For a country like Nigeria with huge natural and human resource endowments needed to produce agricultural commodities and feed her citizens, the raging controversies on whether to ban or not to ban rice importation again reflect one of sordid features of national development plans. In this analysis, TOLA AKINMUTIMI appraises the issues from stakeholders’ viewpoints and the implications for the economy in the long term.
It is indeed an irony that a country that in the early 60s prided itself as one of the agro-based flourishing countries with prospect to become a leading world power if her potential in agricultural sector is fully explored is today sourcing over 70 per cent of her food needs through importation at huge costs to its foreign reserves, other national savings, sustainable growth and socio-economic well being of the people.
This is even more worrisome when the nation’s inability to feed itself is analysed within the context of the fact that the just published Unemployment and Underemployment Watch report by the National Bureau of Statistics, NBS, indicated that the economically active population or working age population (persons within ages 15‐ 64) increased from 102.8 million in the first quarter of this year to 104.3 million by the third quarter.
A cursory appraisal of Nigeria’s import bills over the past years indicated that substantial part of the country’s foreign exchange earnings was spent on importation of food items, which in most cases, as analyses by medical experts confirmed, are harmful to consumers. The latest official figures showed that about N356 billion is spent yearly on rice importation.
The World Bank report on the country’s merchandise trade volume for the period 2011-2013 showed that in 2011, food imports accounted for 31 per cent of the country’s import component of the merchandise trade while in 2012 the figures dropped to 23 per cent. In 2013, food imports cost the country 18 per cent of the year’s import bill.
Although the National Bureau of Statistics, NBS, reported that the nation’s food imports declined from N 1.1 trillion ($6.7 billion) in 2009 to N684 billion ($4.35 billion) in 2013 while 12 million metric tonnes (MT) of food were added to the domestic food basket last year as a result of the successes recorded under the Agricultural Transformation Agenda (ATA), the truth is that Nigeria cannot still feed her population through domestic farming programmes.
As it is with other issues affecting sustainable national development policy thrusts, analysts have blamed the failure to explore abundant country’s agro ecological opportunities in the country, including very rich arable land across the geopolitical zones, fauna-friendly weather and climate as well as huge labour population, to the fullest to policy reversals in the agricultural sector.
For instance, in 2013 fiscal year, government raised the import duty on rice to 100 per cent with an additional levy of 10 per cent based on its believe that such a fiscal regime would discourage import and encourage local production capacity in furtherance of the ATA agenda. A year earlier, import duty on the commodity was 50 per cent and 10 per cent levy bringing total tariff on its import to 60 per cent.
The immediate fiscal and economic fallouts of the implementation of the policy were that smuggling of the commodity increased, causing substantial revenue to the economy and economic losses to importers and other stakeholders engaging in rice business.
For instance, at the ENL Consortium terminal at the Lagos Port Complex (LPC), Apapa, where at least 60 per cent of rice imported into the country is discharged, available statistics indicated that the port recorded nearzero import of the commodity in 2013.
The Chairman, Seaport Terminal Operators Association of Nigeria (STOAN), Princess Vicky Haastrup, estimated the total revenue loss by the rice duty hike in 2013 at about N300 billion, noting that in the first quarter of this year N80 billion was lost as over 600,000 metric tons of rice were diverted to Benin Republic, Cameroon, Ghana and Togo.
She lamented: “This is becoming rather unfortunate. Our economy is bleeding seriously because of this policy. The loss to other countries, as a result of the high tariff on rice was over N300 billion last year while in the first quarter of this year alone, both government and private operators have lost a least N80 billion. Haastrup, who is also the Executive Vice Chairman, ENL Consortium Limited, listed the revenue losses associated with the 110 per cent rice policy to those that should have accrued to the Nigeria Customs Service, terminal operators, dockworkers and the Nigerian Ports Authority (NPA).
While absolving the Customs from blames connected with the huge revenue losses to the country, the industry player explained that there was a lot of pressure on Customs because the quantity of rice produced locally can only satisfy 30 per cent of local demand.
Apparently worried by the negative impact of the policy on the economy, especially revenue losses, the former Minister of Finance and Coordinating Minister for the economy, Dr. Ngozi Okonjo-Iweala, at the occasion of the Centenary Award held in Abuja, hinted of plans by government to revise the policy in the 2014 budget.
She said: “We increased the tariff to110 per cent, and it encouraged some people to go and grow rice and we grew 1.1 million metric tons of the product. But it also encouraged smuggling by neighbouring countries because they immediately dropped their own tariffs to 10 per cent. For rice, we decided to bring it down because we see that it is not working”, she said.
To prove her point, available revenue collections on imported items by the Customs of which rice imports remained substantial showed that in first quarter 2014, Customs import duty collections dipped substantially between January and March to N77.9 billion, a far cry from the N400 billion target set for it by government during the period. This represented a 19.5 per cent or a N322.1 billion loss and also less than half of the N191.3 billion collected by the Service in the corresponding period of 2013.
Apart from the fiscal strains the policy was creating for government, another major factor that undermined its feasibility is that local production capacity could not meet demand, despite sundry efforts under the ATA to complement farmers’ productive activities with the dry season farming since 2013.
Curiously, in the 2015 fiscal year, the controversies that characterized rice import allocations for 2014 did not abate despite Federal Government’s downward review of import volume from 1.5 million MT to 1.3 million MT.
Compelled by the failure of the policy as well as the frustrations arising from the dwindling revenue occasioned by whirlwinds in the global oil market where prices of oil crashed by about 60 per cent since July 2014, the government reversed the tariff regime on rice in the 2015 budget with a view to using the revenue collections to augment revenue in the federation account in the fiscal year.
But then as with other policy measures in the public sector over the years, the rice import policy regimes has again stoked the fire of controversy with those given the task to generate more revenues from rice importation as well as the fiscal authorities lauding the move while others, including the Legislature believe full scale lifting of ban on the commodity requires some caution.
In October, the Comptroller-General of Customs, Col. Hameed Ali (rtd.), unveiled plans by the Federal Government to lift the ban on rice importation through the land borders to improve revenue generation and to curb unbridled smuggling of the commodity into the Nigerian market.
In a spontaneous reaction to the proposed measure, the National Rice Millers Association of Nigeria, NRMAN, faulted the Customs boss stance and advocated for he sustenance of the existing policy on land border restrictions on imported rice.
The Chairman of the association, Mohammed Abubakar, apart from saying that the NCS acted out of its statutory mandate to have made the declaration, noted that opening the borders would hurt the economy and rubbished the successes recorded under the rice value chain so far.
Abubakar, who is the Chief Executive Officer of Umza Rice, said the decision was an attempt by the Customs to give official backing to smuggling of rice. He said: “First of all, the customs does not have the power to do that, it is a matter of national policy and customs does not make national policy, it is an implementation agency.
This will completely kill the rice value chain and everything concerning rice production will stop; customs does not have the right to make such decision. “This ban was placed six years ago and everybody knows that, so it does not have any reason to say rice should be brought in through the land borders.
Anyone who gives such directive has smuggling intentions,” Abubakar added. He urged government to be focused and ensure that the country becomes self sufficient in rice production.
However, barely a month to the implementation of the proposed fiscal measure, the Senate Ad-Hoc Committee on Import Duty Waivers, Concessions and Grants, chaired by Senator Adamu Aliero submitted its report after a review of the policy. The Aliero-led Committee recommended that the Senate ask the Federal Government to suspend the policy on the grounds that it would escalate rice smuggling into the country.
The Committee noted that the Customs lacked “the capacity to monitor and control the flow of goods through the land borders”. Convinced of the logic in the Committee’s stance, the Senate adopted the recommendation calling on the government to suspend the policy.
As expected, the proposal by the Customs and the subsequent recommendations of the Senate have opened a new phase in the unending controversies surrounding the importation of rice such that except the government fully appraised the implications of the planned fiscal regime on rice imports in the 2016 budget, the country may be the ultimate loser in the medium and long terms.
In what seems a direct reaction to the USDA’s stance but more particularly to his conviction that Nigeria can do without massive importation of rice, the Vice President of the Nigerian Association of Chambers of Commerce and Industry, Mines and Agriculture (NACCIMA), Mr Dele Oye, advised the Federal Government to implement the proposed 2015 deadline for the ban on rice importation.
He pointed out that Nigeria cannot be threatened by food insecurity in any form given , the wide variety of food crops that are cultivated in the various agro ecological zones of the country.
According to him, even if there is any shortfall in polished rice and supply comes short of demand, Nigerians have alternatives in other food sources with high carbohydrates nutrients such as garri, yam, foo-foo and plantain, among others.
The Minister of Agriculture and Rural Development, Chief Audu Ogbeh, has also rued the increasing rate at which rice was being smuggled into the country and urged the National Assembly to help in curbing it menace He described the smuggling of 300 trailers of rice through the Seme boarder as unacceptable and called for strong measures to tackle the menace.
The Minister, during an interactive session with members of the House of Representatives Committee on Agriculture last Tuesday, cautioned that “if we carry on like this for the next five months, the economy of Nigeria would collapse” and solicited the support of the lawmakers in protecting the citizens.
Ogbeh expressed his desire to deal with import substitution in which he said $15 billion could be saved if the country explored the rice and wheat export potential to other West African countries, hence the need to develop the small scale industries to create jobs for the rural poor and develop the cotton industry.
In the final analysis and based on stakeholders’ perspectives it is only logical to feel that outright ban on the importation of rice for now may be counter-productive for the economy while prolonged delay in building the much talked-about local production capacity will only expose government’s insincerity to take the destiny of the nation in its hand by anchoring the diversification the economy on agricultural sector.
0 comments :
Post a Comment