The fraud behind Nigeria's 117m naira quota shceme

The fuel subsidy scam probably broke the ceiling in a room crammed with some of the worst corporate perfidy. Nothing could more sabotage the economic interest of a nation, many Nigerians thought.

But then came the rice import quota scheme, an unholy romance between politicians and businessmen, at the moment stretching corporate bad practices in Nigeria to an incredulous length.

About N117 Billion is there for the pick. A total of 26 companies are involved; two of which are owned by a former Attorney General of the Federation and a former civilian governor of Kebbi State respectively. Predictably, in the all-too-familiar Nigerian fashion, not all of the 26 companies selected for the scheme made the list on merit.

The Central Bank of Nigeria (CBN) in 2014 disclosed that Nigeria spent an average of N800 Billion annually on the importation of rice. Unofficial import receipts through the Cotonou corridor was not captured in the CBN figure.

But the business of importing rice, a staple in Africa’s most popular nation, is so huge and attractive that four neighbouring countries of Benin, Togo, Cameroon and even landlocked Niger Republic have technically factored transhipment or smuggling of rice and allied commodities into Nigeria in their national economic plan.

A recent figure from the CBN indicated that Benin Republic imports almost as much rice as China and nearly as much frozen chicken as the UK. Most of the commodities are smuggled into Nigeria.

Disturbed by the nation’s huge import bill, the President Goodluck Jonathan administration in 2014 came up with a new rice policy to fast-track national self-sufficiency in rice production.The policy specified that owners of existing rice mills and new investors with verifiable backward integration in the rice value chain will be allowed to import rice at10 per cent duty and 20 per cent levy (30 per cent); while merchants who have nothing to contribute to local production in the form of rice farms or mills will be charged 10 per cent duty and 60 per cent levy (70 per cent). Technically, it was a subsidy aimed at building local capacity in rice production.

Subsequently, an inter-ministerial committee was set up to work out the national rice supply gap and allocate import licenses with appropriate quotas in order to bridge this gap, same time advancing the objectives of the national rice policy.

On paper, this committee was to determine beneficiaries and allocate quotas based on four key criteria that assess investment of individual companies into local rice production.

The criteria included a Domestic Rice Production Plan (DRPP) that demonstrate evidence of current or planned investment in domestic rice production over a three-year period. The DRPP was also expected to show the size of investment, proof of land acquisition and establishment of rice fields and paddy production.

The second criterion was called paddy purchase outlook from Paddy Aggregation Centres (PAC). This should demonstrate a clear plan of purchase of paddy from PACs, location of the PACs and volumes of paddy to be purchased.

The third criterion was paddy purchase outlook from outgrower farmers and farmer cooperatives. This should include location of farms, volumes of paddy to be purchased, etc.

The last criterion was proof of ownership of integrated rice milling facility with par boilers and dehuskers. This should include size of planned installed capacity and evidence of acquisition of integrated rice milling equipment.

Sources within the Ministry of Industry, Trade and Investment told this reporter that the then Minister of Agriculture, Dr. Akinwunmi Adesina, by-passed the inter-ministerial committee in the selection of beneficiaries and commensurate import quota. Mr. Akinwunmi, now President of the African Development Bank (ADB), was Chairman of the inter-ministerial committee and took key decisions as the arrowhead of President Jonathan’s much-vaunted Agriculture Transformation Agenda.

Mr. Akinwunmi was easily outwitted by merchants and politicians who did not want a change in status quo, and were known to have resisted such in the past, industry insiders said.

Although the turf is different, the strategy is the same. The same way Nigeria’s oil refineries were put in comatose to pave way for massive and lucrative import of refined petroleum products, the same way entrenched interests known in the industry as Rice Mafia, are sabotaging local rice production to sustain the rice import business.

In the final analysis, the rice policy was scuttled to serve everything but national interest. Companies who have no investment in the rice value chain were granted quota. These companies in turn sold the quota to other importers who already had vessels on the sea.

The sellers of quota made huge profits without any investments in Nigeria’s local rice production and indeed did so without taking risk or lifting a finger.

The same sellers have been working hard to get more quotas in the bid to get more money from the scheme without any investments, thus holding the domestic rice policy to ransom.