Thursday, 5 May 2016

The need for a bill to lift the ban on land importation of Rice

Nigerian Customs officials intersecting truck full of imported rice
This is the letter I will send to a Senator requesting him to present a bill before the national assembly on the need to lift the ban on land importation of rice. Let us discuss it and have more suggestions before I deliver it to the National Assembly.

Dear Senator

In one of my recent articles titled: “Rising Inflation and Unemployment: The Answers” (Here is the link to the article: ), in the article I raised the issue of the recent food price crisis and unemployment in the country. I mentioned that the Nigerian inflation rate is now 12.8%, which is higher than what it was (8%) in 2014, this is evident in the prices of common consumer goods. Now, household commodities like tomatoes, rice, egg, milk, spaghetti, maize, matches etc. have all risen, some even doubled their initial prices.

People now adjust their life styles and downgrade the quality of foods they eat, and this affect the performance of the economy as the aggregate demand keep reducing. In addition, the increase in inflation supposed to have been triggered by increase in employment opportunities in the short run, but that is not the case in Nigeria, as the unemployment rate increased together with inflation.
We are concerned with the potential hardship that people may face if this price increase prolong. Particularly concerned with how government’s decision of banning land importation of rice has caused the scarcity and price increase of the rice, which is essential food item among average household. This made some of the poor to switch to lower food options or pay extra money from their savings to pay for the rice. This affect the general aggregate demand in the country.

Therefore, to address part of the food inflation, the government should lift the ban on land importation of rice. If rice is still imported through the sea, then it should be allowed to be imported through the land. What the government should do is to take measures to track and organise the land rice importation, so as to generate revenue from import taxes. Before the banning of land importation of rice, the Nigerian government receive huge amount of revenue amounting to close to N300 million per month, which is around N3.6 billion per year. So, now government is loosing this amount due to the ban.

Even if some of the importers avoid payment of tax, that will still benefit the economy, because, if they did not pay the tax, they will be able to save some money for other expenses, which will improve aggregate demand and help other businesses grow. The tax evaders may likely reduce the price of their rice due to the reduction of the landing cost following tax evasion. This will help in bringing the price of rice down. However, government should take extra measures in the midterm to ensure compliance and payment of tax by those tax evaders.  

However, there should be provisions and incentives for rice farming locally. The price of domestic rice should be subsidised so as to discourage buying foreign rice. The local farmers shall be incentivised to have easy access to capital and suitable farming locations for rice, so as to encourage local rice production and discourage its importation. If there is abundance of local rice production, then the entire rice importation can be banned. The current ban on land importation of rice has led to the scarcity of rice, unemployment and rise in rice price. It is discriminating to ban small-scale importation through the land if large sea importers are still allowed to import. Therefore, government should lift the ban on land rice importation in the short term before the effects of new measures and investment in local rice farming start to manifest. This will evade the expected acute increase in rice price, ahead of the fasting period.

I hope you will accept this propose bill and present it to the National Assembly for Consideration.

Dr. Ahmed Adamu
Petroleum Economist and Development Expert
Pioneer Global Chairperson, Commonwealth Youth Council
University Lecturer (Economics), Umaru Musa Yar’adua University, Katsina.

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