ILLEGAL IMPORTS

Struggling naira boosts cross-border smuggling of goods from Nigeria

By our African Marketing Confederation News Team | 2024

Weakness against other regional currencies creates a significant price gap, making Nigerian goods incredibly cheap for neighbouring countries.

Clandestine traders are exploiting Nigeria’s currency woes to buy consumer goods cheaply in that country and then smuggle them across West Africa’s porous borders for resale in neighbouring states.

 

The currency disparity caused by the struggling naira is such that these ‘entrepreneurs’ are smuggling everything from laundry detergent to noodles. 

A market in Anaynui, Ghana. Smuggled goods from Nigeria are finding ready buyers.

Photo: Gina Gleeson, Wikimedia Commons

 

“Maverick Research’s source of origin analysis of the leading fast-moving consumer goods brands, and feedback from our field teams, indicate a surge in grey products of popular fast-moving brands from Nigeria into Ghana and Cameroon,” says Ato Micah, CEO of Ghanian-based Maverick. 

 

“Imagine buying a box of detergent off a Lagos shelf and selling it for double the price in Accra.” 

 

Micah explains that the unauthorised importers are capitalising on three factors: 

 

  • Currency Chaos: The naira’s weakness against regional currencies like the Ghanaian cedi creates a significant price gap, making Nigerian goods incredibly cheap for neighbouring countries. 
  • Porous Borders: West Africa’s notoriously weak border controls make smuggling a breeze, bypassing customs and regulatory oversight. Allegations of corruption further facilitate the flow of these grey market goods. 
  • Brand Recognition: The strong demand for leading brands in Nigerian and neighbouring markets creates a demand for cheaper versions readily available through unauthorised channels due to the arbitrage (the practice of taking advantage of a difference in prices in two or more markets). Consumers often prioritise familiar brands over the legal origin of those brands. 

Implications of smuggling from Nigeria are wide ranging

 

The implications are wide ranging. Citing the example of the soaps and detergents sector in Nigeria, Micah says Nigeria’s ban on importing finished soaps and detergents forces local manufacturers to rely on exports to neighbouring countries under the ECOWAS Trade Liberalization Scheme (ETLS). This scheme allows them to access the foreign currency (USD) needed for raw-material purchases. 

 

However, the influx of smuggled detergents disrupts this strategy, as it erodes the profit margins of authorised distributors in countries such as Ghana, making them less willing to import products from Nigeria. 

 

Nigeria’s weak currency is also incentivising other forms of cross-border smuggling. For example, Business Day Nigeria reported in February this year that petrol is being smuggled across the border into neighbouring countries. 

 

The newspaper quoted Aisha Mohammed, an energy analyst at the Lagos-based Center for Development Studies, as saying: “The weakening naira is definitely making petrol smuggling more attractive.” 

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.