The final month of the six months within which rice can be imported and cleared duty free ends on October 31. In approving the tax waiver in May, the Federal Government was reacting to the global food crisis that had elicited a surge in the retail price of rice. At the height of the price escalation, a 50kg bag of rice had reached N12,000, depending on the brand. By suspending 50 percent duty as well as another 50 percent tax labelled Rice Development Levy, the government had reasoned that an envisaged surge in importation would force the price down close to the pre-food crisis level.

In my evaluation of the strategy entitled "Rice follies," I warned that it would not have the desired effect. The reason was not because importers may not be able to source enough rice from the international market in the face of growing unwillingness of major producers to sell. Rather, being the product of arm chair policy makers, merely waiving duties without a backup policy that would enable consumers feel the effect of the tax waiver may end up enriching only the importers.

Last year, N11.36 billion was realised from the rice development levy, the same amount that came through import duty. In effect, over N22.72 billion was paid into the Federation Account from tax on rice. In the first quarter of this year, over N6.28 billion had already been collected from both taxes. Although precise figures are hard to come by, the quantity of rice so far shipped into the country this year, despite the seeming reduction in the quantity on offer in the international market, may have surpassed the entire tonnage imported for the whole of 2007.

According to the result of nationwide surveys conducted by BusinessDay and the News Agency of Nigeria, there is no significant drop in the price of 50kg bag of rice. In granting the six months tariff waiver, the Federal Government may have only succeeded in making new millionaires and enriching existing ones.

The tragedy, yes, that is what the tariff waiver is, of the huge amount of money now in private vaults is that policy makers are continuing in the tradition of poor evaluation of new initiatives before they are turned into policies. The policy was anchored on the false premise that all the rice shipped into the country were brought in through official channels - seaports and land borders - for which appropriate duties were paid. At N7,500 per bag, the then retail price did not reflect the 100 percent tax on imported rice in addition to the cost of procurement. While Nigeria maintained a 100 percent tariff regime, neighbouring Benin Republic imposed only 10 percent duty on rice. Given the legendary porous nature of the land borders, the incentive to circumvent the high tariff is too juicy to be ignored.

In effect, a greater percentage of the rice shipped into the country were brought in through illegal channels for which no duty was paid. While the government may have been celebrating the average of N23 billion realised yearly from duty on rice, a lot more was lost through smuggling. It is the huge income from the smuggled shipments that was used to "subsidise" the retail price at the level Nigerians considered affordable.

In the nationwide survey, many respondents assumed, albeit wrongly, that the six-month timeline for duty free importation is too short, hence the limited impact on price. In their view, government should extend the grace period so that prices can drop closer to the pre-global food crisis period.

This is precisely what the country does not need now. The experience with cement which attracted another level of concession ostensibly to beat down price does not reinforce the position of advocates of extension of the tariff waiver. The rice tariff waiver was effectively hijacked by rice merchants and middlemen who appropriated all the billions that would have been paid as tax but which government thought would have been spread equitably to consumers.

Given the structure of the Nigerian economy or lack of it, using tariff waiver to force down the price of an essential commodity usually records limited success. There can no longer be a throw back to the days of price regulation. Invariably, the soon-to-expire strategy is ineffective as a short term measure. The adoption of Common External Tariff (CET) by the ECOWAS does not seem to have adequately addressed the rice issue.

If the proceeds from the rice development levy, the total amount of which is yet to be made official or has government declared who has custody of the money, is properly utilised to prop up and support local rice farmers, we may be on the way to evolving a platform through which local factors can influence and determine the retail price of the essential commodity.

There is no economic sense in imposing multiple taxes on goods ostensibly to aid local development only for the proceeds to be diverted to other use while misguided short term measures that only enrich a few merchants are adopted.