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Nigeria’s border closure hits hard on rice-exporting countries

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The closure of Nigeria’s border with Republic of Benin, aimed at curbing smuggling activities, especially of rice, has taken a toll on rice-exporting countries as price dipped by a joint 46 percent in one month.

Without any formal notice, President Muhammadu Buhari on August 21, 2019 ordered the closure of the Seme border between Nigeria and Benin Republic to check smuggling of rice and wheat.

Between that period and September, data gathered by Tridge, a global trade ecosystem in the food and agriculture industry, show that the wholesale price of the broken parboiled rice, the species consumed mostly in Nigeria, in top exporting countries fell on product glut resulting from a decline in exports.

According to the data analysed by BusinessDay, the wholesale price of rice in India dropped from $0.64/kg in August to $0.40/kg as at 30 September of this year.

In Thailand, the seventh-largest producer of rice, the price of the same product declined by 9.2 percent in the review period.

Demand from African countries has been muted for the last few weeks, even as export prices have corrected, said an exporter based at Kakinada in the southern Indian state of Andhra Pradesh.

Data from both Thailand and India, which previously accounted for up to 90 percent of Nigeria’s rice imports, show legal imports to the country have declined but at the same time, exports of rice to Benin Republic have increased.

This, according to industry players, points to the diversion of consignments originally meant for Nigeria, only for them to find their way back to the country through smuggling.

“I am sure Benin has not gone back to Thailand or India to import rice since the border to their market has been closed and it is most likely they have not exhausted the last stock of rice they imported,” a Lagos-based consumer goods analyst said on the condition of anonymity.

The US with a population size that is 29 times more than Benin Republic imported the same volume of rice as the Francophone African country in 2018, according to data from Tridge as analysed by BusinessDay.

Benin Republic with a population of 11.18 million is ranked by Tridge as the world’s third-largest importer of rice, after Saudi Arabia and Iran, coming before the US with a population of 327.2 million.

The West African country which shares a border with Nigeria from the west, the entry point to Lagos, Nigeria’s business hub, accounted for 4.6 percent of the global rice imports in 2018, the same volume as the US.

Benin spent $899.49 million on rice importation in the review period, $990,000 more than the $898.50 million spent by US to import the same product in the review year.

The country imported 12.51 percent ($634 million) of the total rice produced in Thailand in the year 2018, the highest quantity of rice imported by any country from Thailand.

In the same period under review, Benin Republic imported 3.27 percent ($228 million) of India’s total rice produced in 2018, the eighth-largest importer of the product from the Asian country. This represented 25.44 percent of the total rice import into Benin in the period.

Data by the Thailand Rice Exporters Association show that the country exported 644,131 tons of rice to Nigeria in 2015, and 58,260 tons in 2016, while in 2017, its rice exports to Nigeria stood at 23,192 tons.

The figure was 6,537 tons in 2018, and as of June 2019, Thailand’s rice exports to Nigeria stood 2,796 tons. The exports from India have followed the same trend, decreasing consistently over the years.

Hameed Ali, comptroller-general of the Nigerian Customs Service (NCS), last Wednesday told the National Assembly that the agency had been raking in between N4.7 billion and N5.8 billion daily since the Federal Government closed the nation’s borders.

Ali stated this when he appeared before the Senate and House of Representatives Joint Committees on Finance and National Planning working on the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper.

“When we closed the border, my fear was that our revenue was going to drop. To be honest, our revenue kept increasing. There was a day in September that we collected N9.2 billion in one day. It has never happened before,” the NCS boss said.

Ali said this was achieved “after the closure of the border and since then, we have maintained an average of about N4.7 billion to N5.8 billion on a daily basis”.

For the past five weeks since Nigeria closed its land borders, the price of rice, a major staple in the Nigerian diet, has jumped 86 percent to an all-time high of N27,000 per 50kg, from N14,500 before the border closure, a sign that local rice farmers do not currently have the capacity to meet local demand.

Rice sellers in Lagos, the country’s commercial nerve-centre, are currently hoarding the commodity in anticipation of selling at a higher price during the festive period when demand for the product is usually higher.

“The price of imported parboiled rice is increasing daily because of the border closure and lots of traders are now warehousing it to sell in December,” said a trader at Daleko market in Mushin, Lagos, who identified himself simply as Adegoke.

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