Rice investors and importers are unhappy with the action of the Nigeria Customs Service (NCS), sealing their warehouses over alleged non-payment of N23.60 billion excess importation levy. The sealed companies include OLAM, Stallion, Masco Agro, Ebony Agro and Conti Agro (Milan).
The bona fide rice investors have in the past alleged that the quantum and the basis of allocation of quotas for last year were not in order, and were issued late after all the imports were made and goods sold, implying there was no real “excess”.
It would be recalled that following the confusion that trailed last year’s quotas, quotas for this year were also issued, canceled and later reissued again.
The implementation of the policy received a lot of criticism predominantly around the fact that the process followed was not in accordance with the Presidential Directives.
Rice investors are concerned that the recent action of NCS is based on the said unfair allocation of quotas and they are being subjected to unwarranted harassment notwithstanding their substantial investments into the rice industry.
On May 26 last year, former President Goodluck Jonathan granted approval for investors with rice milling capacity and verifiable backward integration programme to import rice at 10 per cent duty with a levy of 20 per cent for a period of four years.
The objective was to encourage proven investors in the rice value chain while addressing the supply gap effectively. The Ministry of Finance issued a circular dated July 8 last year to this effect. Several Millers certified as bona fide by the Ministry of Finance commenced imports based on the undoubted authenticity of the circular.
However, the subsequent sequence of events led to a chaotic environment, with the rice importers highlighting several problem areas:
The 2014 allocations made by the Ministry of Agriculture was not valid as its was not made as stipulated by the President (to be made by an Inter Ministerial Committee); the allocations were made late, after 6 months from the stipulation in December 2014, too late to meet the country’s rice demand for the season. There was a six month gap with no communication to investors on allocations which created uncertainty in the market; the quotas were imposed with retrospective effect, after the importers had already cleared the shipments and delivered them to their customers, based on incurred landed costs. This is legally questionable.
Others include: the allocations were inadequate and not commensurate with the investments made in Nigeria by integrated rice millers – bona fide investors received low/negligible quotas relative to new companies with no proven track record. Some of the affected importers operate the country’s largest integrated rice production facilities; the clear written stipulation of the President was that only the existing investors with existing rice milling capacity and verifiable backward integration programme should be given the allocations, whereas the Ministry of Agriculture (acting unilaterallyin contradiction of the circular) issued quotas to several companies with no proven investments, at the cost of existing millers.
The rice importers paid to NCS all the stipulated duties on all shipments, at the point of import (as stipulated by the circular for eligible investors)
The United Nations Food & Agricultural Organisation (FAO) has estimated Nigeria’s rice imports to be 2.9 million tonnes this year. However, the national gap determined by the Ministry of Agriculture was set much lower at 1.5 million tonnes in 2014. The imports made by the bonafide investors/millers in 2014 were well within the import estimates. If the imports were not pro actively made by the investors, the nation’s demand would have been met through smugglers, as was the case in 2013.
Sensing that something was seriously wrong, the former Presidency called for the cancellation of this year’s quotas and a full review of the 2014 implementation under the leadership of the Vice President.
However it seems that the issues were no resolved, leaving the new administration with a problem to be resolved on priority.
The recent action of NCS sealing the warehouses of these companies, compounds the problem to a new level of complexity.
During a time when the country is battling with issues relating to fiscal problems and low oil prices, it is critical for the new government to put matters to rest in a fair and equitable manner thereby allowing for the momentum on private sector investments in the nation’s food security to flourish.
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