Low import tariffs, smuggling activities, unpredictable tax exemptions and weak enforcement of quality and food safety standards: The potential of local rice value chains is undermined in West African countries. This article provides deeper insights into these challenges and offers strategic options to support the policy dialogue among ECOWAS countries.
Dr. Johanes Agbahey is agricultural economist. As advisor at the German Corporation for International Cooperation (GIZ) GmbH, he is actively engaged in the development and management of projects based on requests from partner countries. His work contributes to improve agricultural policies and enhance intra-African trade.
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)
West Africa remains dependent on the volatility of international markets due to increasing rice imports. Rice has become a major staple food in the diet of households in West African countries, representing 37% of cereal food consumption Despite increased domestic rice production after the food price crisis in 2008, the competitiveness of the rice sector has improved only slightly. Low import tariffs, smuggling activities, unpredictable tax exemptions and weak enforcement of quality and food safety standards have undermined the potential of local rice value chains and are harmful to West African rice farmers.
The study presents consumption and production trends as well as imports and import dependencies in the rice market. Low import protection, deficiencies in West African countries' customs systems, and government support to producers in large rice-exporting countries have encouraged extra-regional rice imports. Rice imports now cover 40% of consumption needs in West Africa, making this region one of the top rice importers with about 18% of global imports. These imports strongly compete with local rice production and discourage private investment in the rice sector. At the same time, West African governments, pursuing the goal of national self-sufficiency in rice, have directed considerable public resources to rice farming and processing. Moreover, different rice trade policies between West African countries have led to cross-border spill-over effects further complicating the task of developing cost-competitive and quality-oriented value chains and promoting intra-regional trade in locally produced rice. The challenge presented by the rice sector thus raises the issue of policy cooperation between West African countries.
The market power of international rice exporters, as well as dominant national agricultural and industrial policies, the goal of national self-sufficiency in rice, and the risks of climate change complicate the policy coordination of trans-regional import systems and regional trade in locally produced rice in West Africa.
The study examines the main transhipment routes for both formal and informal rice trade flows, shown in the Figure. Legal transhipment of imported rice takes place when after being shipped to a West African port, the imported rice is transported throughout the region, particularly to supply landlocked countries in the Sahel. However, in several cases, imported rice crosses borders illegally, circumventing customs duties and regulations. Up to 85% of Beninese imports are re-exported to Nigeria through highly ramified smuggling networks over which the two states have little control.
Several Beninese localities serve as hubs for trade with Nigeria. These include old cities that perpetuate traditional commercial activities despite the border between the two countries. Besides frequent import bans, high transport and logistics costs in Nigeria encourage importers and traders to carry Asian rice through Benin. These high costs are due to several factors: bottlenecks at the ports of Lagos, Port Harcourt and Calabar; high transaction costs and clearance fees; difficult transport between ports and inner cities (Abuja, Kaduna, Kano and others). In contrast, Benin, with the port of Cotonou and good management of its road network, offers to the Nigerian traders a more efficient ‘logistics platform’ to reach Nigerian consumer markets. This is more the case since the Beninese administration largely eliminated the checkpoints and as road transportation delays are the lowest in the region. Revenues and profits from the smuggling of imported rice between Benin and Nigeria are shared between a complex network of actors on both sides of the border.
Policy events at regional and country levels affect rice imports and production in different ways. As elsewhere on the African continent, West African governments immediately responded to the 2008 food price crisis by reducing import duties and other taxes on imported rice and other cereals. However, reductions in import duties entail large fiscal costs and do not properly target the most exposed populations – the poorest are not the biggest consumers of rice, and traders do not pass on cost reductions to consumers to their fullest extent.
At the same time, those initiatives mainly allocated resources to irrigation infrastructure and rice farming technological research, with the result that few benefited from those investments. With the adoption of the ECOWAS Common External Tariff (CET) for extra-regional trade in 2013, rice was assigned a 10% import tariff, which provides little protection to rice producers in the region. In addition, the implementation of the CET differs between countries (for example, Nigeria usually applies an import duty on rice much higher than the 10% CET), and ECOWAS member states continue to use other tariff-like trade policy tools, such as import and export bans, for the purpose of regulating supplies and prices in domestic markets.
For instance, since 2008, the government of Ghana has banned exports of locally produced rice and took regulatory measures to stop rice imports through land borders. Following the major cereal production shortfall in the Sahel in the marketing year 2011 – 2012, Mali suspended import duties. In response to an unusually strong import demand in Mali, in late 2011 the Burkinabe government responded by enacting a ban on exports of rice and other cereals. To limit rice smuggling from Benin and Niger and to protect the domestic rice industry, the Nigerian government has placed substantial import tariffs on rice, reaching 110% in 2013. Taking a step further, Nigeria enacted between May 2013 and October 2015 a ban on land imports. Subsequent to the re-opening of borders, rice trans-shipments surged again, leading Nigeria to place a full ban on imports by land from Benin and Niger since 2019. Those government interventions contribute to the volatility in rice prices and trade across the region as shown in the figures.
The three synergistic reform areas that have been identified are: regulating extra-regional rice imports, structuring domestic rice markets for improved quality-cost competitiveness, and promoting intra-regional rice trade for regional rice market development. Recent developments indicate that progress in regulating rice markets and developing competitive and inclusive value chains is possible. This requires the alignment of interests, incentives for private investment, and the promotion of a coherent policy that links a tighter regulation of imports with the structuring of domestic markets.
Progress in regulating rice markets and developing competitive and inclusive value chains is possible. This requires an alignment of policy and private sector interests, as well as incentives for private investment and coherent policies to regulate and structure imports and domestic markets.
Building on the existing momentum in regional trade, trade facilitation could further contribute to strengthening the rice value chain and have positive impacts on livelihoods, food security and job creation. In this context, the development of the rice sector as part of a more sustainable agricultural and food system also depends on the interests of the various countries in better coordinating national rice policies and implementing regional trade agreements.
The study therefore aims to support private and public actors, stakeholders and networks in the rice sector to reach consensus on feasible measures and reforms.
Developing the rice value chain and promoting rice trade for the benefit of West Africa requires a comprehensive policy dialogue on coordinated national rice policies and regional trade agreements. This study supports ECOWAS in this endeavour.
The study was conducted by the European Centre for Development Policy Management (ECDPM) and the Initiative Prospective Agricole et Rurale (IPAR) and financed by the Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ).
The discussion paper and further information can be found here.
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