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| Nigerian Customs officials intersecting truck full of imported rice |
Dear Senator
In one of my recent articles titled: “Rising Inflation and
Unemployment: The Answers” (Here is the link to the article: http://ahmedadamu.blogspot.com.ng/2016/04/rising-inflation-and-unemployment.html
), 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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