War against Smuggling

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There is need for concerted efforts to tackle smuggling of goods into the country as it poses serious threat to the economy, discourages investments and destroys innovation, writes Obinna Chima

Monetary policy transmission mechanism in Nigeria is inhibited due to numerous factors. That is why despite efforts by the Central Bank of Nigeria (CBN) through its development finance activities aimed at raising domestic production especially in the agriculture sector, the menace of smugglers has continued to affect growth in the agriculture sector.

For instance, the President of the Dangote Group, Alhaji Aliko Dangote, lamented recently that Nigeria currently loses at least 300,000 tonnes of sugar to smuggling annually. He also said the smuggling activities in the sugar industry has hindered the employment of at least 250,000 Nigerians, adding that it has also led to economic sabotage.

Dangote stressed that, “what is killing us the most is smuggling. Smuggling is what has actually killed most of our policies. There is no country that is surviving with a neighbour like Republic of Benin. Because their main job is to facilitate smuggling.”

Clearly, the effects of smuggling are numerous and economically significant. It is a serious problem and its impacts are far reaching, affecting national revenue, businesses and households.

Indeed, smuggling of rice and other items through the Seme, Idiroko, Katsina, and Yobe borders form a major part of the informal economy volume of which ranges between 50 to 60 per cent of the formal economy.  Smuggling has assumed an alarming proportion and turned out to be a parallel economy, which is depriving the country of its rightful levies including excise and customs duty worth hundreds of billions of naira.

As a result of the activities of smugglers, thousands of industrial units have been rendered sick, due to the availability of smuggled goods in open markets. Nigeria is facing the challenge of enormous revenue leakages and black money — its size estimated to be three time the regular economy.

Targeting Smugglers

Owing to this unfortunate development, the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, recently disclosed that the apex bank has blocked the accounts of some smugglers sabotaging Nigeria’s economy the textile, rice and palm oil industry.

He said, “In due course, we will come up with the names of those identified but we want to be sure that we have come up with something that is credible and that you cannot deny. At this stage, we have already blocked the accounts of some in the textile, rice and palm oil industries.

“We are investigating those accounts and as information becomes clearer and as we can clearly say they have committed the offence, we will go to the next round which is to forbid any Nigerian banks from opening any account with them.”

He said that smuggling and dumping had sabotaged economic policies in Nigeria.

Emefiele said, “Nigeria is very good at making brilliant economic policies, but we have identified smugglers and dumpers as those who sabotage these policies and we will deal with them. In our strategy, we will not bother ourselves because there is an agency of government responsible for border control.

But If these people pass through the border control, we will use the instrumentality of being the regulator and head of the banking system, to get the banks to provide all the details of these smugglers and dumpers, we will investigate the accounts, and if they are found culpable in economic sabotage bordering on dumping and smuggling in Nigeria, we will not only block their accounts, we will close their accounts in all the banks in Nigeria.

“We will close the accounts of the owners of such companies, and we will close the accounts of top management members of those companies because they know that their companies are involved in smuggling and they should not be supporting such.”

He said the investigation would also be extended to the 43 other items restricted from forex in Nigeria.
“Today, Nigeria currently spends about $4 billion annually on imported textiles and ready-made clothing. With a projected population of over 190 million Nigerians, the needs of the domestic market are huge and varied, with immense prospects for growth of the domestic textile industries.

“One quick example that highlights the potential of this local market, includes the need to support provision of uniforms and clothing apparels for students, military and paramilitary officers as well as workers in the industrial sector.

“In addition, when we consider the amount spent on outfits for religious and social events such as weddings, naming and funeral ceremonies on a weekly basis, the potential market size is well over $4 billion,” the CBN governor added.
On the restriction of foreign exchange to 43 items, Emefiele said the measures taken by the CBN were yielding the desired results and had helped in driving interest by potential investors who are seeking to make investments to support improved production of textiles in Nigeria.
“With a population of over 190 million people, Nigeria clearly stands out as a virgin market that must be tapped. If we are serious or determined in our drive to create jobs on a mass scale and reduce youth restiveness in Nigeria, the cotton, textiles and garments industry cannot be ignored,” Emefiele added.
He, therefore, urged all hands to be on deck to harness potential of the agricultural sector.

While commenting on the opportunities in the textile sector, Emefiele, said the target was to revive and set up at least 50 textile companies by 2023.  This, he said was geared towards supporting local manufacturing of textiles.

“Nigeria remains a big market for the textile industry. We need to reclaim this industry from smugglers. We need the support of customs and other authorities,” Emefiele said.

On its part, the federal government recently disclosed that it has stepped up measures to tackle smuggling of goods into the country.

The immediate past Minister of Foreign Affairs Geoffrey Onyeama, had expressed the government’s determination to holistically address the issues by working with neighbouring countries.

Onyeama, had said that the current efforts aimed at tackling smuggling in the borders of the affected countries would yield results.

“I think the political will is really there now to finally and definitively address this issue,” Onyeama had stated.

According to him, President Muhammadu Buhari had set up a committee comprising the ministries of Foreign Affairs, Agriculture, Justice, Finance and Interior; as well as the Nigeria Immigration Service and the Nigeria Customs Service over the issue.

“He has also asked the governments of Niger and Benin to set up similar committees in the two countries and to also meet.

“So, we are planning to have a meeting of those committees in the very near future.

“This is a preparatory meeting between us to revisit all the issues, come up with a common position and present that to Mr President so that we can have a basis for engaging with those other countries,’’ Onyeama said.

On his part, Audu Ogbeh, the immediate past Minister of Agriculture had said the perennial insecurity in the country, weapons coming into the country and smuggling, necessitated the meeting.

Also, the Nigeria Customs Service (NCS), Federal Operations Unit (FOU), Zone ‘C’, Owerri, Imo State, had stepped up anti-smuggling operations in the South-south and South-east geopolitical zone with the aim of ridding the area of smugglers.

The command had said its operations had continued to record daily success with the seizures made in Benin axis alone from January till date totalling more than N442 million in duty paid value.

The Customs Area Controller Federal Operations Unit Zone ‘C’ Owerri, Comptroller Olusemire Kayode, noted that despite several appeals to smugglers to turn a new leaf, some were still bent on smuggling and sabotaging the economy of the nation. He also stated that the rising compliance level had suffered a setback going by the number of seizures recorded from January till date.

“The federal government is working towards self-sufficiency on rice production but some people are working against government’s initiative by smuggling rice through the land borders. From Calabar to Maidugri, Sokoto to Lagos there is arable land to cultivate and harvest rice. People want to make money quickly and sabotage the economy and frustrate government efforts. Stop wasting your money and stop wasting your time, “he advised, explaining that his officers and men are equipped to stop their nefarious activities. The Comptroller explained that such actions is injurious to the health and wellbeing of consumers and called for support of the local agriculture industry as well as importation through the appropriate channels. He explained that the federal government has a lot of attractive programmes for the agricultural industry and urged them to tap into the initiative and make Nigeria prosperous.

Way Forward

The Nigerian economy which presently lacks the required revenue to drive economic activities has been hampered by the effect of smuggling in multi-dimensional ways. Clearly, smuggling weakens the domestic industry, discourages investments and destroys innovation. That is why there is need for stronger collaboration by government agencies to ensure stronger enforcement of laws and enhancing the capacity of the various security agencies at borders across the country.

The use of technology would also support the Customs in carrying out their operations as manpower alone might not be enough to carry out the task.

The foregoing clearly shows that while the bold move by the central bank to block the account of smugglers is necessary, it would not be sufficient alone to achieve this task as the joint efforts of other government agencies is essential.