from the Customs. Analysts say the figure could be far higher than this because of the persisting smuggling activities.

“ The huge collection in just two months has vindicated our position. If we had stuck to our previous directive, this much quantum of rice would still have been smuggled anyway, and we would have lost over N1 billion revenue at this critical period of economic downtown” , the Comptroller-General argued then.

A source close to the presidency told BusinessDay that even though Ali’s policy has generated additional revenues to government,
it has also been found to be contributing immensely to the present demand pressure on foreign exchange and the free fall of the naira.

“Smuggling is still not abating anyway”, he added, saying he does not yet know what agreements that the CBN and Customs would arrive at.

“Should we only bother about what the Customs generate from duties on rice or how much foreign exchange and jobs we are losing just importing that product?

“There is a serious discussion going on between the CBN governor and Comptroller General in this regard and we do hope that whatever decision is arrived at would put back some restrictions on rice imports,” the Presidency source said.

The source further informed that to reduce pressure on the Customs, the government is already working out a lower revenue target for the Service and also looking at implementing a co-ordinated border management strategy, as well as reinforced anti-smuggling activities through intelligence gathering and networking, as outlined in the latest three-year Medium term Expenditure Framework
(MTEF).