The Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane, has warned that smuggling is undermining Nigeria’s economy, depriving the government of revenue and placing local manufacturers at a disadvantage.

Rewane made the observations during the Lagos Business School Breakfast Session, themed Smuggling Paradox: Good for the Few, Bad for the Economy, where he argued that the country’s future economic growth would depend partly on its ability to address the conditions that enable illicit trade.

He described smuggling as the movement of goods across borders while deliberately evading applicable duties and regulations, noting that it creates unfair competition for businesses operating within the formal economy.

According to him, persistent price differences, inconsistent policies, informal trading networks and porous borders continue to encourage the practice, despite a reported decline in some smuggling activities.

Rewane identified the government, domestic manufacturers and legitimate businesses as the major victims, explaining that illicit imports deprive the state of customs revenue, taxes and duties while allowing untaxed goods to compete unfairly with locally produced alternatives.

He said fast-moving consumer goods and downstream petroleum refining were particularly vulnerable because businesses in those sectors depend on high sales volumes to offset production costs and narrow profit margins.

Smuggled goods, he added, could erode market share, weaken production capacity and discourage investment. Consumers could also face risks from counterfeit, unsafe and substandard products that bypass regulatory and quality-control checks.

Rewane cited Nigerian Customs Service seizure figures to illustrate the scale of the problem. According to the figures he presented, the value of seized goods rose from ₦17.56 billion in 2023 to ₦35.29 billion in 2024, when officers recorded 3,555 seizures, including 183,527 bags of rice and more than 1.7 million litres of fuel.

In 2025, the number of seizures reportedly fell to slightly above 2,500, while their total value increased to more than ₦59 billion.

He linked the rising value of seized contraband partly to the depreciation of the naira, which can widen price differences between Nigeria and neighbouring countries and increase incentives for informal cross-border trade.

Rewane also identified demand for cheaper goods, the size of the informal market and differences in prices across neighbouring economies as factors sustaining smuggling.

To reduce the problem, he advocated stronger formal trade within the Economic Community of West African States (ECOWAS) and across Africa. He said trade-facilitation measures under the African Continental Free Trade Area (AfCFTA) could make legitimate transactions less costly and reduce incentives for some forms of smuggling.

He also proposed narrowing the gap between formal and informal import costs through appropriate duties, improved economic conditions that support the naira and stronger efforts by manufacturers to serve the domestic market.

Although smuggling may temporarily provide consumers with cheaper goods and wider availability, Rewane warned that its longer-term consequences include declining government revenue, reduced investment and weaker consumer protection.

He further cautioned that illicit fuel transportation and other unsafe smuggling practices could cause accidents, fires and loss of lives.

Rewane maintained that closing the price, policy and infrastructure gaps that facilitate smuggling would be important to strengthening local industry, protecting consumers and supporting Nigeria’s next phase of economic growth.