Smuggling Across Border Still A Thriving Business

Although smuggling is to be a global challenge, studies have shown that it is more prevalent in developing countries and relatively closed economies. It goes without saying that it is rampant in Nigeria. BAMIDELE OGUNWUSI, ANDREW UTULU and IKECHI NZEAKOR writes:

Arecent report by the World Bank on smuggling in Nigeria had disclosed that about N1.45 trillion worth of different goods are smuggled into Nigeria annually through Benin Republic alone.

Smuggled goods are not only available in markets in major cities such as Lagos, Kano and Port Harcourt to name a few, they are equally found in rural areas.

The Nigeria Customs Service, the agency saddled with policing the nation borders, describes smuggling as “false declaration and concealment of goods, willful under-payment of Customs duties, trafficking in prohibited or restricted goods, use of unapproved routes and ports, forging of Custom documents and touting in Customs goods and documents.”

Evidence from literature indicates that smuggling is motivated by differential tariffs or price disparities between markets.

Some other factors that pave the way for smuggling include cumbersome customs procedures, reluctance by traders to obtain quality standards and certifications, lack of competitive advantage in domestic products, harsh economic conditions as well as inadequate employment opportunities especially in border regions.

Much as tariffs and trade restrictions are major push factors, a number of empirical studies which employed the Multiple Indicators Multiple Causes (otherwise known as MIMIC) model to analyse the determinants of smuggling equally found that the presence of weak rule of law and high level of corruption encourage smuggling.

This is because strong institutions and rule of law make it difficult for smugglers to escape justice when apprehended.

Little wonder, these studies established a negative relationship between the index of rule of law and the size of smuggling.

Conversely, there is a strong correlation between corruption and smuggling which means theoretically the two are birds of a feather.

It is a fact that smuggling activities are often carried out with the connivance of corrupt government officials who see their postings to border areas as an opportunity to make quick money. This is unpatriotic to say the least.

Smuggling hurts the economy in a number of ways. Because it is an act of tax evasion, the government is deprived of the much-needed revenue to provide social services and undertake development projects especially for an economy that is vulnerable to external revenue shocks.

Smuggled goods distort market prices since they are often cheaper than the ones supplied to markets through legal routes thereby exposing genuine traders to unfair competition.

As a corollary, it undermines the local industry not least because smuggling under-cuts prices of goods manufactured in Nigeria thus crowding out the market for local products.

The undesirable outcome is collapse of local industries accompanied by loss of jobs and high rate of unemployment. There is equally the low productivity associated with health and safety hazards on the part of consumers who patronise substandard, expired and fake products.

The Nigeria Customs Service (NCS) over the years have not relented in its war against smugglers and smuggling activities in the country.

However, based on the quantum of seizures and arrests/prosecution of die-hard smugglers, there are indications that the NCS under the leadership of Col. Hameed Ali (rtd.), the Comptroller-General of the Nigeria Customs Service is not relenting in this war even as the smugglers, irrespective of their arrests, prosecution and loses as a result of seizures refused to bow.

Many reasons are adduced to why smuggling persists even with the serious war being waged against it.

Some attributed it to wrong economic policies of government which adversely affected imports.

These also include penchant for consumption of foreign goods in preference to home made products by Nigerians, cost doing business in Nigerian ports and border stations, among others.

Manufacturers under the auspices of the Manufacturers Association of Nigeria (MAN) have identified textile as one of the major good being smuggled into the country and they suggested the setting up of an anti-smuggling task force, which they believe could rejuvenate the dying textile industry.

They alleged that smuggling through the over 1000 porous entry points into the country is the main reason why the textile industry is at a comatose state, adding that inferior textile materials from abroad are sold at a lower price to the detriment of locally produced ones.

They, therefore, warned that if the current trend is not arrested, the industry could die; saying that stopping the influx of foreign and cheap textile materials could rev up the industry

Frank Jacobs, immediate past president, MAN, said that is part of their ongoing discussion with the central government to revitalise the decaying textile factories in the country.

Jacobs said that the establishment of the task force will reduce smuggling significantly and enable many textile factories to return to production as smuggling was the key reason why many textile factories shut down their operations.

He said visits to Kano and Kaduna will reveal a large number of factories that have closed down; factories that hitherto engaged a large manpower in their production lines are now out of operations due to smuggling amongst other things.

“Most of the fabrics produced here are gotten by unscrupulous Nigerians who take same samples to places like China to reproduce them, then they label them ‘Made-in-Nigeria’ goods and then smuggle them back into the country.

“There was a time customs seized about N400 billion worth of goods in Kano and prosecuted some persons, but that has not hindered them and this is why we are proposing the anti-smuggling task force,” he asserted.

The post Smuggling Across Border Still A Thriving Business appeared first on Independent Newspapers Nigeria.

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Author: Our Correspondents