When the Federal Government introduced the Rice Import Quota Policy, the aim was to meet a national sufficiency gap which existed in the country. Another reason the policy was introduced was to reduce smuggling of rice into the country.
The Rice Import Quota Policy was premised on the enjoyment of preferential duty rates and levy for beneficiary of the policy. While others imported rice at the normal extant rate of 10 per cent duty and 60 per cent levy, the beneficiary companies enjoyed concessionary rates of 10 per cent duty and 20 per cent levy.
However, the policy also gave a limit to the numbers of bags of rice these beneficiary importers could bring into the country. There was need to peg the numbers of rice bags these importers could bring into the country in order to save the local rice production industry in the country.
If the amount of rice these importers bring in is unchecked, there is a tendency that they will over-flood the market with their discounted rice bags and utterly kill the local production of the commodity in the country.
Abuse of the policy
However, despite the limit to the numbers of bags of rice they could bring in, some of them still crossed the line by importing above the quota given to them by the Federal Government.
According to the spokesman for the Nigerian customs Service (NCS), Mr. Wale Adeniyi, “Companies like OLAM, Ebony Agro, Conti Agro (Milan) and a conglomerate comprising Stallion, Popular Foods and Masco Agro exceeded their imports quota, thereby leading to short-changing of government as regards duty payable.
“For OLAM, it exceeded its rice imports with a quantity of 149, 469. 51 metric tonnes of rice, thereby owing the Federal Government about N4, 998, 125, 665. 86. Conti Agro (Milan) on its own part crossed the line when it imported in excess of 61, 178. 19 metric tonnes of rice, thereby also owing the Federal Government about N1, 089, 907, 273. 62.
“For the conglomerate of Stallion, Popular Foods and Masco Agro, they were the biggest offenders with the highest quantity of rice imports exceeded. They crossed the line with about 529, 517. 33 metric tonnes of rice, thereby owing government to the tune of N17, 187, 245, 022. 96.
“The least offender was the only Nigerian company among the four culprits, Ebony Agro. The firm crossed the line when it imported in excess of 10, 070. 00, thereby owing government to the tune of N328, 201, 440. 00”.
In total, the four companies incurred a total sum of N23, 603, 479, 402 duty payable into the coffers of government.
Reason for abuse
Many of these firms crossed the line with the mindset that there will be a roll-over of amount exceeded into allocation that will be granted in the following year.
Although it is yet to be proven that importing above the quota granted them was intentional, there was a general feeling that government will just roll over the amount exceeded into the quota that will be granted in the following year, thus removing the excess from what the firms will be expected to bring into the country in the following year.
According to Mr. Shaibu Mohammed, a management staff of OLAM Nigeria Limited, one of the companies that defaulted under the Rice Import Quota Policy, OLAM thought government would just allow for a deduction of excess imported in the preceding year from the quota that would be allocated to them in the following year.
In his words, “we did not just deliberately import above the quota given to us by the Federal Government of Nigeria. We had made our order for rice before the quota allocation was released by government. When the vessels came in with our rice imports, we later found out that what was brought in had exceeded the quota allocated to us by government. It was not deliberate. We had placed our order before the quota was released.
“What we are saying is that since the quota allocation system is an annual thing; let government remove what we imported as excess in 2014 from the quota that will be allocated to us in 2015. This should not be a problem. We were not expecting that it will lead to the closure of our warehouses because the quota system is a yearly thing.
“If government allows for a roll-over of quota allocations, then the allocation for 2015 will be reduced by the amount that was exceeded in 2014.”
Why roll-over won’t work
However, in a swift reaction to Mr. Mohammed’s views, Adeniyi stated that there cannot be a roll-over of allocation from one year to another due to certain reasons.
“The reason there cannot be a roll-over from 2014 to 2015 is because the quota that was given to importers was given on the basis of the sufficiency gap of 2014. The 2014 quota allocation was premised on the sufficiency gap prevalent in 2014.
“Government cannot just roll-over without a proper definition of what the sufficiency gap of 2015 is. Government needs to know how much it needs to import in 2015. So a roll-over cannot just be made without knowing what the sufficiency gap of 2015 is,” the Customs image maker stated.
Another reason the anticipated roll-over plan of the rice importers won’t work is the change of government that occurred in Nigeria early this year.
The Rice Import Quota Policy was implemented by the administration of former President Goodluck Jonathan in 2014. With the revenue drive of the incumbent administration led by President Muhammadu Buhari, the Customs is bent on recouping all monies hitherto lost to ineffective regulatory policies which were the bane of the Goodluck Jonathan-led administration.
It is recalled that the Federal Government rice import allocations for 2015 reflects an approved quota of 1.3 million metric tonnes as against 1.5 metric tonnes approved in 2014. The 2015 supply gap is 200,000 metric tonnes lower than 2014.
Out of the 1.3 metric tonnes approved, one million metric tonnes of the quota has been set aside as allocations to existing rice millers, importers and new investors with approved Domestic Rice Production Plans (DRPP), at a preferential levy of 20 per cent and 10 per cent duty while rice importers with no DRPP will account for the remaining 0.3 million metric tonnes at the higher levy of 60 per cent and duty of 10 per cent.
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