Few weeks ago, the Nigerian government closed the nation’s borders with Niger Republic and Benin Republic. From all angles, you can make noise that the border closure may be violating the spirit of AfCFTA, the trade agreement, designed to bring commerce and industry closer in Africa. But Nigeria has a game plan: check rice smuggling into Nigeria.
Do not blame me – I tend to pick unstructured data including paying attention to the price or rice and availability of rice. In Umuahia, Abia State, this week, the price of (foreign) rice is hitting N18,000 per bag if you can find one.
But besides the price and the supply, these are things I pick from this policy:
- Nigeria is not producing enough rice that can meet demand. This contradicts all the statements from Audu Ogbeh, the former minister of agriculture, who boasted last year that Nigeria has attained parity on internal supply and demand.
- Smuggling of rice is massive. Official data shows that rice is not banned in Nigeria even though the central bank is not supporting its importation with special exchange rate. Yet, by closing the Niger and Benin Republic borders, scarcity has been created. The implication is that most of the rice consumed in Nigeria are smuggled.
- Benin Republic and Niger Republic do not eat a lot of rice. Apparently, the mind-blowing imports into these nations are destined for Nigerian family tables. With the borders closed, I expect drops on the volume of rice imports into these nations, in coming weeks.
- This scarcity can equilibrate in 4-8 weeks (time it could take ships from Asia to Nigeria) as importers begin using Nigerian ports over Nigerien and Benin Republic ports.
Nigeria should sustain this policy but make sure there is a faster clearance for imported rice via the opened ports so that supply can get into the country. This is also the time banks should help their customers to ensure they are using ports which are opened in Nigeria for quick delivery so that supply-demand will normalize.
We need this type of experiment. My suggestion next time will be for government to educate importers and customs to ensure when supply-demand disequilibrium like this happens, immediate actions can be taken to normalize things. It is purely evident that local production cannot do that in the short-run, so a Plan B must be in existence.------
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