Dike Onwuamaeze
The Chief Executive Officer of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, has stated that Nigeria’s next growth phase would be determined on how fast government could close the gaps that enable smuggling to thrive.
Rewane stated this in his presentation during the LBS Breakfast Session titled, ‘Smuggling Paradox: Good for the Few, Bad for the Economy’, where he described smuggling as trade that deliberately avoids the duties and rules at the border, stating that it is the unpriced competition for consumer goods, which is the height of the informal economy.
He said, “Smuggling thrives in the gaps. Nigeria’s next phase of growth depends on how fast we close them: price gaps, policy gaps and infrastructure gaps,” adding that, “smuggling has reduced, but persistent price gaps, informal networks and porous borders make complete elimination unlikely.”
Rewane said that the telecoms are the least vulnerable to impact of smuggling while building materials and pharmaceuticals have low exposure to its effects.
According to him, “FMCG and downstream refining rely heavily on volume to offset high production costs and thin margins.
“This makes smuggled imports catastrophic as they destroy market share and scale.
“Unlike FMCGs, healthcare consumers rarely substitute trusted (pharmaceutical) brands for open-market alternatives.”
He identified the victims of smuggling as the government, local manufacturers, formal businesses.
According to him, “government loses Customs’ revenue, taxes and duties. Local manufacturers face unfair competition from cheaper untaxed imports.
“Formal businesses and importers lose market share to informal competitors.”
He also said that smuggling could expose consumers to unsafe, counterfeit or substandard products and force financial system to lose formal foreign exchange and transaction flows
Rewane said that the depreciation of the Naira is accelerating the value of smuggled goods across the Nigerian borders as the value of seizures that were made by the Nigerian Customs Service (NCS) rose from N17.56 billion in 2023 to N59 billion in 2025.
He further said, “Smuggling has grown with the weak Naira, and customs data tells the story. The value of seizures doubled from N17.56 billion in 2023 to N35.29 billion in 2024, when officers made 3,555 seizures, including 183,527 bags of rice and over 1.7 million litres of fuel.
“In 2025, the number of seizures fell to just over 2,500, but their value rose to more than N59bn, over three times the 2023 figure.
“The pattern points to a fact: as the Naira depreciated, the value of contraband rose sharply.”
Rewane said that a large informal market, demand for cheaper goods and price differentials with neighbouring countries are among the factors that accelerate smuggling.
He suggested that more formal ECOWAS and Intra-African trades could reduce incentives for some forms of smuggling.
Rewane pointed out that even though the African Continental Trade Area (AfCFTA) is not automatically an anti-smuggling agreement, “its trade-facilitation provisions can reduce smuggling by lowering the cost of legal trade.”
According to him, the future of smuggling could be reduced if Naira could appreciate to its fair value and the government pursues lower import duties that narrows the gap between formal and informal imports while manufacturers focus more on the domestic market.
He stated that the short-term benefits of smuggling to the consumers include lower prices, and increased availability of some goods but warned that this can put pressure on formal sellers and make domestic producers lose market share.
Therefore, “investment may weaken, government revenue can decline, product standards and consumer protection may be compromised,” he said.
Rewane also said that smuggling can cost lives as unsafe transportation and illicit fuel movement can result in accidents, fires and loss of lives. On the other hand, substandard goods put consumers at risk since “smuggled products often bypass regulatory and quality control checks.”