Struggling naira boosts cross-border smuggling of goods from Nigeria

“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.”