A Costly Smuggling Circle

As insecurity keeps farmers away from their land and naira depreciation sustains incentives for petrol diversion, Festus Akanbi examines how smuggling exploits Nigeria’s economic difficulties while deepening them

At Nigeria’s borders, an individual bargain can become a national burden. Rice brought through an illegal crossing may ease a household’s food bill; petrol diverted abroad may enrich a trader. Behind these transactions, however, lie unpaid duties, displaced production and livelihoods weakened by an economy increasingly rewarding evasion.

Smuggling feeds on genuine hardship. Consumers seek cheaper food, businesses struggle with production costs, and traders exploit differences between markets. Insecurity adds a particularly damaging dimension: farmers who cannot safely cultivate their land leave a supply gap that illicit imports can exploit.

The result is a troubling contradiction. Nigeria seeks agricultural self-sufficiency while violence obstructs farming. It invests in refining while cross-border price differences encourage fuel diversion. Border enforcement consequently confronts incentives generated far beyond the frontier.

When Fear Empties the Farms

For farming communities exposed to banditry, kidnapping and attacks, returning to the land involves more than finding seeds, fertiliser or credit. It requires confidence that planting, harvesting and transporting produce will not end in violence.

Without that assurance, fields remain undercultivated, harvests suffer, and agricultural investment becomes hazardous. Displacement also separates farmers from their land, equipment and established markets, making recovery difficult even when immediate threats recede.

Government critics said the gains Nigeria recorded in farming under Presidents Goodluck Jonathan and Muhammadu Buhari have all been undone under incumbent President Bola Tinubu.

The Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane, located the problem in that uncomfortable intersection during his Lagos Business School breakfast presentation. “Smuggling thrives in the gaps,” he said, identifying price, policy and infrastructure differences as the openings through which illegal trade advances.

The World Food Programme reported in July 2026 that more than 17 million people across nine conflict-affected northern states were experiencing crisis, emergency or catastrophic hunger. The finding illustrates the severity of the insecurity surrounding food production and access. It does not, however, measure rice smuggling.

Rice occupies a sensitive position because it is an essential staple. Families cannot indefinitely postpone eating while domestic production recovers. When insecurity constrains supply and household incomes cannot absorb prevailing prices, cheaper foreign rice finds a receptive market, including through illegal channels.

Disrupted agricultural livelihoods may also make illicit trading attractive to some people seeking alternative income. Nevertheless, there is insufficient evidence to claim that displaced farmers generally become smugglers. The clearer relationship is that insecurity weakens production and livelihoods, creating conditions that smuggling networks exploit.

Restricting rice supplies without restoring safe access to farmland therefore leaves the underlying problem unresolved. Consumers remain under pressure, while farmers cannot respond adequately to the demand that protection is supposed to reserve for them.

The Cost Behind the Bargain

Customs interceptions demonstrate the persistence of illicit trade. The Nigeria Customs Service recorded 3,555 seizures with a duty-paid value of N35.29 billion in 2024. Comptroller-General Bashir Adewale Adeniyi also reported seizing 183,527 bags of rice.

For 2025, Customs reported more than 2,500 seizures valued at above N59 billion, alongside revenue collection of N7.28 trillion—stronger revenue performance thus coexisted with substantial interceptions of prohibited and harmful goods.

These figures require care. Duty-paid seizure values are neither total smuggling volumes nor a calculation of government revenue lost. Undetected consignments remain outside the record, while exchange rates, product composition and enforcement intensity can influence reported valuations.

The competitive damage is nevertheless straightforward. A compliant producer pays taxes, finances inventory, maintains machinery and meets regulatory standards. An illicit competitor avoids some obligations and can undercut legitimate businesses.

For rice growers and millers, cheaper smuggled supplies can weaken sales and discourage investment in cultivation, processing and storage.

Insecurity and smuggling may consequently reinforce each other: violence constrains production, illegal imports exploit shortages, and weakened returns complicate agricultural recovery.

The pressure extends to other industries. In June 2026, Customs Deputy Comptroller-General Timi Bomodi reported 65 vegetable-oil seizures in 2025 and another 23 in 2026, with a combined duty-paid value of approximately N1.314 billion.

When legitimate businesses contract, the consequences spread to employees, suppliers, distributors and tax receipts. An apparently inexpensive purchase can therefore carry costs dispersed across the wider economy.

The Naira and Petrol Diversion

Petrol smuggling operates in the opposite direction: supplies leave Nigeria to capture higher returns elsewhere.

Subsidy removal reduced one historical incentive, but it did not abolish cross-border price differences. Adeniyi has explained that the gap between Nigerian petrol prices and those in neighbouring countries remains profitable for diversion.

Naira depreciation can strengthen that incentive. Revenue earned in CFA francs becomes worth more in naira as the Nigerian currency weakens. If domestic petrol prices do not rise sufficiently to offset that exchange-rate advantage, buying locally and selling across the border can remain attractive.

Reporting from the Benin frontier has documented this interaction between currency weakness and petrol trading. However, profitability still depends on purchase prices, transport expenses, exchange rates and enforcement risks; depreciation alone does not determine the margin.

Diversion can tighten supplies in affected communities, complicate distribution and sustain illegal trading networks. Unregulated transport and storage also expose traders and residents to avoidable danger.

Beyond Seizures

Nigeria’s response must address the conditions that make smuggling commercially attractive. Secure farms, dependable rural roads, affordable production and predictable trade rules are essential complements to border intelligence and credible sanctions.

Protecting agriculture requires enabling farmers to return safely and profitably to their land. Tackling petrol diversion requires monitoring price incentives alongside enforcement.

Until lawful production and trade offer dependable returns, Nigeria will keep paying collectively for bargains struck privately at its borders.