Rewane: Smuggling Costs Nigeria Billions, Stifles Local Industry

Bismarck Rewane, CEO of Financial Derivatives Company Limited (FDC), claims Nigeria's economic growth will depend on the government's ability to close loopholes that facilitate smuggling. Addressing the LBS Breakfast Session titled 'Smuggling Paradox: Good for the Few, Bad for the Economy,' Rewane described smuggling as unlawful trade that evades customs duties and border regulations, calling it an unpriced competitor in the consumer goods market.

He noted that while smuggling has decreased, persistent price gaps, informal networks, and porous borders make total eradication improbable.

Reacting to the telecoms being least vulnerable to smuggling's impact, and construction materials and pharmaceuticals experiencing low exposure, Rewane highlighted how FMCG and downstream refining industries suffer greatly due to high production costs and thin profit margins. He pointed out that smuggled imports significantly damage market share and production scales, unlike in pharmaceuticals where consumers rarely switch to open-market alternatives.

The victims of smuggling, according to Rewane, include the government, local manufacturers, and formal businesses. He explained that governments lose customs revenue, taxes, and duties; local manufacturers face unfair competition from cheaper untaxed imports; and formal businesses and importers lose market share to informal traders. He added that smuggling can expose consumers to unsafe, counterfeit, or substandard products while forcing the financial system to lose formal foreign exchange and transaction flows.

Rewane acknowledged that Nigeria's depreciating currency is accelerating the value of smuggled goods. Customs data shows that the value of seizures rose from N17.56 billion in 2023 to N59 billion in 2025. Despite a decline in the number of seizures, their value surged over three times from 2023 to 2025. He identifies a large informal market, the demand for cheaper goods, and price differentials with neighboring countries as factors fueling smuggling.

Rewane suggests that stronger regional trades within ECOWAS and intra-African markets could diminish smuggling incentives. He also pointed out that while the African Continental Trade Area (AfCFTA) does not inherently prevent smuggling, its trade-facilitation aspects can reduce smuggling by lowering the cost of legitimate trade.

Rewane believes that the future of smuggling could be curtailed if the Naira appreciates closer to its fair value, and the government lowers import duties to narrow the disparity between formal and informal imports. He also warned that while consumers benefit from lower prices and increased availability in the short term, these advantages can harm formal sellers, weaken investment, reduce government revenue, compromise product standards, and undermine consumer protection.

Lastly, he cautioned that smuggling can lead to loss of lives due to unsafe transportation and the unregulated movement of illicit fuel. Substandard goods, he noted, often bypass quality control checks, putting consumers at risk of accidents, fires, and health hazards.